Jobs Figure Devastating for Obama

For the myopic few that questioned my comment on deregulation causing this mess, here is a primer (yes it is a cut and paste but not worth my time to do any more) As the primer comes to a close, it starts to address the broader credit markets, and that, friends, is why jobs are so scarce. People are both afraid or forbidden from borrowing or are hesitant to lend. Now you have to be a bit nimble intellectually to follow. If that leaves you out, I am sorry:

At least five distinct regulatory failures led to the current crisis.

Regulatory Failure Number One: Failure to Manage the U.S. Trade Deficit. The housing bubble (as well as the surge in leveraged buyouts of publicly traded companies ("private equity")) was fueled by cheap credit -- low interest rates. One reason for the cheap credit was an influx of capital into the United States from China. China's capital surplus was the mirror image of the U.S. trade deficit -- U.S. corporations were sending lots of dollars to China in exchange for the cheap stuff sold to U.S. consumers.

Regulatory Failure Number Two: Failure to Intervene to Pop the Housing Bubble. Along with an influx of capital, Federal Reserve policy kept interest rates very low. There were good reasons for the Fed Policy, but that did not mean the Fed was helpless to prevent the housing bubble. As economists Dean Baker and Mark Weisbrot of the Center for Economic and Policy Research insisted at the time, Federal Reserve Chair Alan Greenspan simply by identifying the bubble -- and adjusting public perception of the future of the housing market -- could have prevented or at least contained the bubble. He declined, and even denied the existence of a bubble.

Regulatory Failure Number Three: Financial Deregulation and Unchecked Financial "Innovation." A key reason that mortgages were made available so widely and with such little review of recipients' qualifications was a shift in which institutions hold the mortgages. Traditionally, banks made mortgages and held them. In the new era, banks and non-bank mortgage lenders made loans, but then sold the loans to others. Investment banks packaged lots of mortgage loans into "Collateralized Debt Obligations" (CDOs) and then sold them on Wall Street, with a promise of a steady stream of revenue from interest payments. These operations were pretty much unregulated. Despite the supposed sophistication of the investors involved, no one took account of how shoddy the loans were or -- more fundamentally -- the certainty that huge numbers would go bad if and when the housing bubble popped.

Regulatory Failure Number Four: Private Regulatory Failure. It was the job of ratings agencies (like Standard and Poor's, and Moody's) to assess the CDOs and give investors guidance on how risky they were. They failed totally, likely in part because they wanted to maintain good relations with the investment banks issuing the CDOs.

Regulatory Failure Number Five: No Controls Over Predatory Lenders. The toxic stew of financial deregulation and the housing bubble created the circumstances in which aggressive lenders were nearly certain to abuse vulnerable borrowers. The terms of your loan don't matter, they effectively purred to borrowers, so long as the value of your house is going up. Lenders duped borrowers into conditions they could not possibly satisfy, making the current rash of foreclosures on subprime loans inevitable. Effective regulation of lending practices could have prevented the abusive loans, but none was to be found.

Unfortunately, the consequences of the mortgage meltdown go far beyond the foreclosure epidemic, as horrible a toll as that is taking. The entanglement of the financial sector with mortgage instruments, and the ripple effects of the housing bubble, has made lenders uncertain of who even among large corporations and financial institutions is credit worthy. The resulting credit crunch endangers the functioning of the global economy. Financial markets are guessing wildly about the prospects of banks, insurers and other financial corporations, and the plunging value of stocks poses immediate dangers to the real global economy.

 

Said another way: Obama is refusing to budge on taxes. This is becoming increasingly obvious to everyone.

 

That's cool, I am not asking for the government to pay for anything of mine. I can take care of myself. I don't want them to pay my rent, but maybe fight to make rent lower. I don't want them to pay my medical bills but it sure would be nice for them to fight to ensure prescription drugs aren't 100% more expensive here than in Mexico. I don't want them to pay for my food, just fight to ensure food and other commodities aren't ridiculously expensive. I have never asked for anything for free, I have never depended on government to do anything for me. What I think government's role should be, is make sure it's people can find work, not get exploited, and not get gouged.

It's also not Government's role to decide who can and cannot be married. It's also not government's role to decide what chemicals I can and cannot put in my body. It's not the government's place to tell any woman what she can or cannot do to her womb.

Maybe you aren't a social conservative, but I have a huge problem with the right saying "limited government, limited government" but at the same time want government to control how you live your life, or what you do behind closed doors. (as long as you aren't infringing upon the rights of others)

 

I fail to see how Congress can possibly force or push people to buy homes. It's the "Amerian Dream. People already want to own a home. When a guy is approached by the banks and encouraged to take out a loan, his first thought is "Maybe I can afford it. These guys certainly don't want to lend money to someone they don't think can pay it." It leads to people with 500 credit scores and no money down taking out mortgages because of policies passed by Reagan's administration. It was continued by every President since. When people began to default on their loans, the money came due. It snowballed and almost carried the world's economy down with it.

Regulations prevented people from getting mortgages. De-regulation allowed them to buy homes they couldn't afford. If you can't grasp that simple fact, there's simply no hope for you.

