Where is the US economy headed?

That's essentially what got banks and finance companies into trouble; they wanted to dish out credit like sugar candy to not only people with good credit, but those who were behind in their payments. There were signs from many years ago that there was an increase in bankruptcies and bad loans, but all they did was "write them off" while increasing credit and the amount of "receivables" on their books. That was a disaster no matter how one looked at their balance sheets. Bankers still believe they deserve those high pays ad bonus' even after the disaster they created for everybody.

when the folks who write the loans flip the loans by way of derivatives with in days and thus have no stake in the loan getting paid, that is going to happen. The profits (60% of which went out the door to the wall street workers in the form of compensation) were largely a blatant scam.

As usual, howkeye 10, Cicerone Imposter is abysmally ignorant of the ROOTS of the problem.


Note:



Fannie Mae and Freddie Mac Invest in Democrats
Published by Lindsay Renick Mayer on July 16, 2008 5:27 PM | Permalink | Comments (16)
(For an updated chart that includes contributions from Freddie Mac and Fannie Mae's PACs and employees to ALL lawmakers back to 1989, including to their leadership PACs, go here.) and data The federal government recently announced that it will come to the rescue of Freddie Mac and Fannie Mae, two embattled mortgage buyers that for years have pursued a lobbying strategy to get lawmakers on their side. Both companies have poured money into lobbying and campaign contributions to federal candidates, parties and committees as a general tactic, but they've also directed those contributions strategically. In the 2006 election cycle, Fannie Mae was giving 53 percent of its total $1.3 million in contributions to Republicans, who controlled Congress at that time. This cycle, with Democrats in control, they've reversed course, giving the party 56 percent of their total $1.1 million in contributions. Similarly, Freddie Mac has given 53 percent of its $555,700 in contributions to Democrats this cycle, compared to the 44 percent it gave during 2006.

Fannie Mae and Freddie Mac have also strategically given more contributions to lawmakers currently sitting on committees that primarily regulate their industry. Fifteen of the 25 lawmakers who have received the most from the two companies combined since the 1990 election sit on either the House Financial Services Committee; the Senate Banking, Housing & Urban Affairs Committee; or the Senate Finance Committee. The others have seats on the powerful Appropriations or Ways & Means committees, are members of the congressional leadership or have run for president. Sen. Chris Dodd (D-Conn.), chairman of the Senate banking committee, has received the most from Fannie and Freddie's PACs and employees ($133,900 since 1989). Rep. Paul Kanjorski (D-Pa.) has received $65,500. Kanjorski chairs the House Financial Services Subcommittee on Capital Markets, Insurance and Government-Sponsored Enterprises, and Freddie Mac and Fannie Mae are government-sponsored enterprises, or GSEs.

Top Recipients of Fannie Mae and Freddie Mac
Campaign Contributions, 1989-2008



Name
Office
Party/State
Total

1. Dodd, Christopher J
S
D-CT
$133,900

2. Kerry, John
S
D-MA
$111,000

3. Obama, Barack
S
D-IL
$105,849

4. Clinton, Hillary
S
D-NY
$75,550

5. Kanjorski, Paul E
H
D-PA
$65,500

6. Bennett, Robert F
S
R-UT
$61,499

7. Johnson, Tim
S
D-SD
$61,000

8. Conrad, Kent
S
D-ND
$58,991

9. Davis, Tom
H
R-VA
$55,499

10. Bond, Christopher S 'Kit'
S
R-MO
$55,400

11. Bachus, Spencer
H
R-AL
$55,300

12. Shelby, Richard C
S
R-AL
$55,000

13. Emanuel, Rahm
H
D-IL
$51,750

14. Reed, Jack
S
D-RI
$50,750

15. Carper, Tom
S
D-DE
$44,389

16. Frank, Barney
H
D-MA
$40,100

17. Maloney, Carolyn B
H
D-NY
$38,750

18. Bean, Melissa
H
D-IL
$37,249

19. Blunt, Roy
H
R-MO
$36,500

20. Pryce, Deborah
H
R-OH
$34,750

21. Miller, Gary
H
R-CA
$33,000

22. Pelosi, Nancy
H
D-CA
$32,750

23. Reynolds, Tom
H
R-NY
$32,700

24. Hoyer, Steny H
H
D-MD
$30,500

25. Hooley, Darlene
H
D-OR
$28,750



Includes contributions from PACs and individuals.

