Some Clarity in Financial Reform - easy to understand

[Frisco_Slug_Esq]

This is a Krugman economy...

The only thing he's ever expressed dissatisfaction with was the niggardly amount of money we threw at the problem.

It's plain and simple: Communists and Marxists have economists too. It does not mean their theories are valid. Experience shows us that their managed economies always fail. Everyone's opinion of why they fail might very wildly from the not enough, wrong time *I was in the Wright place, But it musta been the wrong Pew* to the libertarian thinkers who advocate for the power of individual liberty, objective law, and unfettered markets.

As I watch Krugman's paradise across the pond struggle with the results of a Marxist economy (which all liberal economies are once you strip away the facade masquerading as "We're not Marxists, we're [fill in the blank]"), I have to assume that, in the long run, you run out of other people's money (Thatcher).
__________________
It is popular today to blame capitalism for everything that displeases. Indeed, who is still aware of what he would have to forego if there were no "capitalism?" When great dreams do not come true, capitalism is charged immediately. This may be a proper procedure for party politics, but in Scientific discussion, it should be avoided.
Ludwig von Mises
A Critique of Interventionalism (1929)

"The more communal enterprise extends, the more attention is drawn to the bad business results of nationalized and municipalized undertakings. It is impossible to miss the cause of the difficulty: a child could see where something was lacking. So that it cannot be said that this problem has not been tackled. But the way in which it has been tackled has been deplorably inadequate. Its organic connection with the essential nature of socialist enterprise has been regarded as merely a question of better selection of persons. It has not been realized that even exceptionally gifted men of high character cannot solve the problems created by socialist control of industry."
Ludwig Heinrich Edler von Mises

 

[Ishmael]

Krugman may have a Nobel prize, but he's still a partisan hack who tries to present things in the most convenient way possible.

If Fannie and Freddie were blameless and maintained high lending standards, there share of issuance would have fallen much more than these charts show. But, of course, they did relax their standards.

The proof of my claim would be in the amount of money that has been directed at those two GSEs vs. all other mortgage bond issuers. What's the total now on the Fannie / Freddie bailout? Oh, right: $144B and counting with $18B in just the last month. And how much have they paid back? Oh, right...zero.

Let's put that number in terms of the percentage of home loans backed by Freddie/Fannie, which now stands at 96.5+% of ALL home mortgages.

The entire home loan mortgage market place is now virtually in the hands of the federal government and hence on the backs of the taxpayer.

The whole concept of financial market reforms is now focused on derivatives and other concocted financial instruments and while there is certainly room for reform there this entire effort seems to ignore the fact that these instruments were created so as to spread the risk associated with the huge increase in bad mortgages let in the housing market.

We can argue ad infinitum the bad behavior of Wall Street with regards to the packaging of those derivatives but it still distills down to the fact that without the underwriting of loans to individuals that obviously didn't qualify for said loans there would have been little need to the derivatives to be concocted to begin with.

The housing market was that the root of the financial disaster that has hit everyone world wide. That is the inescapable truth of the matter. And although the NYT is now singing a different tune, the foresaw the collapse of the financial markets as a result of loose housing loan policy and wrote about it in an editorial back in Dec. of 1992, warning then president elect Clinton NOT to follow through on his desired policy of loose credit home loans. He didn't listen, no one listened it seems, so here we are today.

The concept that you can reform the financial sector WITHOUT dealing with the Freddie/Fannie problem is either a case of insanity, or politically purposeful act of fiscal irresponsibility. If, as the current trend indicates, the taxpayer is going to be the garuntor of ALL home loans, it would be hard to argue that ALL taxpayers shouldn't have a home loan. And that my firends is the very definition of government subsidized housing. Rules dictating who can live where with how much sq. footage, etc. are not beyond consideration once all the power of the granting of loans is concentrated in institutions that are owned and operated by the government.

A couple of weeks ago a member of congress was queried as to why Freddie and Fannie were not being dealt with in the financial reform package. That fine fellows reply was, "They're too complicated an issue to deal with now." Really? Freddie and Fannie are too complicated to be dealt with but the entire US financial sector isn't? I'm undecided as to whether that clown was stupid or he thought the rest of us are.

Ishmael

 

[RightField]

The part of this that's really scary is that the dems are successfully scapegoating and deflecting the blame from themselves and not addressing the root of the problem (political interference).

 

[Frisco_Slug_Esq]

The great thing about the derivatives, and the best lesson to learn, was how many of them were written by people involved in Democrat politics and how virtually all of the creators went on to short their instruments...



Despite being liberal, they knew what reality actually is.
__________________
"You can avoid reality, but you cannot avoid the consequences of avoiding reality."
Ayn Rand

 

[RightField]

The great thing about the derivatives, and the best lesson to learn, was how many of them were written by people involved in Democrat politics and how virtually all of the creators went on to short their instruments...



Despite being liberal, they knew what reality actually is.
__________________
"You can avoid reality, but you cannot avoid the consequences of avoiding reality."
Ayn Rand

You're right, another case of democrats trying to hide the truth and escape blame (in this case, they were trying to spread the risk to hide the fact that they knew they were making bad loans).

 

[Frisco_Slug_Esq]

And, despite all their class-war rhetoric, most all of them became excessively rich servicing government...

 

[RightField]

And, despite all their class-war rhetoric, most all of them became excessively rich servicing government...

Yeah, how much as algore made with his political machinations in trying to frighten people with the IPCC findings which has been found to be a forgery/fraud?

 

[RobDownSouth]

Let's put that number in terms of the percentage of home loans backed by Freddie/Fannie, which now stands at 96.5+% of ALL home mortgages.

Which is a direct consequence of the derivatives/loose credit housing meltdown.

The entire home loan mortgage market place is now virtually in the hands of the federal government and hence on the backs of the taxpayer.

The whole concept of financial market reforms is now focused on derivatives and other concocted financial instruments and while there is certainly room for reform there this entire effort seems to ignore the fact that these instruments were created so as to spread the risk associated with the huge increase in bad mortgages let in the housing market.

We can argue ad infinitum the bad behavior of Wall Street with regards to the packaging of those derivatives but it still distills down to the fact that without the underwriting of loans to individuals that obviously didn't qualify for said loans there would have been little need to the derivatives to be concocted to begin with.

The housing market was that the root of the financial disaster that has hit everyone world wide. That is the inescapable truth of the matter. And although the NYT is now singing a different tune, the foresaw the collapse of the financial markets as a result of loose housing loan policy and wrote about it in an editorial back in Dec. of 1992, warning then president elect Clinton NOT to follow through on his desired policy of loose credit home loans. He didn't listen, no one listened it seems, so here we are today.

So far, so good...I'm with ya here (nice slam on Clinton btw...Clinton's involvement was minimal here but you can't let an opportunity pass).

The concept that you can reform the financial sector WITHOUT dealing with the Freddie/Fannie problem is either a case of insanity, or politically purposeful act of fiscal irresponsibility. If, as the current trend indicates, the taxpayer is going to be the garuntor of ALL home loans, it would be hard to argue that ALL taxpayers shouldn't have a home loan. And that my firends is the very definition of government subsidized housing. Rules dictating who can live where with how much sq. footage, etc. are not beyond consideration once all the power of the granting of loans is concentrated in institutions that are owned and operated by the government.

Aaaaaand we are go for liftoff to Planet Wingnut! "Fannie and Freddie guarantee all home loans, therefore all Americans should have a home loan". There is so much logical fallacy in this premise. Credit worthiness and loan underwriting standards have not disappeared, knucklehead.