The Fed kept interest rates low because the rich people and businesses wanted it low and to stifle inflation. These same people who were behind lending out money to people they KNEW couldn't afford it, but didn't care because they were making so much money. How does our President react? He pushes for and signs legislation reducing taxes on dividends so these *******s can make even more money.

 

Good post Halloween Run. I agree with a good deal of it, and you have some interesting points I haven't considered. Specifically the part of point 1 about China's trade surplus funds funding the housing bubble.

I would add that in addition to deregulation that some regulation also contributed greatly. Specifically the regulations that pushed (forced) mortgage companies to make home loans that were marginal. And then the path was greased by Freddie and Fannie.

Points 3 and 4 working together led to criminal dishonestly in the 'financial derivitives' market. All together it became a house of cards that was destined to come down. Some of these people were just plain thieves.

Finally, this failure was a true bi-partisan effort. ENRON and others crazy finance schemes started during Clinton - and were praised for thier innovation. We went into two wars (now 3 - the Libia thing costs something) without a plan to pay for them. Remember, the Afgan war was very bi-partisan; the resolution had one NO vote in the Senate and House combined. Bush didn't plan on how to pay for Iraq. And both parties have been using our money to buy votes back home with special projects.

I'm not rich, even using any of Obama's moving target flexible definitions of rich. But I'd be willing to give a significant tax increase to pay this crap off with one condition. From now on Senate terms are 4 years - you can only serve two terms; House keeps 2 years - you only get two terms; Presidents - limited to one 6 year term. We would actually get more work out of the President if he wasn’t spending two years out of every term running for office. We also might get more honest legislation if congress was less concerned about getting elected.

 

this is the sort of attitude that destroys cities. the way to make rent lower is to kill public housing, kill rent control, and get the damn government out of it.

listen for a secdond and stop being an *******. you should not want the governmen t to take sides in your exchanges of goods and services. your landlord and you can agree on the rent, and thts it. if the government makes an effort to make your rent lower, it ruins everything. rent controls have ****ed up the entire market here in new york. i pay more than i should because morons like you think the government should fight to make rent lower. attempted managemt of rent by the government means less construction, housing shortages and artificial restriction of supply. eventually landlords abandon building altogether because it isnt profitable (this basically set the bronx afire in the 70's and turned all olf new york into a ruined ****hole). and some lucky idiots are scamming the rest of us by holing up in a rent controlled apartment for 500 when the rest of us are paying 2300. that money has to be made up somewhere, and it means higher rent for market rate renters (and a housing shortage, which means even higher rent for market rate renters). so i take the hit because a ****ing ******* like you thinks the government should fight to keep his rent low, thanks alot, prick. seriously.

thereby riuning our entiure ****ing food system, fattening everyone, and destroying food markets around the world, and killing millions by mismanaging our food supply, nice ****ing job.

thatsz not the role of government. and this is not an exaggeration. your sort of thinking gets people killed.

the market protects us from being gouged. unless an idiot like you uses the government to mangle the market so our food and rent prices are artificial and ruined. again. you are a force for evil, you make the world worse, you have not a ****ing clue.

i would love to not be gouged on rent. but too bad for me there are apartments i could rent for decent prices, but i cant because they are controlled. the landlords hate it, i hate it, everyone paying market rates hates it. but some ******* gets to live for nothing, ass-raping his landlord, who raises the rent on others because of people like you.

and the farmer in africa, he wants to feed his kids, but he cant because the american government is subsidizing food, and grain prices are so low he cant make a profit. thanks alot, you are killing people. you thought the governmetn should manage food prices!

i am not kidding, what you believe is wrong, stupid, evil, destroys society and causes immeasurable misery.

 

and furthermore, the government cant "make food less expensive" they can only tax us and then the food really isnt cheaper, is it, because you paid for it in taxes. and you didnt even pay for the food you chose, you paid for the food that has the best lobby in washington. thanks alot.

also it just is a lie that food is expensive at all.

if you want to kill people by the millions, make african farming impossible, make sure millions of people cant sutain themselves but instead rely on the shaky help of american taxpayers, then by all means favor efforts by the government tyo manage food prices.

listen, the only thing that really protects you is the market, and specifically, choice. hi rent? move. cheeseburgers too expensive? buy rice. if you have the freedom to choose, the market manages things. landlords and food sellers want to sell you things. yunno why south LA sugar farms dont work as well as they used to? because corn is subsidized because big government lunatics want to manage things. so we are floodded with corn sugar, destroying cane farms worldwide. but hey, you want cheap food right? you want somebody to pay tax dollars to help "manage" our food supply? well good work, you are a destroyer of the global food supply, restrictor of human progress.

cant you see that people dont want to price things so high that you cannot afford it? you dont need the governemtn to protect you! that just destroys the fdreedom of choice that the market gives you. and that freedom, that power to choose, this is the only thing that protects you.

 

you are correct but might i suggest smoking some of that weed. this guiness gets you worked up.

 

yeah i am calmed down now, i lose it sometimes. taking a day off from Guinness. have a 12 mile run tomorrow.