Who's to blame for the slow recovery?

[Gimmesometruth]

There was an economic slowdown just prior to the financial crisis.

He becomes more vague, and changes "housing bubble" to "financial crisis". Keep massaging the message....you'll get there....eventually.

 

[eohrnberger]

There was an economic slowdown just prior to the financial crisis.

How shifty!

Your original statement:

I believe there was an economic downturn which started it, and then the bubble bursting fed it to become worse.

Which has now been amended. :bs

[h=2]2007[/h] See also: Financial crisis of 2007–2010, List of writedowns due to subprime crisis, and List of bankrupt or acquired banks during the subprime mortgage crisis
Home sales continue to fall. The plunge in existing-home sales is the steepest since 1989. In Q1/2007, S&P/Case-Shiller house price index records first year-over-year decline in nationwide house prices since 1991.[SUP][119][/SUP]
https://en.wikipedia.org/wiki/Subprime_crisis_impact_timeline#2007

A decline in year-over-year decline in nationwide house prices is not indicative of a downturn in the economy?

He becomes more vague, and changes "housing bubble" to "financial crisis". Keep massaging the message....you'll get there....eventually.

Funny. I thought that synonyms would be something you would familiar with. Guess not.

 

[Gimmesometruth]

Funny. I thought that synonyms would be something you would familiar with. Guess not.

I guess not, a "financial crisis", a credit market collapse involving financial institutions solvency.....and a "Housing price bubble", in which the price of nearly all types of real estate in large markets peaks and declines......are NOT "phrases the mean nearly the same thing".

I am "familiar" with the phrases and the meanings, which is why I am so amused, but not surprised, to see your utter confusion...and conflation.

Like I said, keep massaging it.....work out those nots.

 

[Kushinator]

A decline in year-over-year decline in nationwide house prices is not indicative of a downturn in the economy?

You are trying to squiggle your way out of a list of, to put it nicely, naive comments regarding the national economy. First you claim the housing bubble began 25 years ago. Next you claim it was Gramm–Leach–Bliley legislation, which only was to allow mergers among financial institutions, caused the bubble. Then you claim the economic downturn caused the housing collapse.

Perhaps it is time to fess up?

 

[Gimmesometruth]

A decline in year-over-year decline in nationwide house prices is not indicative of a downturn in the economy?

Tulip price bubbles...were not indicative of a Dutch economy, it was indicative of speculation. Housing had become a replacement investment when the dotcom popped. NINJA private lending was not a reflection of real, broad based economic gains, it was a reflection of many people increasing their level of personal debt, a gamble taken because of, in large measure, a stagnation in incomes.

 

[Ganesh]

We do need to raise taxes but we need to make sure that anyone over the poverty line is paying something, not zero, and the rich should pay more than they do now. The purpose of tax increases should be to help shore up the deficit. Far left liberals, of which you do not appear to be, want to tax just the rich more while 43% pay zero and then they want to take 100% of those increased tax revenues and spend 125% of it. I agree that if the economy is growing we are not in a recession. It's stupid to argue that. I'm a big believer that slow steady growth is better for the economy long term than fast growth is. However, we can increase the paltry growth we have now but we don't need to deficit spend in order to do it.

If one looks at taxes as primarily a method of controlling money supply and inflation, and evening out the excesses of the market economy, then it makes sense to tax those who spend reliably into the economy less, and those that do not more. That's not a moral judgement, but an economic one. It would still make sense if 43% didn't pay (they do) if their incomes were in a certain range.

Deficit spending is needed, anytime the private sector fails to meet desired economic targets. It is needed today because the private sector is not spending on socially desirable projects. This is a hallmark of private enterprise, where individual gain may not, and often does not, equate to public good. The overarching problems facing the world economy today are beyond the control of private companies, and are not their responsibility anyway. That is why it is essential to set public goals for economic growth, rather than hoping a babble of self interest will magically coalesce into just the right formula. One of the major problems in the US today is the excess influence of lobbyists for the most financially comfortable, who are helping to draw resources ever upward, while the larger society atrophies, and public infrastructure rusts.

 

[mmi]

That is MMI's MO … lengthy hard to read posts with a bunch of gibberish and cherry picked facts mixed in with a bunch of delusions … [and] … when others offer up evidence … he calls it irrelevant … and claims that he doesn't take reading assignments

Classic loser's lament. The nonsense you continually post is very easily destroyed and swept away. Yer left with nothing to do but whine about it.

