Where is the US economy headed?

Okie- Cyclops says that "You are full of ****" I never heard that term used in a debate but I consider the source.


Note the effective debating style used by Cyclops--

Re: okie (Post 3589125)
ooh, right. Fannie and Freddie made all those financial institutions make stupid choices! The forced AIG to commit massive fraud! They forced banks to give loans to people without checking their credit or employment history!

Wait a minute.

Actually, they did none of those things, and you're just full of **** on this issue. Like Fox in the other thread, you haven't done much research into the actual situation, but you sure are great at blaming the people you are told to blame.

Cycloptichorn

Ican- Here is the truth about he pressure which Cyclops says did not exist.

CRA was meant to encourage banks to make loans to high-risk borrowers, often minorities living in unstable neighborhoods. That has provided an opening to radical groups like ACORN (the Association of Community Organizations for Reform Now) to abuse the law by forcing banks to make hundreds of millions of dollars in “subprime” loans to often uncreditworthy poor and minority customers.
Any bank that wants to expand or merge with another has to show it has complied with CRA - and approval can be held up by complaints filed by groups like ACORN.
In fact, intimidation tactics, public charges of racism and threats to use CRA to block business expansion have enabled ACORN to extract hundreds of millions of dollars in loans and contributions from America’s financial institutions.
Banks already overexposed by these shaky loans were pushed still further in the wrong direction when government-sponsored Fannie Mae and Freddie Mac began buying up their bad loans and offering them for sale on world markets.
Fannie and Freddie acted in response to Clinton administration pressure to boost homeownership rates among minorities and the poor. However compassionate the motive, the result of this systematic disregard for normal credit standards has been financial disaster.

Cyclops will not resp0nd to the evidence because he is afraid to debate me.

No, okie, you are wrong again. All this happened because the Bush government failed to rein in what the semi-government departments, Mae and Mac, was doing to give loans to unqualified buyers. Something you conservatives fail to see the hypocrisy of wanting Obama to be perfect during his first month in office, but give a pass for all the GW Bush's eight years of failings as the (incompetent) leader of our country responsible for all the federal departments to ensure the security of Americans (which includes economic.) GWBush spent most of his energies on the Iraq war, and even failed there. He left the cleanup of his mess for the next president - which creates a handicap for the next president in concentrating on only our economy. Something you probably do not realize or acknowledge.

According to ci, everything is Bush's fault. Makes for a nice comf0rtable world for ci, but unfortunately not much grounded in reality. Thats why I have quit answering ci much lately, he responds with one liner insults and statements grounded in "Its Bushes fault no matter what the problem was" Someday, ci will wake up and realize Clinton was president when alot of this stuff began or was being perpetuated, and that Democrats also inhabit Congress, most of the time in majority. Some of them have spent their entire working lives, if you can call it working, in Congress, but of course they have nothing to do with anything, none whatsoever. And he will wake up to the fact that Obama, Nancy, and Harry are making policy.

okie wrote:

You finally got it! ROFL

Okie wrote:

No it does not require new regulation. It requires enforcement of the old regulation in which banks were allowed to make market decisions on what is and is not a good risk and were required to demonstrate and utilize sound lending pratices. When that was the case, the U.S. banking system was among the strongest in the world.

If I were rude like Cyclops, I would say that Cicerone Imposter was full of ****, but I wont' do that> I will merely give evidence that Cicerone is wrong, wrong, wrong. Cicerone evidently finds it hard to discover evidence and keeps flatulating. Here is what he does not know or understand.

Okie- Here is what Cicerone and the other left wingers either do not know or do not want to know--the key words are

COMMUNITY REINVESTMENT ACT

AND

ACORN

NOTE:


!

Economic Meltdown Fueled By Barney Frank/Christopher Dodd

By TVC Executive Director Andrea Lafferty

January 29, 2009 " As our nation faces a serious economic crisis in 2009, Americans need to understand the origins of this crisis.

The subprime mortgage crisis fueled instability in other sectors of the economy and has led a crisis in the banking industry, housing industry, auto industry " and is resulting in the layoffs of millions of Americans. A subprime mortgage is one granted to individuals with a bad credit history or no credit history. They were given no-money-down, low interest, or interest-only loans.

