Where is the US economy headed?

Which means if okie is blaming the Dems he was right.

Well, the blame certainly goes all around - though it is centered squarely on the Fiscal Conservative, which does include some democrats.

More than anyone else, it was the greed of investment companies and fund managers which led to this crisis - when something is too good to be true, it usually is!

Cycloptichorn

It had nothing to do with the greed of those who borrowed off them I suppose?

What do you mean 'borrowed off' of them?

If you are referring to investors, then yes - many of them were greedy as well. But they at least have the solid defense of claiming that they had no clue what was going on in these markets. The whole thing was pretty murky if you hadn't done a lot of research, and the 'closed' nature of the CDS market meant that nobody who didn't do a lot of business with CDSwaps knew just how many of them there were out there.

Cycloptichorn

I was thinking of all the new houses and extensions and cars built. They are still here whatever the accounts look like. You can't extend credit to people who don't want it no matter how murky your procedures.

Good point, spendius. People that want stuff they can't pay for, that is true greed.

Yes, I agree with both of you here. The proliferation of HELOC's and so-called 'liar's loans,' where banks gave out money to practically anyone who asked for it, definitely contributed to the problem.

For an overview of how this can negatively affect the housing market directly, read here:

www.irvinehousingblog.com

Cycloptichorn

Please answer my questions, okie. You made a claim about me that you can't support with evidence, so you go into tangents. Those are juvenile tacks that you have never grown out of.

I can't agree with that okie. It's bleedin' obvious.

But for those kinds of loans to be profitable, you needed somebody to enable the profitability, to be willing to buy them. That is where Fannie Mae and Freddie Mac comes in, they were the enablers, cyclops. Without them, banks would have recognized the inherent risks of bad loans and sound companies would not have participated in such practices, and the ones that would have engaged in them would have gone broke, thus providing a good example for the remaining banks to abide by.

But since there were enablers of bad loans, the bubble grew to the point where it was when it was inevidibly going to bust. As I've used the example before, try creating a Fannie and Freddie for loans on used cars for people with marginal and lousy credit, and see where that would end up, cyclops? My bets would be in a giant wreckage at the end of the process. It would be up to conservatives and mostly Republicans to also clean up the mess at the end of it.

It was the banks that lied about the mortgages and had them securitized thus identifying them as secure i.e. they were superficially safe and paid low premiums to AIG.

talk, what if the banks made the loans according to government mandate? For example, I understand that redlining of neighborhoods with marginal real estate and inherently marginal loans was made illegal, so that loans would have to be made there.

What has that got to do with making loans to unqualified buyers?

It was GWB who promoted Home Ownership to boost the economy.

Yeah, I even remember when Bush encouraged spending when most consumers were already deep in debt.

I remember seeing a cartoon in Punch a very long time ago.

It was in an office with a sign ACME LOANS. $10, 000 on your signature. A tramp was sat in the applicant's chair and a typical banker of the period positively oozed integrity. The tramp says "where do I sign?"

I have a collection of Punch if anybody wishes to save themselves spending three years on an English major so they can get some $$$s made. A big box full. £200 the lot plus shipping and it's heavy.

But Bush wanted to reform how Fannie and Freddie operated, talk. And the Democrats like Barney Frank blocked it. That is just fact and part of the record, talk.

http://biggovernment.com/jdunetz/2010/08/11/blame-barney-frank-for-the-recession-not-george-bush/

"The 10/8/03 Washington Post reported that Frank opposed giving the Bush administration the approval rights over banking business activities that “could pose risk to the taxpayers.” He worried the Treasury Department “would sacrifice activities that are good for consumers in the name of lowering the companies’ market risks.”

In the video below Frank sits in a 9/10/03 House Financial Services Committee hearing and says Fannie and Freddie are sound, and there is no housing disaster coming."



Watch the whole thing, cyclops and talk, especially the last sentence or so. If the Republicans had known they had the votes, they would have had it voted on.

okie, That still doesn't excuse any financial institution that provided loans to unqualified buyers. That Frank told congress that "Fannie and Freddie is sound" doesn't mean much when they continued to lend to unqualified buyers. Did Frank make it illegal not to?

Fannie and Freddie were run as private corporations. Even the head of one of them was/is a Board member of Goldman Sachs. Hank Paulson fired them.

No, wrong again. They are what are known as GSEs, "Government Sponsored Enterprises," and when they are government sponsored, they do not operate quite like a private corporation. Perhaps in some ways they are, but everyone knows they are backed by the government, which changes everything.

And if people are serving as board members of both them and private corporations, it seems that it creates a situation ripe for corruption to take place.