43% pay zero

A stupid lie you repeat ad nauseum. The bottom two quintiles paid 7.1% of the taxes last year.

Short enough for ya? Hard to read? Cherry-picked? (Like talking about FIT and ignoring other taxes.) Gibberish? Delusions?

 

[eohrnberger]

You are trying to squiggle your way out of a list of, to put it nicely, naive comments regarding the national economy. First you claim the housing bubble began 25 years ago. Next you claim it was Gramm–Leach–Bliley legislation, which only was to allow mergers among financial institutions, caused the bubble. Then you claim the economic downturn caused the housing collapse.

Perhaps it is time to fess up?

I think it misleading to narrow down all the entire events / actions / people forming, enabling, and leading up to the housing bubble bursting, and the fall out which it caused. There is no single event, action or person who could possibly be responsible for it all.

From my view, there is no one single event or action which is responsible for it all. Rather, it's a series of event and developments which can legitimately be traced back to the CRA and Gramm–Leach–Bliley (and probably others), as precursors that set up the initial conditions in which further actions based on those precursors caused further actions in which the mortgage bubble formed and grew in size and scope, which then finally burst, or collapsed if you prefer.

Had any one or two or more of these events / actions not occurred, the bubble wouldn't have formed, and / or would not have grown so large, and would have had either had no impact or a lesser impact, or even possibly continued to grow at a slower rate, delaying the bursting potentially years further on.

Had the mortgage / housing bubble not burst, there wouldn't have been a financial crisis, and everyone would still be treating their houses like ATM machines.

25 People to Blame for the Financial Crisis

Those who want to blame a single person or a single event are going to be disappointed by the reality, should they bother to further dig into it.

 

[Kushinator]

From my view, there is no one single event or action which is responsible for it all. Rather, it's a series of event and developments which can legitimately be traced back to the CRA and Gramm–Leach–Bliley (and probably others)

Neither had anything to do with it.

Those who want to blame a single person or a single event are going to be disappointed by the reality, should they bother to further dig into it.

We already know why: lenders were able to make loans to people who shouldn't have had them, because they were not regulated appropriately... period. There really is nothing more you will add to this discussion, because your participation has been disingenuous from the very beginning.

 

[eohrnberger]

Neither had anything to do with it.



We already know why: lenders were able to make loans to people who shouldn't have had them, because they were not regulated appropriately... period. There really is nothing more you will add to this discussion, because your participation has been disingenuous from the very beginning.

So from your perspective that happened in a complete vacuum?
No other preconditions that caused or contributed to it?
These lenders just woke up one day and decided that they'd originate crap mortgages for what? For just the hell of it?

Wouldn't the next logical question be 'Why did they do that?'

 

[Kushinator]

So from your perspective that happened in a complete vacuum?

No.

No other preconditions that caused or contributed to it?

There was a savings glut that financed the underwriting.

These lenders jut woke up one day and decided that they'd originate crap mortgages for what? For just the hell of it?

Wouldn't the next logical question be 'Why did they do that?'

Because they made so much ****ing money! They were able to write a **** mortgage, make points in profit, sell it off for additional profit, and continue on in the process. During the bubble forming period, 2003 - 2006, it was the private sector that saturated the secondary market. Not Fannie and Freddy; but private investors such as Bear Stearns and Lehman Brothers.

Where are they now?

 

[Moderate Right]

You are aware that income taxes are not the only taxes nor is it the sole source of federal tax revenue?

That's just your pathetic argument that 43% of Americans should pay zero federal income taxes while the other 57% pay 100% of the federal income tax burden. EVERYONE pays other taxes so that is a silly argument. Since the one percent pay other taxes as well, and more of them than the poor, then they should also pay 0% in federal income taxes.

 

[Moderate Right]

He becomes more vague, and changes "housing bubble" to "financial crisis". Keep massaging the message....you'll get there....eventually.

Oh please. There is no one more vague than an MMT believer. You can't get any more vague than that.

 

[Moderate Right]

If one looks at taxes as primarily a method of controlling money supply and inflation, and evening out the excesses of the market economy, then it makes sense to tax those who spend reliably into the economy less, and those that do not more. That's not a moral judgement, but an economic one. It would still make sense if 43% didn't pay (they do) if their incomes were in a certain range.