Democrats effectively blamed President Bush for the economic crisis and this propelled Obama into office as President of the United States for the next four years.

Is President Bush to blame? No. It was Democrat leadership going back to the Carter Administration that created this economic disaster.

The fact is that the roots of this economic crisis go back to the Clinton and Carter Administrations , the radical group ACORN, and Rep. Barney Frank (D-MA) and Senator Christopher Dodd (D-CT).

Here are the facts:
Under President Jimmy Carter, the Community Reinvestment Act (CRA) was passed. It required federal financial institutions to encourage banks to give home loans to persons with little credit and low income. Economist Russell Roberts said that the CRA played a major role in creating the sub-prime mortgage crisis in the U.S.


Under Bill Clinton, the CRA was expanded and Clinton set targets for low-income home ownership at the Department of Housing and Urban Development and at Fannie Mae and Freddie Mac. Banks were forced by the federal government to provide bad loans to unqualified people.


Rep. Barney Frank (D-MA) is Chairman of the Financial Services Committee in the House of Representatives. In 2003, he said of Fannie Mae and Freddie Mac: “These two entities " Fannie Mae and Freddie Mac " are not facing any kind of financial crisis. The more people exaggerate these problems, the more pressure there is on these companies, the less we will see in terms of affordable housing.” In the late 1980s and early 90s, Frank was engaged in a sexual relationship with Herb Moses, who was Fannie Mae’s assistant director of product initiatives! Bill O’Reilly exposed Frank’s involvement in the mortgage crisis: YouTube - O 'Reilly - Barney Frank Had Affair with Fannie Mae Exec. Frank looked the other way, while our economy was being destroyed by federal policies created in Clinton and Carter Administrations. (Freddie Mac and Fannie Mae help fund the homosexual agenda.


In 2008, Freddie gave $20,000 to a Parents and Friends of Lesbians and Gays (PFLAG) event; Fannie Mae gave nearly $19,000 to the same event. Freddie has donated $125,000 and Fannie donated $80,000 to homosexual groups since 2005.)


Senator Christopher Dodd (D-CT) is head of the powerful banking committee in the Senate. He and Barney Frank consistently resisted attempts by the Bush Administration to closely regulate Fannie Mae and Freddie Mac. Dodd also got preferential treatment from Countrywide on two mortgages. Countrywide was one of the biggest subprime providers.


Barney Frank and Christopher Dodd received thousands of dollars in contributions from Fannie Mae and Freddie Mac over the years. Dodd has received $133,900 since 1989; Frank received $40,100. (While in the Senate, Barack Obama received $105,849).


As long ago as 2003, President Bush was trying to get the House and Senate to carefully monitor the actions of Fannie Mae and Freddie Mac. His efforts were rejected by Democrats.


Obama associates headed Fannie Mae and Freddie Mac during the years that the crisis was getting out of control. Obama friend Franklin Raines ran Fannie Mae and collected $50 million from it. Obama friend Jamie Gorelick worked for Fannie Mae and earned $26 million; Jim Johnson, formerly Obama’s vice president search committee chairman, hauled in millions from his work with Fannie Mae as CEO.


ACORN, the socialist group that routinely engages in voter fraud, was involved in pushing for risky loans to people with bad credit histories or little money for down payments. ACORN intimidated banks in Chicago and elsewhere to give risky loans! Obama actually trained ACORN workers when he was a community organizer in Chicago! ACORN used provisions of the Community Reinvestment Act to delay or halt efforts of banks to merge or expand until they had lowered their credit standards!
The financial mess we face now was created by Democrats and friends of Barack Obama over the past two decades. Yet, President Obama now pretends that his economic stimulus package will solve our crisis. What we’re now facing is four years of Obamunism " socialism with an Obama smirk.

The Congressional Budget Office (CBO) analysis of his stimulus package says that his nearly trillion dollar spending bill will do little or nothing to create or maintain jobs for the American worker! It will, however, enrich groups like ACORN and serve as a piggy bank for state and local communities to use for whatever projects they want. The money isn’t going for jobs creation but for government projects " including paying for sod for the Washington Mall.

I am, frankly, quite confused by this Krugman piece. This is something I have not seen before. Should anyone understand this, I would appreciate having your explanation.


