112
   

Where is the US economy headed?

 
 
maporsche
 
  1  
Reply Wed 14 Apr, 2010 05:13 pm
@Cycloptichorn,
Don't you think part of that was made possible by Fannie/Freddie having a policy to back most of these mortgages up?

I woudl agree with you that it wasn't the cause of the problem; but it has to have been part of the problem, at least.

I guess I see them as being an enabler of the people who caused the real problem.
spendius
 
  1  
Reply Wed 14 Apr, 2010 05:25 pm
It is obvious that my recommendation has not been followed up.
0 Replies
 
Cycloptichorn
 
  1  
Reply Wed 14 Apr, 2010 05:30 pm
@maporsche,
maporsche wrote:

Don't you think part of that was made possible by Fannie/Freddie having a policy to back most of these mortgages up?

I woudl agree with you that it wasn't the cause of the problem; but it has to have been part of the problem, at least.

I guess I see them as being an enabler of the people who caused the real problem.


I dunno - a huge amount of the houses underwater had nothing to do with F/F at all, as the amount of their balance was higher then the limits F/F had.

It just doesn't make sense. No matter what F/F did, at the end of the day it was bad mortgages written by bad banks.

Cycloptichorn
okie
 
  0  
Reply Wed 14 Apr, 2010 09:23 pm
@Cycloptichorn,
Cycloptichorn wrote:

You do realize that this had nothing to do with the financial crash - at all, right? Cycloptichorn

No I do not because it is an absolute lie. Only Democrats and liberals still live in denial that it did not have any impact on it. Artificial intrusion into the market always, always, always, always, got that cyclops, always has unintended consequences.
0 Replies
 
okie
 
  0  
Reply Wed 14 Apr, 2010 09:27 pm
@Cycloptichorn,
Cycloptichorn wrote:


It just doesn't make sense. No matter what F/F did, at the end of the day it was bad mortgages written by bad banks.

Cycloptichorn

And how many times has this been pointed out to the people living in denial, they wrote bad mortgages because they could sell them to Fannie and Freddie and make money, plain and simple. Or they were writing bad mortgages because other banks were doing the above, and because the market became skewed because of skewed prices because of bad mortgages, head of the pack being Fannie and Freddie. It was a house of cards built by Fannie and Freddie. And the crooks still walk free.
okie
 
  -1  
Reply Wed 14 Apr, 2010 09:37 pm
@okie,
Here is a statistic for cyclops to chew on. Maybe if he would follow up on it, it might provide a clue to what has happened? He will probably still claim that entities that control 70% of the home loans have had absolutely no impact on bad loans!!! Laughing Laughing

"Last year, they backed about 70 percent of all home loans, according to Inside Mortgage Finance, a trade publication."

http://www.cbsnews.com/stories/2010/03/23/business/main6325088.shtml
And to this day, the Democrat congress and Obama has done absolutely nothing.
old europe
 
  2  
Reply Wed 14 Apr, 2010 10:04 pm
@okie,
Full paragraph:

Quote:
Fannie and Freddie were effectively nationalized by regulators in September 2008, and their role in the marketplace has only grown since. Last year, they backed about 70 percent of all home loans, according to Inside Mortgage Finance, a trade publication. The duo also manage the Obama administration's $75 billion loan modification program.


In other words, that 70 percent figure is a consequence rather than the cause of the meltdown in the housing market.
H2O MAN
 
  -2  
Reply Thu 15 Apr, 2010 07:38 am


New Jobless Claims Rise for Second-Straight Week, Reach Highest Level Since February.
Jobless Claims Rise to 484,000 First-Time Claims.


Way to go PrezBO Rolling Eyes
H2O MAN
 
  -2  
Reply Thu 15 Apr, 2010 08:10 am
Hope and Change:

Back in early January (2009), when Barack Obama was still President-elect, two of his chief economic advisers " leading proponents of a stimulus bill " predicted that the passage of a large economic-aid package would boost the economy and keep the unemployment rate below 8%.