Deficit spending is needed, anytime the private sector fails to meet desired economic targets. It is needed today because the private sector is not spending on socially desirable projects. This is a hallmark of private enterprise, where individual gain may not, and often does not, equate to public good. The overarching problems facing the world economy today are beyond the control of private companies, and are not their responsibility anyway. That is why it is essential to set public goals for economic growth, rather than hoping a babble of self interest will magically coalesce into just the right formula. One of the major problems in the US today is the excess influence of lobbyists for the most financially comfortable, who are helping to draw resources ever upward, while the larger society atrophies, and public infrastructure rusts.

The poverty level is about 15%. Everyone not below the poverty level should pay something in federal income taxes, even if it is a paltry amount. Zero is unacceptable. 43% of Americans are not in poverty.

 

[Kushinator]

That's just your pathetic argument that 43% of Americans should pay zero federal income taxes while the other 57% pay 100% of the federal income tax burden. EVERYONE pays other taxes so that is a silly argument. Since the one percent pay other taxes as well, and more of them than the poor, then they should also pay 0% in federal income taxes.

How is this a pathetic statement? You are the one who fumbled the terminology, when you stated:

The purpose of tax increases should be to help shore up the deficit. Far left liberals, of which you do not appear to be, want to tax just the rich more while 43% pay zero and then they want to take 100% of those increased tax revenues and spend 125% of it.

When it is pointed out that 43% don't pay zero, you come back with anger based nonsense. You get angry because you lack the knowledge base to discuss the topic in the depth you wish to discuss it.

 

[eohrnberger]

No.



There was a savings glut that financed the underwriting.



Because they made so much ****ing money! They were able to write a **** mortgage, make points in profit, sell it off for additional profit, and continue on in the process. During the bubble forming period, 2003 - 2006, it was the private sector that saturated the secondary market. Not Fannie and Freddy; but private investors such as Bear Stearns and Lehman Brothers.

Where are they now?

In order to make money at that, in order for them to sell those mortgages, there had to be a demand to buy them. No one can sell something and make money at it, if someone's not willing to buy it.

What caused that demand for subprime mortgages? Who bought all these subprime mortgages?

Yes, we know that investment banks bought many of them, gambling banksters I call them, because they were able to turn them around, offer them in sliced and diced risk traunches and sell them off as some sort of secured investments, as long as they had a credit default swap to cover their default. They had no risk in the this game, and also made tons of money.

But who else was buying ever more subprime mortgages?

Unfortunately, yes, Fannie and Freddy were also buying into, and exposing themselves to, the subprime mortgage risk. Or is it your position that Fannie and Freddy never bought any subprime mortgages? Never exposed themselves to the subprime mortgage risks?

 

[Moderate Right]

How is this a pathetic statement? You are the one who fumbled the terminology, when you stated:



When it is pointed out that 43% don't pay zero, you come back with anger based nonsense. You get angry because you lack the knowledge base to discuss the topic in the depth you wish to discuss it.

43% do pay zero federal income taxes.

 

[JohnfrmClevelan]

In order to make money at that, in order for them to sell those mortgages, there had to be a demand to buy them. No one can sell something and make money at it, if someone's not willing to buy it.

What caused that demand for subprime mortgages? Who bought all these subprime mortgages?

Yes, we know that investment banks bought many of them, gambling banksters I call them, because they were able to turn them around, offer them in sliced and diced risk traunches and sell them off as some sort of secured investments, as long as they had a credit default swap to cover their default. They had no risk in the this game, and also made tons of money.

But who else was buying ever more subprime mortgages?

Unfortunately, yes, Fannie and Freddy were also buying into, and exposing themselves to, the subprime mortgage risk. Or is it your position that Fannie and Freddy never bought any subprime mortgages? Never exposed themselves to the subprime mortgage risks?

CDSs didn't really take all of the risk out of them in the end, did they?

As was pointed out before, this was financed by savings. And private sector buyers were willing to buy it because those instruments were rated higher than they should have been. There is always demand for a low-risk, high-return instrument, and that is what MBSs were falsely sold as. F&F bought some, but they certainly weren't the driving force. Their hand in this is far overstated by your team.

 

[Gaea]

There was an economic slowdown just prior to the financial crisis.

That's true. But consider this - Q2 of 2016 had worse growth than every quarter from Q1 of 2002 through Q4 of 2007. Yet our growth last quarter isn't precipitating a financial crisis.

 

[Kushinator]

In order to make money at that, in order for them to sell those mortgages, there had to be a demand to buy them. No one can sell something and make money at it, if someone's not willing to buy it.

People want to buy homes. There was demand, the only thing that is different is that companies made billions of dollars selling mis-rated mortgage securities.

