09 November 2008

Scooter

Scooter and I don't see eye to eye a lot. This is one of those times. I asked him what exactly it is that W screwed up. Since most people are just content to blame everything from Katrina to the economy on him, I wanted specifics. Here is his original comment for those too lazy to click on the post below to read the comment.

"Well, his partial privatization of social security scheme went over like a dead skunk on a Thanksgiving platter.

His deregulation of wall street, enacted by congress, has come to bite us on the ass.

Iraq's strategy was a piece of shit until after the 2006 elections, when he started listening to what people like John McCain were saying.

It doesn't help that he's socially awkward and says things that are inappropriate. I think he is mildly autistic. Kim doesn't want to give him that much credit.


The partial privatization was a great idea. I think total privatization is needed and the gub needs to keep their hands off. Anyway.

The deregulation of Wall Street is biting us in the ass how? Last I checked it was the financial sector that was failing. And in the entirety of his tenure he never once deregulated the financial sector. In fact with the addition of Sarbanes-Oxley he actually put in place financial and Wall Street regulations to help protect investors from accounting scandals. On top of that the current housing/lending/financial crisis dates back to carter, then picked up again by Clinton. Allow me to explain:

The community reinvestment act of 1977 told the banks that received FDIC money they had to lend to low and moderate-income borrowers. People deemed too high risk for the taste of the banks. It went largely unnoticed throughout the 80s and then in 1993 Billy Boy wanted to ease up the paperwork, deregulate the industry, and "improve" the CRA, Thus creating the Subprime market. When the bill was enacted there were many critics. Basically it eased up the lending restrictions and told lenders that they HAD to lend to people who most likely can't pay back their loans.

Look at the time after 1995. Lenders started lending 100% uncapitalized loans. When you don't need to come in with any money down, how can you be expected to do everything in your power to repay your loan? You stand to lose nothing. It’s like walking away from an apartment. Aside from that, what the act truly did was falsely inflated the market. When you have a 2.5 million homes for sale and 1.9 million buyers you can count on housing values to continue to increase at a standard trend as it has done for decades. Now, along comes the CRA and now your purchaser pool has just tripled. Now you have 2.5 million homes for sale and 5.7 million buyers. So, housing prices artificially inflate due to a glut in buyers, and a willingness to pay more than the house is worth. In real estate they teach you that a house is worth what the market will bear. When you suddenly drive up housing prices by creating the glut of buyers you create an unstable situation that cannot be sustained. People bought houses over and above what they should have. Builders were scrambling to build new neighborhoods at a rate that was staggering to behold, and builders just kept popping up. New home sales at one point actually passed existing home sales in this area, times were going so good. Then, reality had to set in.

See, the way lending works, is that a lender loans the money. In an amazing act of benevolence Fannie Mae and Freddie Mac like to buy up those loans from the banks. Aren’t they nice little semi private institutions? THEN, in another even more amazing act of benevolence in 1997, $384.6 million of CRA Loans were offered up as securities. Those very securities were guaranteed by Freddie Mac and had an implied "AAA" rating. The public offering was several times oversubscribed, by money managers and insurance companies (read: AIG).

So, with artificially inflated housing prices, deregulated lending practices and constant republican harping to rein in Fanny/Freddie, and lenders screaming that people were defaulting on loans the gubmint told them they had to make, and fanny/Freddie realizing that the loans they bought and secured were all bunk due to the high rate of default we end up where we are. A busted housing bubble, people "upside down" in their mortgages and a record number of vacancies and foreclosures. Why did we have to bail out Fannie/Freddie? Cuz the Dems needed to cover their asses. Why did we bail out AIG? That one, I still don't agree with but since they owned a significant amount of CRA securities guaranteed by Fanny/Freddie I guess the Dems felt they owed it to them. BTW, Fanny/Freddie both created by Dems.

On March 8th 1995, before the Subcommittee on Financial Institutions and Consumer Credit Committee on Banking and Financial Services United States Senate, William A. Niskanen chairman of the CATO institute had some choice words to say,

The Community Reinvestment Act should be repealed--not reformed or restricted but repealed! For no conceivable set of regulations on a bank is consistent with the objective of the Act to meet "the credit needs of its entire community, including low- and moderate-income neighborhoods, consistent with safe and sound operation of such institution."