Paul Krugman: Revenge of the glut
Tuesday, March 3
( updated 3:00 am)
By Paul Krugman

Remember the good old days, when we used to talk about the "subprime crisis" -- and some even thought that this crisis could be "contained"? Oh, the nostalgia!
Today we know that subprime lending was only a small fraction of the problem. Even bad home loans in general were only part of what went wrong. We're living in a world of troubled borrowers, ranging from shopping mall developers to European "miracle" economies. And new kinds of debt trouble just keep emerging.

How did this global debt crisis happen? Why is it so widespread? The answer, I'd suggest, can be found in a speech Ben Bernanke, the Federal Reserve chairman, gave four years ago. At the time, Bernanke was trying to be reassuring. But what he said then nonetheless foreshadowed the bust to come.

The speech, titled "The Global Saving Glut and the U.S. Current Account Deficit," offered a novel explanation for the rapid rise of the U.S. trade deficit in the early 21st century. The causes, argued Bernanke, lay not in America but in Asia.

In the mid-1990s, he pointed out, the emerging economies of Asia had been major importers of capital, borrowing abroad to finance their development. But after the Asian financial crisis of 1997-98 (which seemed like a big deal at the time but looks trivial compared with what's happening now), these countries began protecting themselves by amassing huge war chests of foreign assets, in effect exporting capital to the rest of the world.

The result was a world awash in cheap money, looking for somewhere to go.

Most of that money went to the United States -- hence our giant trade deficit, because a trade deficit is the flip side of capital inflows. But as Bernanke correctly pointed out, money surged into other nations as well. In particular, a number of smaller European economies experienced capital inflows that, while much smaller in dollar terms than the flows into the United States, were much larger compared with the size of their economies.

Still, much of the global saving glut did end up in America. Why?

Bernanke cited "the depth and sophistication of the country's financial markets (which, among other things, have allowed households easy access to housing wealth)." Depth, yes. But sophistication? Well, you could say that American bankers, empowered by a quarter-century of deregulatory zeal, led the world in finding sophisticated ways to enrich themselves by hiding risk and fooling investors.

And wide-open, loosely regulated financial systems characterized many of the other recipients of large capital inflows. This may explain the almost eerie correlation between conservative praise two or three years ago and economic disaster today. "Reforms have made Iceland a Nordic tiger," declared a paper from the Cato Institute. "How Ireland Became the Celtic Tiger" was the title of one Heritage Foundation article; "The Estonian Economic Miracle" was the title of another. All three nations are in deep crisis now.

For a while, the inrush of capital created the illusion of wealth in these countries, just as it did for American homeowners: Asset prices were rising, currencies were strong, and everything looked fine. But bubbles always burst sooner or later, and yesterday's miracle economies have become today's basket cases, nations whose assets have evaporated but whose debts remain all too real. And these debts are an especially heavy burden because most of the loans were denominated in other countries' currencies.

Nor is the damage confined to the original borrowers. In America, the housing bubble mainly took place along the coasts, but when the bubble burst, demand for manufactured goods, especially cars, collapsed -- and that has taken a terrible toll on the industrial heartland. Similarly, Europe's bubbles were mainly around the continent's periphery, yet industrial production in Germany -- which never had a financial bubble but is Europe's manufacturing core -- is falling rapidly, thanks to a plunge in exports.

If you want to know where the global crisis came from, then, think of it this way: We're looking at the revenge of the glut.

And the saving glut is still out there. In fact, it's bigger than ever, now that suddenly impoverished consumers have rediscovered the virtues of thrift and the worldwide property boom, which provided an outlet for all those excess savings, has turned into a worldwide bust.

One way to look at the international situation right now is that we're suffering from a global paradox of thrift: Around the world, desired saving exceeds the amount businesses are willing to invest. And the result is a global slump that leaves everyone worse off.

So that's how we got into this mess. And we're still looking for the way out.

Paul Krugman is a columnist for The New York Times.

What he is saying is that almost all developed and developing countries "invested" their money in the US, because they saw us as the economic giant of the world that creates wealth. That impression of "easy" wealth was bogus from the get-go, because we all know now that it was based on the wrong formulas creating that wealth. People saw their home values increase preceptiously even though their salaries remained stagnant, so they went to the bank and borrowed money on their "equity" which really didn't exist. We were a country of consumers that wanted everything today; tomorrow will take care of itself. When any economy is based as the US is on 70% of consumption, we were creating an atom bomb of extraordinary explosion. Everybody went into debt to buy, and savings rates even fell into negative territory.