and, Hawkeye 10, Cicerone Imposter appears to know nothing about the pressure put on financial institutions to make loans to people who should have not gotten the loans in the first place. C icerone Imposter does not know that the economic crisis began when the pressure was put on the financial institutions by Democrat left wingers and minorities. Note below---


QUOTE-

I\I’ve been fighting alongside ACORN on issues you care about my entire career. Even before I was an elected official, when I ran Project Vote voter registration drive in Illinois, ACORN was smack dab in the middle of it, and we appreciate your work.” " Barack Obama, Speech to ACORN, November 2007

Do you remember how we told you that the Democrats and groups associated with them leaned on banks and even sued to get them to make bad loans by abusing the Community Reinvestment Act (see HERE and HERE)? The abuse of this act by ACORN and officials like Janet Reno was a factor in causing the economic crisis. The harasment suits filed under this act were used to get banks to lower credit standards and hand out high risk loans. Fellow bloggers have dug up the lawsuit below while researching Obama’s legal career. It is a typical example of an ACORN harassment lawsuit.

In these lawsuits, ACORN makes a bogus claim of Redlining (denying poor people loans because of their ethnic heritage). They protest and get the local media to raise a big stink. This stink means that the bank faces thousands of people closing their accounts and get local politicians to lobby to stop the bank from doing some future business, expansions and mergers. If the bank goes to court, they will win, but the damage is already done because who is going to launch a big campaign to get the bank’s reputation back?

It is important to understand the nature of these lawsuits and what their purpose is. ACORN filed, or threatened to file, tons of these lawsuits and ALL CRA suits allege racism (usually the press involved and such with the threat of the CRA lawsuit is enough to get the bank to give in and put them in a catch 22, they also had a willing Janet Reno Justice Department to work with - see below for more on Reno). As we have said in our series or articles analyzing every aspect of this story (links at the very bottom of this post), the series of ACORN harassment lawsuits and intimidation against banks to lower credit standards was not the sole reason for the mortgage crisis, it was one important layer of many that brought us to the mortgage crisis and the largest financial scandal in the history of the world.

end of quote

THE ACORN HARASSMENT LAW SUITS AND INTIMIDATION AGAINST BANKS TO LOWER CREDIT STANDARDS WAS INDEED ONE IMPORTANT LAYER OF MANY THAT BROUGHT US TO THE MORTGAGE CRISIS.

LOL. Cyclops thinks communism works?

More and more of the Marxists are daring to speak what they really think. I have noticed that.

okie, Do you know what a Marxist is?

Okie feels that profits are the free market, but losses are the government's. That is exactly what is happening with the big banks -- we are bailing out the big banks, but getting bubkis for it. Banks are not that innovative or entreprenurial. If we are paying the bill, we should get the banks. The govt. will do a better job running them. That would not be communism, Okie.

You cant be serious!!
The same govt that created the problem by doing nothing is now going to fix it by buying and running the institutions they allowed to get screwed up?

I guess you missed out on the election MM.

The govt that created the problems by doing nothing has left and there is a new government in place that will have to fix the problems caused by doing nothing.

And the history of government economic interventions generally shows that government non-interference (or minimal interference) almost always yields better results. The worldwide track record of government economic central planners and the authoritarian structures they create generally points to the loss of both wealth and freedom.

Sure..
We have the S&L debacle
We have the present banking debacle

Non interference almost always results in the markets self destructing. Oversight is required for markets to work and prevent abuse which always occurs if no one is preventing it. But it seems you prefer to argue from a strawman as opposed to discussing no oversight versus oversight.