... The proposed new regulations would be very costly to the economy, to the banking system, and to the communities they serve... The primary long term effect of such measures would be to further contract the banking system,(emphasis mine) increasing the number of neighborhoods dependent on check cashing outlets and pawnshops.

The Community Reinvestment Act was the wrong solution to a genuine problem, for the most part created by other government regulations. Until recently, federal restrictions on interstate banking and state restrictions on intrastate branching severely restricted bank competition in local markets and the potential for geographic diversity of loan portfolios. These restrictions have been substantially reduced, promising a more competitive banking system that is more responsive to the interests of both depositors and borrowers and less vulnerable to adverse economic conditions in specific regions. Another effect of considerable importance: competition among banks is also the best discipline on discrimination among loan applicants on any basis other than credit risk.

Don't try to fix the Community Reinvestment Act. It can't be done. Repeal it.


Boy, did the press lambast him. Turns out, the man was right.

As far as Iraq the strategy worked. We unseated the government and beat the army. Unfortunately the Geneva Conventions stop us from being able to break the will of the people and then build them back up. Instead we have to take a kid gloves approach and have congress second-guess every move and the media and populace give their insight. As though they're qualified. If you've got a better strategy then I suggest you go to the next meeting of the JCS.

As for awkwardness, meh. Unimportant. It gave some comedians a good 8 years of material. And THAT is good for the economy.

On January 20th 1981 a very wise man had this to say,

In this present crisis, government is not the solution to our problem; government is the problem. From time to time we've been tempted to believe that society has become too complex to be managed by self-rule, that government by an elite group is superior to government for, by, and of the people. Well, if no one among us is capable of governing himself, then who among us has the capacity to govern someone else? All of us together, in and out of government, must bear the burden. The solutions we seek must be equitable, with no one group singled out to pay a higher price.


We've come a long way haven't we...

17 comments:

Scooter said...

Ok, fine. Bill Clinton started the ball rolling. George Bush had six years to stop it.

He didn't. Moreover, he let it reach critical mass under his administration, and allowed it to cost his party the election.

Now, the Democrats are going to get credit for cleaning up the mess.

George Bush is partly responsible for this.

Drunken Chud said...

actually in 2002, 2003 and 2005 they tried to enact legislation to seriously undercut the CRA, they got stopped every time. on top of that the republicans, including john mccain have been going on record since 1998 trying to get more oversight and a restructuring of Fanny/Freddie.

the problem doesn't lie with bush per se, it more lies with the media and the inability of the RNC to get this information to the masses. to quote 'men in black' "A person is smart. People are dumb, panicky dangerous animals and you know it." they see the failure under a republican and simply blame him.

the RNC is broken and they need to restructure back to true conservatism. reagan conservatism. i'm not talking about social policy on abortion and shit, i'm talking fiscal conservatism. not this middle of the road, half liberal fiscal middle ground they seem to be reaching for right now. McCain was off message for most of the campaign, and the RNC wasn't much help. hopefully this is the kick in the nuts they needed to restructure the RNC and get themselves back on message.

moreover i blame the media the most. our supposedly unbiased media has never once covered a "positive" bush story, or "McCain/Palin" story. and so help us if Bush, McCain, Palin or any republican had friends like Bill Ayers, Rashid Khalidi, Jeremiah Wright, or ACORN. we'd be wiped off the map. the media would stomp us into the ground. yet, "the one" gets a pass. great. nice bias. but that's been the case since the 70's we know that. we expect that.

aside from the war, W's economic policies have been sound. and now that all looks to be undone. you have to remember, he inherited a downward swing in the economy when he was coming into office. then some planes hit some buildings and the economy stopped for 6 months. after that he managed to get unemployment to an all time national low and keep it there (even while michigan was losing jobs at a record rate) while allowing the DOW, Nasdaq, and NYSE to continually post record numbers not seen since reagan.

so... aside from an unpopular war...