It was time for the explosion, and it reverberated all around the world.

All those countries who invested in the US felt the explosion too!

And the BEST part, I'm told, is that the way to solve our borrowing and spending problem is with MORE borrowing and spending.

Good thing we're learning from the mistakes you outlined.

Yeah, our government is really creating a huge handicap for the future of our economy by the way they are spending money; some of it to support foreign countries like AIG. Can't do much when we have dummies in Washington DC who has control of the purse strings.

So who might be those dummies in D.C. be right now?

All of them.

Is it true? Is Cicerone Imposter coming to his senses?

O, I know--He spoke to his financial advisor today and his financial advisor told him that his portfolio is down by 50% and that it looks like it may be wiped out soon.

He and his missus had better look at the old films of the depression in the thirties. There they can learn how to sell Apples on the street corner!

Your posts are humorous, genoves. I think though that ci took his money out of the market a long time ago. I wish I had taken his advice many moons ago, but I waited, but at least I got out a while back. That happened after my advisor told me that Obama studied Lincoln and was Lincolnesque, and at that point I decided I had to be smarter than my advisor, who kept saying the "Smart Money was riding it out.!!!!!!!!

Advocate's replicated the Krugman article. The nexus is at the end of the article.

Note:

And the saving glut is still out there. In fact, it’s bigger than ever, now that suddenly impoverished consumers have rediscovered the virtues of thrift and the worldwide property boom, which provided an outlet for all those excess savings, has turned into a worldwide bust.

One way to look at the international situation right now is that we’re suffering from a global paradox of thrift: around the world, desired saving exceeds the amount businesses are willing to invest. And the result is a global slump that leaves everyone worse off.

So that’s how we got into this mess. And we’re still looking for the way out.

end of quote--


A PARADOX OF THRIFT--GOT THAT!!!

Now, who, just who do you think is being thrifty?

A. People on welfare

B. People who make less than $40,ooo a year.

C. People who make between $40,000 a year and 250,00o a year.

D. People who make over $250,000 a year.


The correct answers are A-none at all; B-very slightly; C- perhaps 5% more a year; D- Thousands more a year.

****************************************************************

This happened before--A crisis of confidence in which the people who have money and could spend it, could open more businesses, hire more people, invest in the stock market are REFUSING TOPUT THIER MONEY AT RISK.

Note: from "The Forgotten Man" by Amity Shlaes--PP> 8-9

"Businesses decided to wait Roosevelt out, HOLD ON TO THEIR CASH, AND INVEST IN FUTURE YEARS...Rooosevelt's committment to experimentation itself created FEAR, and business was terrified of the president."

end of quote

That is what Krugman means---A PARADOX OF THRIFT.

Why should the people who have money( remember 80% of the entreprenuers in the USA are small business owners--uncer fifty employees) put their money at risk when they see that any rise in income will be so heavily taxed?

Obama, the Messiah, can feed the multitude with Manna from heaven after most of the businesses shut down!!

Over two million job losses in four months is a crisis; some people on these economics threads do not seem to understand that our government must do "something" to alleviate this trend in job loss. It's not an option; without government intervention, our economy will be destroyed further to the point of no return.

The primary job for our government is to reverse this trend in job losses; that means investing in our infrastructure to get people back to work. A healthy infrastructure is necessary for a healthy economy to grow.

I'm also an advocate for universal health care, but the government should implement these programs in steps as our economy begins to show some improvement. Their problem is trying to do too much too quickly, and increasing the government debt while tax revenues continues to drop. It's not as if our country cannot afford universal health care, because our total cost for medical care is the highest in the world. It's a matter of implementing more efficiencies into the current system such as using the computer and the internet.

Our government's bailout of mismanaged companies is a big mistake; it'll take more infusion of taxpayer money to save them than to start up new companies.

Today's uptick in the market means nothing; more bad news for the next eight to twelve months will ensure that. Gold prices close to $1,000/oz is crazy; money is king today, not any metal or gem. History has shown that the market has always outperformed gold. Only long-term strategy works with diversification.