0 Replies
 
H2O MAN
 
  -3  
Reply Thu 15 Apr, 2010 09:31 am


The current graduated income tax system needs to be replaced in order to turn the US economy around.
Cycloptichorn
 
  3  
Reply Thu 15 Apr, 2010 10:16 am
@okie,
okie wrote:

Cycloptichorn wrote:


It just doesn't make sense. No matter what F/F did, at the end of the day it was bad mortgages written by bad banks.

Cycloptichorn

And how many times has this been pointed out to the people living in denial, they wrote bad mortgages because they could sell them to Fannie and Freddie and make money, plain and simple. Or they were writing bad mortgages because other banks were doing the above, and because the market became skewed because of skewed prices because of bad mortgages, head of the pack being Fannie and Freddie. It was a house of cards built by Fannie and Freddie. And the crooks still walk free.


If they sold those bad mortgages to F/F, why did the banks all face collapse when the market collapsed? The obvious answer is that your theory does not accurately represent what happened; the banks and investment houses involved made gigantic bets on mortgages, ones that had nothing to do with Fannie or Freddie at all. It's just a government boogeyman that you can point to so as to avoid blaming the private sector, who created this problem, participated in it, and drove the economy over a cliff in the name of ever-increasing profits.

Nobody forced these banks to make high-risk, expensive home loans. As has been pointed out to you before, CRE loans and low-cost housing are not the cause of our collapse. In fact CRE loans and low-cost home loans were far less likely to be on adjustable-rate mortgages or other crap mortgages. You've been shown the data on this but stubbornly refuse to blame those who are actually responsible, instead preferring to blame the government, because you are a one-trick pony, Okie.

The truth is that F/F suffered from basically the same problem that the banks did - they had too many mortgages on the books and not enough diversification. This works great while the market is on the rise or at least stable - all of Wall Street made tons of money on mortgages during that time period, from 2000-2007 or so. Companies tried to mask their risk by purchasing Credit Default Swaps from other companies, most notably AIG. Fannie and Freddie couldn't do that, so when thing went downhill they were first. The rest of the house of cards just fell down later.

Let me ask you: How exactly did Fannie and Freddie cause the value of homes to rise so precipitously? How did they cause the banks to write hundreds of thousands of bad loans on houses whose mortgages were too expensive to fall under Fannie guidelines? You say that gov't intervention leads to higher prices, but you don't ever explain exactly how it did.

You have a lot of allegations - just like about Obama - but you have no real evidence, because you haven't done any real research into this issue. Just repeated talking points you've read on right-wing websites.

Cycloptichorn
Cycloptichorn
 
  3  
Reply Thu 15 Apr, 2010 10:16 am
@old europe,
old europe wrote:

Full paragraph:

Quote:
Fannie and Freddie were effectively nationalized by regulators in September 2008, and their role in the marketplace has only grown since. Last year, they backed about 70 percent of all home loans, according to Inside Mortgage Finance, a trade publication. The duo also manage the Obama administration's $75 billion loan modification program.


In other words, that 70 percent figure is a consequence rather than the cause of the meltdown in the housing market.


Okie doesn't understand cause vs. effect.

Cycloptichorn
parados
 
  3  
Reply Thu 15 Apr, 2010 10:40 am
@Cycloptichorn,
Okie doesn't seem to understand that 2009 comes after 2008 let alone loans in 2009 couldn't cause what happened prior to 2008.
0 Replies
 
parados
 
  1  
Reply Thu 15 Apr, 2010 10:40 am
@H2O MAN,
H2O MAN wrote:



The current graduated income tax system needs to be replaced in order to turn the US economy around.