What caused that demand for subprime mortgages? Who bought all these subprime mortgages?

Reduced ROI in fixed income markets created the demand for higher returns. The problem is, when you have to resort to fraud in order to create this demand, or in this case, rate BBB rated securities AAA, it creates tremendous amounts of systemic risk.

Yes, we know that investment banks bought many of them, gambling banksters I call them, because they were able to turn them around, offer them in sliced and diced risk traunches and sell them off as some sort of secured investments, as long as they had a credit default swap to cover their default. They had no risk in the this game, and also made tons of money.

But who else was buying ever more subprime mortgages?

 

[Kushinator]

43% do pay zero federal income taxes.

So? That is the nature of the income tax code. 43% do pay taxes.

 

[eohrnberger]

CDSs didn't really take all of the risk out of them in the end, did they?

Quite true. When the business backing the CDS, AIG I believe it was, went bust when all the CDSs triggered, they were one of the entities that got TARP bail out money to keep them solvent.

As was pointed out before, this was financed by savings. And private sector buyers were willing to buy it because those instruments were rated higher than they should have been. There is always demand for a low-risk, high-return instrument, and that is what MBSs were falsely sold as. F&F bought some, but they certainly weren't the driving force. Their hand in this is far overstated by your team.

Also correct. The rating agencies rated these toxic mortgages as A1 securities, which was clearly wrong, and also weren't familiar with the mathemagical formula the banksters applied, which I believe they claimed somehow magically reduced the inherent risk of those bundled and traunched mortgages.

From what I gathered, the bubble was financed by people continually re-mortgaging their houses and getting cash from the savings they had put into their houses, i.e. mortgage payments. The worst story that I heard was someone who had re-mortgaged their house 6 times in a single year, and always for their increased market value. Others would buy a house on credit, fix a few things or nothing at all, and weeks later re-sell it at a profit. Both of these are symptoms of 'get rich quick' mentality which came to bite them in their asses. A 'get rich quick' mentality the mortgage originators, mortgage buyers, banksters and yes, even F&F, all supported / enabled, all which fed the market prices increasing faster and faster. It was a feed back loop.

People want to buy homes. There was demand, the only thing that is different is that companies made billions of dollars selling mis-rated mortgage securities.

True the rating agencies lied / didn't understand what they were rating, and the banksters kept gambling in ever greater dollar amounts with ever greater risk.

Reduced ROI in fixed income markets created the demand for higher returns. The problem is, when you have to resort to fraud in order to create this demand, or in this case, rate BBB rated securities AAA, it creates tremendous amounts of systemic risk.

Yup. A feedback loop. One that injected ever increasing risk to the system.

BTW: Which part of 'systemic' is any one single individual? Any one single law? Any one single regulation? Any one single action?

I do believe that this is a case of a conflagration of actions and conditions coming together in a rather unforeseen way, which caused great harm. This is by no means any excuse to any of those in leadership positions for not taking action when it was already blatantly obvious what was coming down the tracks. This is their failure, and this is the blame they must shoulder.

Unfortunately, yes, Fannie and Freddy were also buying into, and exposing themselves to, the subprime mortgage risk. Or is it your position that Fannie and Freddy never bought any subprime mortgages? Never exposed themselves to the subprime mortgage risks?

 

[Moderate Right]

So? That is the nature of the income tax code. 43% do pay taxes.

Then the nature of the tax code is fine just the way it is. No need to tax the rich more.

 

[Gaea]

Then the nature of the tax code is fine just the way it is. No need to tax the rich more.

How do you propose eliminating the deficit without raising taxes or pushing the economy into a recession?

 

[Moderate Right]

How do you propose eliminating the deficit without raising taxes or pushing the economy into a recession?

I was just making an argument to KUSH, who thinks that there is nothing wrong with the tax code that allows 43% to pay zero in federal income taxes so I was saying that if there is nothing wrong with the tax code then we should just leave it the way it is and not tax the rich more. Actually, I am in favor of increasing the taxes on the rich but it is not fair to make the ones already paying the majority of the taxes pay even more while 43% pay absolutely zero in federal income taxes. Everyone over the poverty level should pay something, even if only a pittance. It is extremely hypocritical to tell the rich that they aren't paying their fair share while 43% are paying zero. Zero is not a fair share. I am for a combination of raising taxes and cutting spending but I don't agree with liberals desire to raise taxes and then spend 125% of that increased tax revenue.