Government oversight and regulation of selected activities is one thing: government direction, funding, and determination of what economic activities will take place is quite another. You are evading the issue - again.

Oversight was supposed to come from the SEC (a government department), but they failed. We also know that capitalism failed when greed took over the transactions that brought us to this point in the banks/financial institution crisis.

There is no other option for our government at this point when we are bleeding over half million jobs every month but to react. Task number one is to make sure that our banks are stabilized, and begin to provide loans. The second job is to create jobs - that will stop the bleeding of jobs. This second task is more difficult, because there is no magic wand to create enough jobs to reverse the current trend in the loss of jobs. This will take much longer; and possibly much longer than Obama's first term in office.

Our government will not be able to reverse this crisis with a $800 billion dollar stimulus plan. That's like trying to fill a leak in a dike with chewing gum. When the stimulus plan includes tax breaks over the creation of jobs, the handicap they created for themselves is enormous.

This crisis environment is totally different from any we have experienced, and it will take extra-ordinary actions to save our economy. Past rules about taxes and spending no longer applies. It's no longer a case of transferring debt to our children and grandchildren; it's a matter of saving our economy for our children and grandchildren.

The government has always directed economic activities through various means. Often it has unintended consequences such as the tax break for trucks and large SUVs under Bush. I pity the poor couriers I see driving full size hummers they thought were a great deal because of the tax break.

That's what happens when you have 535 people in the committee to develop a stimulus/recovery plan.

MM, do you know what "full employment" (search for this term, you might learn a lot) is considered to be in America? Hint: it's not 0%.

Full Employment is 95%. Most Economists consider a 5% Unemployment Rate to signify Full Employment because there is always( even under the best economy) 5% of workers leaving one job to look for another.

Left Wingers like Cyclops have moaned that the Unemployment Rate is much higher than the currently reported 7.6% since the BLS does not report U-6--the category in which "discouraged" workers are placed. But, what he does not say, is that despite his comment, the BLS has never used U-6, even under Clinton, Bush, Reagan and Carter

Since it has been established that the current rate of functional illiteracy in the USA is 14% and since it is becoming much more difficult to work in any job without functional literacy, I am amazed that the Unemployment Rate is not over 10%.

The Unemploment Rate for young blacks is over 20%. But, of course, as parados would say, that's strictly because of racism!

What "tax break"? The fact is that as trucks these vehicles were not regulated at all under the CAFE standards for fuel consumption. There was no tax break as such. This situation merely illustrates the futility of attempting to perfect human behavior through government regulation. Consumers and manufacturers are generally smarter and more agile than bureaucratic regulators, who merely litter our lives with well-intended but basically futile and bothersome regulations that almost never accomplish their intended purpose.

However, we do agree about unintended consequences. What will be the unintended consequences of the recently enacted stimulus plan and the Democrat social programs that are being forced on us all?

Do you live in a cave george?

All I did was google SUV tax break -
140,000 hits

What is the SUV tax deduction?

http://4wheeldrive.about.com/cs/drivingtipssafety/a/aa041603a_4.htm
http://www.bankrate.com/brm/itax/biz_tips/20030403a1.asp
http://www.businessweek.com/autos/autobeat/archives/2007/07/suv_tax_break_f.html
http://www.detnews.com/apps/pbcs.dll/article?AID=/20070616/AUTO01/706160358


I guess we have to weigh those vs the intended consequences. I would think 3-4 million jobs outweighs most unintended consequences. The unintended consequences of doing nothing are what I would be more worried about.

You are correct, George OB 1--

Dr. Thomas Sowell, in his fine book--"Basic Economics" wrote:

quote

"Although some have tried to depicgt FDR as the man who got us out of the Great Depression, all previous recessions ended much sooner, without any major government intervention. In fact, the Great Depression was the first depression in which the federal government intervened so much first under Hoover and then under Roosevelt. Some economists,including Nobel Prize winning Milton Friedman, have argued that it was PRECISELY government policies that kept the economy from recovering as quickly as before."