I guess your evidence is how the economy has NEVER worked when the US has had a graduated income tax, right?
H2O MAN
 
  -3  
Reply Thu 15 Apr, 2010 11:27 am
@parados,
I guess you're unaware that this country worked much more efficiently before the graduated income tax ever existed.
ican711nm
 
  -2  
Reply Thu 15 Apr, 2010 12:04 pm
Quote:

http://www.hillsdale.edu/news/imprimis/archive/issue.asp?year=2009&month=09
September 2009
Walter Williams
Professor of Economics, George Mason University
WALTER WILLIAMS is the John M. Olin distinguished professor of economics at George Mason University. He holds a B.A. from California State University at Los Angeles and an M.A. and a Ph.D. in economics from UCLA. He has received numerous fellowships and awards, including a Hoover Institution National Fellowship and the Valley Forge Freedoms Foundation George Washington Medal of Honor. A nationally syndicated columnist, his articles and essays have appeared in publications such as Economic Inquiry, American Economic Review, National Review, Reader’s Digest, Policy Review and Newsweek. Dr. Williams has authored six books, including The State Against Blacks (later made into a PBS documentary entitled Good Intentions) and Liberty Versus the Tyranny of Socialism.
The following is adapted from a lecture delivered on August 2, 2009, during a Hillsdale College cruise from Venice to Athens aboard the Crystal Serenity.

Future Prospects for Economic Liberty

One of the justifications for the massive growth of government in the 20th and now the 21st centuries, far beyond the narrow limits envisioned by the founders of our nation, is the need to promote what the government defines as fair and just. But this begs the prior and more fundamental question: What is the legitimate role of government in a free society? To understand how America’s Founders answered this question, we have only to look at the rule book they gave us"the Constitution. Most of what they understood as legitimate powers of the federal government are enumerated in Article 1, Section 8. Congress is authorized there to do 21 things, and as much as three-quarters of what Congress taxes us and spends our money for today is nowhere to be found on that list. To cite just a few examples, there is no constitutional authority for Congress to subsidize farms, bail out banks, or manage car companies. In this sense, I think we can safely say that America has departed from the constitutional principle of limited government that made us great and prosperous.

On the other side of the coin from limited government is individual liberty. The Founders understood private property as the bulwark of freedom for all Americans, rich and poor alike. But following a series of successful attacks on private property and free enterprise"beginning in the early 20th century and picking up steam during the New Deal, the Great Society, and then again recently"the government designed by our Founders and outlined in the Constitution has all but disappeared. Thomas Jefferson anticipated this when he said, “The natural progress of things is for liberty to yield and government to gain ground.”

To see the extent to which liberty is yielding and government is gaining ground, one need simply look at what has happened to taxes and spending. A tax, of course, represents a government claim on private property. Every tax confiscates private property that could otherwise be freely spent or freely invested. At the same time, every additional dollar of government spending demands another tax dollar, whether now or in the future. With this in mind, consider that the average American now works from January 1 until May 5 to pay the federal, state, and local taxes required for current government spending levels. Thus the fruits of more than one third of our labor are used in ways decided upon by others. The Founders favored the free market because it maximizes the freedom of all citizens and teaches respect for the rights of others. Expansive government, by contrast, contracts individual freedom and teaches disrespect for the rights of others. Thus clearly we are on what Friedrich Hayek called the road to serfdom, or what I prefer to call the road to tyranny.

As I said, the Constitution restricts the federal government to certain functions. What are they? The most fundamental one is the protection of citizens’ lives. Therefore, the first legitimate function of the government is to provide for national defense against foreign enemies and for protection against criminals here at home. These and other legitimate public goods (as we economists call them) obviously require that each citizen pay his share in taxes. But along with people’s lives, it is a vital function of the government to protect people’s liberty as well"including economic liberty or property rights. So while I am not saying that we should pay no taxes, I am saying that they should be much lower"as they would be, if the government abided by the Constitution and allowed the free market system to flourish.

And it is important to remember what makes the free market work. Is it a desire we all have to do good for others? Do people in New York enjoy fresh steak for dinner at their favorite restaurant because cattle ranchers in Texas love to make New Yorkers happy? Of course not. It is in the interest of Texas ranchers to provide the steak. They benefit themselves and their families by doing so. This is the kind of enlightened self-interest discussed by Adam Smith in his Wealth of Nations, in which he argues that the social good is best served by pursuing private interests. The same principle explains why I take better care of my property than the government would. It explains as well why a large transfer or estate tax weakens the incentive a property owner has to care for his property and pass it along to his children in the best possible condition. It explains, in general, why free enterprise leads to prosperity.

