Market Collapse, simplified
Discussion
Suggest you watch this video.. it sums up why the market in America went to hell, the forces behind it.
http://www.youtube.com/watch?v=1RZVw3no2A4
And it also illustrates why you would have to be a complete and utter moron to vote for Obama.
http://www.youtube.com/watch?v=1RZVw3no2A4
And it also illustrates why you would have to be a complete and utter moron to vote for Obama.
im said:
Is it a party political broadcast?
*Sucks air through teeth* 
.Major causes of the banking "crisis" IMO:
- People borrowing more than they could afford to re-pay during a perticularly long property bubble.
- Banks getting silly lending people money, making ever riskier loans to "the cast of Deliverance" [Quote: Soovy(?)].
- Regulators being convinced banks could operate with less stringent reserve requirements (in some cases, not all).
- Local authorities restricting supply of housing.
- Reserve bank failing to control growth in that one sector.
- Humans turning their brains off.
so they won't take any blame from me when they start pointing fingers. Economies are cyclical and there is never such a thing as a free lunch.Even in the US where both parties had sufficient time in power to change legislation they chose to sit on their hands. That's just the self serving nature of politics, no party is better than the other in this regard.
Edited by speedy_thrills on Wednesday 15th October 12:05
im said:
MrVelox said:
Nope. The guy is stumping for McCain, but that's at the end. Watch it... it's scary.
But if by "stumping" you mean "backing" or "supporting" then surely its party political?But Mr change is surrounding himself with the architects of this disaster, and meanwhile claiming that McCain is supportive of "The Bush Administration's failed economic policies". That's the polar opposite of the truth.
MrVelox said:
im said:
MrVelox said:
Nope. The guy is stumping for McCain, but that's at the end. Watch it... it's scary.
But if by "stumping" you mean "backing" or "supporting" then surely its party political?But Mr change is surrounding himself with the architects of this disaster, and meanwhile claiming that McCain is supportive of "The Bush Administration's failed economic policies". That's the polar opposite of the truth.
MrVelox said:
But Mr change is surrounding himself with the architects of this disaster, and meanwhile claiming that McCain is supportive of "The Bush Administration's failed economic policies". That's the polar opposite of the truth.
If you want to make partisan political statements, have the honesty not to try to dress them up as something else.speedy_thrills said:
im said:
Is it a party political broadcast?
*Sucks air through teeth* .Major causes of the banking "crisis" IMO:
- People borrowing more than they could afford to re-pay during a perticularly long property bubble.
- Banks getting silly lending people money, making ever riskier loans to "the cast of Deliverance" [Quote: Soovy(?)].
- Regulators being convinced banks could operate with less stringent reserve requirements (in some cases, not all).
- Local authorities restricting supply of housing.
- Reserve bank failing to control growth in that one sector.
- Humans turning their brains off.
so they won't take any blame from me when they start pointing fingers. Economies are cyclical and there is never such a thing as a free lunch.Even in the US where both parties had sufficient time in power to change legislation they chose to sit on their hands. That's just the self serving nature of politics, no party is better than the other in this regard.
Edited by speedy_thrills on Wednesday 15th October 12:05
bad_roo said:
MrVelox said:
But Mr change is surrounding himself with the architects of this disaster, and meanwhile claiming that McCain is supportive of "The Bush Administration's failed economic policies". That's the polar opposite of the truth.
If you want to make partisan political statements, have the honesty not to try to dress them up as something else.bad_roo said:
MrVelox said:
But Mr change is surrounding himself with the architects of this disaster, and meanwhile claiming that McCain is supportive of "The Bush Administration's failed economic policies". That's the polar opposite of the truth.
If you want to make partisan political statements, have the honesty not to try to dress them up as something else.I blame a lot of this on the Community Reinvestment Act, and the dips
t Clinton administration who pulled off a real neat stunt in 1999 I think it was. The CRA was originally designed to ensure that Banks in this country provided products and services to all customers in their areas. IE, you couldn't just give mortgages to Rich White people buying Mansions in ritzy suburbs. The idea behind this was to allow more access to mortgages for middle and low income people. In the late 1990s the Government got the idea that they should basically force the banks to give loans to poor people in economically disadvataged areas, while that sounds good in theoiry, in principal it meant that the banks had to start giving mortgages to otherwise unqualified people. It also tied the ability of banks to offer lucrative securities and investment products to their compliance with CRA. In other words, "You want to make money? You'll do what we say".I can't tell you how many customers we had in the motor trade who could not get finance, even at rates over 30% on a car, but who had no trouble getting a mortgage.