Scooter said...

That unpopular war sucked all of the oxygen out of the room. It cost Hillary Clinton the candidacy, and the Republicans the 2006 elections.

George Bush is partly responsible for this.

Mommy Phoenix said...

George Bush is a Mayor in a city with a City Manager. He has no real power. Yet everyone blames him for everything. All of the problems we started having, started 2 years ago. Go Figure, thats when the Democrats became in control of Congress.
Also, everyones throwing a fit over this Wall Street Bail Out. Is that Bush's fault? Did he, as one man put that bill together, and pass out the billions of dollars? Nope. Did Bush single handedly put soldiers on a plane to Iraq? Nope.
Thats another thing, everyone is pissed over the amount of money we spent on the War in Iraq. Does anyone remember after 9/11. Half of the Fucking United States was ready to jump on a Plane and blow some Terrorist Heads off themselves. We were outraged! WE wanted this war. But because now WE seem to have forgotten the impact that 9/11 had on us, WE are pissed off that we even got involved. And I guarantee if we were attacked again, those feelings would come right back and WE would be ready to blow some heads off again.
People seem to forget the way they felt after 9/11. They forget that we were terrified, grieving and extremely pissed off. We were DEMANDING retaliation! When you are violated, you want the violaters to be brought to justice. That is why we started this war. You can't blame George W. Bush for that. Blame the American people as a whole.

Scooter said...

You do realize that I am using the word "partly", right?

Anonymous said...

what bar do u gotonow? ihave to talk to u its urgent....

Drunken Chud said...

scooter, the reason for unpopularity is based largely on the media. if you look at afghanistan we've been there since '01/'02. not a peep in the media. but since we've lost almost 5,000 american lives in 5 years there is an outcry over iraq. nevermind the fact we're still in Bosnia-Herzkovania and everywhwere else clinton put us. btw, at the death rate we're going at it would take us over 55 years to reach to vietnam numbers. 430 years to reach wwii numbers and 675 years to reach civil war numbers. i don't get the outcry. i wanted to be a soldier. i was told i couldn't. curt wanted to be a soldier, his asthma prevented him from doing so. this media spin is bullshit.

phoenix, the american people have the attention span of a goldfish. seriously. you know the saying, "those who cannot remember the past are forever condemned to repeat it". we are the condemned.

scooter, i was partly responsible for the US women's beach volleyball team winning the gold. cuz i watched.

anon. the bench most days. but i am curious as to who you are. and what is urgent. if you have my number call me. otherwise, send me an e-mail.

Scooter said...

Yes, chud, the media has a lot to do with this. However, we had a lot of support and obvious reasons to go to war in Afghanistan. Iraq... was mostly a war of choice. We are looking through the prism of hindsight, but Saddam was not as big a threat as he was made out to be, and the strategy put forward was woefully inadequate.

When a man sends troops to die for a reason proven to be incorrect, people get upset.

George Bush is partly responsible for this, and it certainly is a bigger part than that of watching it happen.

Drunken Chud said...

scooter, i still don't believe that the reason was incorrect. i think saddam was a lot more savvy in politics than we gave him credit for. the CIA knew he had WMDs and they know that they are now in Syria. i mean shit, we gave the man a year to hide everything. he wouldn't comply with UN investigators, and every time we went back he let us into areas he previously hadn't. which tells me he was playing a shell game. the general populace doesn't have the memory to think back to those events leading up to the war. they just know that it's popular to hate bush and the war. we had an exit strategy: build an iraqi govwernment and then peace out. how were we supposed to know that the iraqis would be not only incompetent but also unwilling to run their own country.

i am still partly responsible for the us women's beach volleyball team team winning gold.

Scooter said...

Allowing weapons of mass destruction to pass between two hostile states isn't an example of a woefully inadequate military strategy?