Ironically, the free market system is threatened today not because of its failure, but because of its success. Capitalism has done so well in eliminating the traditional problems of mankind"disease, pestilence, gross hunger, and poverty"that other human problems seem to us unacceptable. So in the name of equalizing income, achieving sex and race balance, guaranteeing housing and medical care, protecting consumers, and conserving energy"just to name a few prominent causes of liberal government these days"individual liberty has become of secondary or tertiary concern.

Imagine what would happen if I wrote a letter to Congress and informed its members that, because I am fully capable of taking care of my own retirement needs, I respectfully request that they stop taking money out of my paycheck for Social Security. Such a letter would be greeted with contempt. But is there any difference between being forced to save for retirement and being forced to save for housing or for my child’s education or for any other perceived good? None whatsoever. Yet for government to force us to do such things is to treat us as children rather than as rational citizens in possession of equal and inalienable natural rights.

We do not yet live under a tyranny, of course. Nor is one imminent. But a series of steps, whether small or large, tending toward a certain destination will eventually take us there. The philosopher David Hume observed that liberty is seldom lost all at once, but rather bit by bit. Or as my late colleague Leonard Read used to put it, taking liberty from Americans is like cooking a frog: It can’t be done quickly because the frog will feel the heat and escape. But put a frog in cold water and heat it slowly, and by the time the frog grasps the danger, it’s too late.

Again, the primary justification for increasing the size and scale of government at the expense of liberty is that government can achieve what it perceives as good. But government has no resources of its own with which to do so. Congressmen and senators don’t reach into their own pockets to pay for a government program. They reach into yours and mine. Absent Santa Claus or the tooth fairy, the only way government can give one American a dollar in the name of this or that good thing is by taking it from some other American by force. If a private person did the same thing, no matter how admirable the motive, he would be arrested and tried as a thief. That is why I like to call what Congress does, more often than not, “legal theft.” The question we have to ask ourselves is whether there is a moral basis for forcibly taking the rightful property of one person and giving it to another to whom it does not belong. I cannot think of one. Charity is noble and good when it involves reaching into your own pocket. But reaching into someone else’s pocket is wrong.

In a free society, we want the great majority, if not all, of our relationships to be voluntary. I like to explain a voluntary exchange as a kind of non-amorous seduction. Both parties to the exchange feel good in an economic sense. Economists call this a positive sum gain. For example, if I offer my local grocer three dollars for a gallon of milk, implicit in the offer is that we will both be winners. The grocer is better off because he values the three dollars more than the milk, and I am better off because I value the milk more than the three dollars. That is a positive sum gain. Involuntary exchange, by contrast, means that one party gains and the other loses. If I use a gun to steal a gallon of milk, I win and the grocer loses. Economists call this a zero sum gain. And we are like that grocer in most of what Congress does these days.

Some will respond that big government is what the majority of voters want, and that in a democracy the majority rules. But America’s Founders didn’t found a democracy, they founded a republic. The authors of The Federalist Papers, arguing for ratification of the Constitution, showed how pure democracy has led historically to tyranny. Instead, they set up a limited government, with checks and balances, to help ensure that the reason of the people, rather than the selfish passions of a majority, would hold sway.

Unaware of the distinction between a democracy and a republic, many today believe that a majority consensus establishes morality. Nothing could be further from the truth.

Another common argument is that we need big government to protect the little guy from corporate giants. But a corporation can’t pick a consumer’s pocket. The consumer must voluntarily pay money for the corporation’s product. It is big government, not corporations, that have the power to take our money by force. I should also point out that private business can force us to pay them by employing government. To see this happening, just look at the automobile industry or at most corporate farmers today. If General Motors or a corporate farm is having trouble, they can ask me for help, and I may or may not choose to help. But if they ask government to help and an IRS agent shows up at my door demanding money, I have no choice but to hand it over. It is big government that the little guy needs protection against, not big business. And the only protection available is in the Constitution and the ballot box.

Speaking of the ballot box, we can blame politicians to some extent for the trampling of our liberty. But the bulk of the blame lies with us voters, because politicians are often doing what we elect them to do. The sad truth is that we elect them for the specific purpose of taking the property of other Americans and giving it to us. Many manufacturers think that the government owes them a protective tariff to keep out foreign goods, resulting in artificially higher prices for consumers. Many farmers think the government owes them a crop subsidy, which raises the price of food. Organized labor thinks government should protect their jobs from non-union competition. And so on. We could even consider many college professors, who love to secure government grants to study poverty and then meet at hotels in Miami during the winter to talk about poor people. All of these"and hundreds of other similar demands on government that I could cite"represent involuntary exchanges and diminish our freedom.

This reminds me of a lunch I had a number of years ago with my friend Jesse Helms, the late Senator from North Carolina. He knew that I was critical of farm subsidies, and he said he agreed with me 100 percent. But he wondered how a Senator from North Carolina could possibly vote against them. If he did so, his fellow North Carolinians would dump him and elect somebody worse in his place. And I remember wondering at the time if it is reasonable to ask a politician to commit political suicide for the sake of principle. The fact is that it’s unreasonable of us to expect even principled politicians to vote against things like crop subsidies and stand up for the Constitution. This presents us with a challenge. It’s up to us to ensure that it’s in our representatives’ interest to stand up for constitutional government.

Americans have never done the wrong thing for a long time, but if we’re not going to go down the tubes as a great nation, we must get about changing things while we still have the liberty to do so.
0 Replies
 
parados
 
  4  
Reply Thu 15 Apr, 2010 12:08 pm
@H2O MAN,
H2O MAN wrote:

I guess you're unaware that this country worked much more efficiently before the graduated income tax ever existed.

ROFLMAO..

Which part of the 18 and 19th centuries were more efficient than any time in the 20th century?
H2O MAN
 
  -3  
Reply Thu 15 Apr, 2010 12:11 pm
@parados,
All of it.
ican711nm
 
  1  
Reply Thu 15 Apr, 2010 02:13 pm
Quote:

http://www.ncpa.org/sub/dpd/index.php?Article_ID=19212&utm_source=newsletter&utm_medium=email&utm_campaign=DPD

*READ THE BILL: OBAMACARE SOCKS MIDDLE CLASS WITH $3.9 BILLION TAX INCREASE

There is one more small detail they forgot to tell you about in the health care bill, says the Washington Examiner: Taxpayers earning less than $200,000 a year will pay roughly $3.9 billion more in taxes -- in 2019 alone -- because of health care reform, according to the Joint Committee on Taxation, Congress' official scorekeeper for legislation.
Consider:
• The new law raises $15.2 billion over 10 years by limiting the medical expense deduction, a provision widely used by taxpayers who either have a serious illness or are older.
• Taxpayers can currently deduct medical expenses in excess of 7.5 percent of their adjusted gross income (AGI).
• Starting in 2013, most taxpayers will only be allowed to deducted expenses greater than 10 percent of AGI; older taxpayers are hit by this threshold increase in 2017.

This is worse than a tax on the middle class, says the Examiner. It's a tax on the middle class who are seriously ill. And what's the over/under on how many times Obama is going to break that "no taxes on anyone earning under $250,000 a year" pledge, anyway?

Source: Mark Hemingway, "Read the bill: ObamaCare socks middle class with $3.9 billion tax increase," Washington Examiner, April 12, 2010.

0 Replies
 
ican711nm
 
  1  
Reply Thu 15 Apr, 2010 02:21 pm
At the end of the day, it was the Fannie & Freddie backed and encouraged bad mortgages written by bad banks that were the catalyst for the beginning of the current depression. The current depression was expanded by the Obamademocrats because they expanded and did not reduce the Fannie & Freddie backed and encouraged bad mortgages written by bad banks.

 

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