Drunken Chud said...

poor poor myopic scooter. your lack of understanding of global politics coupled with your inability to remember that far back is what is hamstringing you from being able to make a single argument stick.

in the year leading up to the war which is the time i'm talking about we weren't at war with iraq yet. in fact the UN was still working with us. so how do you propose to go into two sovereign countries and stop smuggling between the two? on top of that, how do you not stall out israeli peace talks by invading syria. on top of that, by declaring war with syria how do you fight a war in iraq, syria, and israel? and while we're overextended keep iran at bay? sometimes it's best to think before you speak.

Scooter said...

... So you are basically admitting that attacking Iraq without any real ability to effect stability in the region was a woefully inadequate military strategy. Afghanistan should have been taken care of first.

We have lost seven years.

Drunken Chud said...

apparently you scored subpar on your reading comprehension.

Zen Wizard said...

A junior undergrad majoring in Finance at even a marginal C-tier school like Georgia State could probably tell you that "Everyone" is a bad risk for a loan.

I am too lazy to look for it but I think on YOuTube there is a Clinton speech where he says something very close to, "Universal home ownership is the goal."

This of course was at the height of the Dot-com boom.

"Universal" is a dangerous word.

Even at the height of the Roman Empire circa Julius Caesar, there were slumlords. "Everyone" did not own his home--not even every citizen.

At the same time as that Clinton speech, I can remember people looking at me like I was a 'tard because I rented an apartment.

"Why don't you own a house?" they said. "YOU CAN'T LOSE MONEY IN REAL ESTATE [SIC]. Plus, you get a nice tax writeoff."

I don't understand tax writeoff's: Would you hand a guy $100 so that he would give you $33 back on April 15th? No. But that is basically what a tax writeoff is.

Also, people don't think of it, but with "Universal Home Ownership," we are subjecting people who are not used to it to a NEW KIND OF TAX: Property tax.

Schools are having a hard time now across the nation because every county (almost) projected and leveraged that there were all these new classes of people that they would be able to extort money from, forever.

Now they are not there anymore and all the counties have is a house that they thrashed before they got kicked out.

I think we have to face the fact on a going forward basis that "everyone" should not necessarily be in a dwelling that they own. Maybe some people SHOULD BE renters.

Heff said...

Very impressed with this post Chud, and your politics.

Drunken Chud said...

Zen, i agree that universal is a dangerous word. but that's the crux of the Dems. they want the shiny happy universal scenario without thinking about the consequences and how to actually impliment it (hint, you can't). i'm not sure where this entitlement mentality came from but it's sickening. not everybody DESERVES a house. hell, not everybody deserves a roof over their heads. this is America, you work for what you have and have what you earned. if you choose like i do, to blow all of your money on women and booze and don't have anything left over to pay the bills that's your/my own fault. nobody owes me a house/healthcare/a car/etc i have to earn it. but too many people want other people to cover for their vices and insecurities. nobody has personal responsibility anymore. why do i drink like a thirsty elephant? cuz i enjoy it. any health risks that arise i am culpable for. no one else. my choice, my life. i am on such a big tangent right now, i'm just gonna stop typing.

heff, thank you. thank you very much.

Zen Wizard said...

I am in a job where I do financial profiles on people and then give them advice--and I cannot BELIEVE some of the situations that some homeowners are in.

Example:

"Well, I get $1200 gross (BEFORE the taxes) per month for disability. My mortgage payment is $750 per month."

I want to say, "What the hell do you do for FOOD??"

There are MANY people in this type of situation, and if one little thing goes wrong they are totally screwed. These people should be in cheap-assed, Section 32 apartments.

"Universal health care" is another loaded term. I believe in UNIVERSAL BASIC: I.e., even if you are an illegal alien, you go to a hospital when you are in a car wreck, we remove the windshield glass from your face, we put your arm in a cast, etc.

But if you want to fly to India and get some new experimental surgery, you have to be a rich guy or bust your ass to afford one of these "Cadillac" plans. Or just pay for your own shit.

Not one candidate talked about simply expanding Medicare/Medicaid, either, which I thought was interesting: We ALREADY HAVE the system in place, with people drawing salaries and taking up offices and computers, etc. Why come up with some brand new invention and not just expand what we already have?

I guess that would not be, "Hope & Change" enough so we have to fuck everything up so we can say we were "original."