In 2003 The current administration, worried at spiralling subprime loans and spiking home values proposed yet another government agency who would be under the department of the treasury and who would have the sole purpose of policing Fannie Mae and Freddie Mac. For those who don't know, Fannie Mae and Freddie Mac are Government sponsored corporations who don't provide loans to consumers, they basically buy the retail mortgage paper from the banks and bundle them into securities. Congress shot this measure down, led by the Democrats who were voting against ANYTHING that the Bush administration was putting out there at that point and Republicans felt that it restricted free markets so they didn't like it. Dumb and Dumber strike again.
The consensus, based on what I read on the NY TImes' site is that Congress felt that it would restrict low income families' access to mortgage funds. Idiots. Barney Frank, a powerful Democrat member of Congress from Massachusetts was very vocal in his contempt towards it.
In 2005 McCain was warning the Senate of the impending doom at Fannie Mae and Freddie Mac. Senate Democrats blocked the bill. The Bill was called "The Housing Enterprise Regulatory Act" and it was from 2005. Google it, I'm sure it's on the Senate website somewhere. Want to see what he said? Here it is:
John McCain in 2005 said:
"Mr. President, (referring to the Presiding Officer of the Senate) this week Fannie Mae’s regulator reported that the company’s quarterly reports of profit growth over the past few years were “illusions deliberately and systematically created” by the company’s senior management, which resulted in a $10.6 billion accounting scandal.
The Office of Federal Housing Enterprise Oversight’s report goes on to say that Fannie Mae employees deliberately and intentionally manipulated financial reports to hit earnings targets in order to trigger bonuses for senior executives. In the case of Franklin Raines, Fannie Mae’s former chief executive officer, OFHEO’s report shows that over half of Mr. Raines’ compensation for the 6 years through 2003 was directly tied to meeting earnings targets.
The report of financial misconduct at Fannie Mae echoes the deeply troubling $5 billion profit restatement at Freddie Mac. The OFHEO report also states that Fannie Mae used its political power to lobby Congress in an effort to interfere with the regulator’s examination of the company’s accounting problems. This report comes some weeks after Freddie Mac paid a record $3.8 million fine in a settlement with the Federal Election Commission and restated lobbying disclosure reports from 2004 to 2005.
These are entities that have demonstrated over and over again that they are deeply in need of reform. For years I have been concerned about the regulatory structure that governs Fannie Mae and Freddie Mac—known as Government-sponsored entities or GSEs—and the sheer magnitude of these companies and the role they play in the housing market. OFHEO’s report this week does nothing to ease these concerns.
In fact, the report does quite the contrary. OFHEO’s report solidifies my view that the GSEs need to be reformed without delay. I join as a cosponsor of the Federal Housing Enterprise Regulatory Reform Act of 2005, S. 190, to underscore my support for quick passage of GSE regulatory reform legislation. If Congress does not act, American taxpayers will continue to be exposed to the enormous risk that Fannie Mae and Freddie Mac pose to the housing market, the overall financial system, and the economy as a whole.
I urge my colleagues to support swift action on this GSE reform legislation."
And Franklin Raines, who resigned in under a cloud of suspicion and made millions while running our country's economy (and ultimately much of the rest of the world's) into the garbage was Clinton's Budget Director! Raines is an advisor to Obama.The Office of Federal Housing Enterprise Oversight’s report goes on to say that Fannie Mae employees deliberately and intentionally manipulated financial reports to hit earnings targets in order to trigger bonuses for senior executives. In the case of Franklin Raines, Fannie Mae’s former chief executive officer, OFHEO’s report shows that over half of Mr. Raines’ compensation for the 6 years through 2003 was directly tied to meeting earnings targets.
The report of financial misconduct at Fannie Mae echoes the deeply troubling $5 billion profit restatement at Freddie Mac. The OFHEO report also states that Fannie Mae used its political power to lobby Congress in an effort to interfere with the regulator’s examination of the company’s accounting problems. This report comes some weeks after Freddie Mac paid a record $3.8 million fine in a settlement with the Federal Election Commission and restated lobbying disclosure reports from 2004 to 2005.
These are entities that have demonstrated over and over again that they are deeply in need of reform. For years I have been concerned about the regulatory structure that governs Fannie Mae and Freddie Mac—known as Government-sponsored entities or GSEs—and the sheer magnitude of these companies and the role they play in the housing market. OFHEO’s report this week does nothing to ease these concerns.
In fact, the report does quite the contrary. OFHEO’s report solidifies my view that the GSEs need to be reformed without delay. I join as a cosponsor of the Federal Housing Enterprise Regulatory Reform Act of 2005, S. 190, to underscore my support for quick passage of GSE regulatory reform legislation. If Congress does not act, American taxpayers will continue to be exposed to the enormous risk that Fannie Mae and Freddie Mac pose to the housing market, the overall financial system, and the economy as a whole.
I urge my colleagues to support swift action on this GSE reform legislation."
Then you have his predecessor, Jim Johnson, who was in charge of picking Obama's VP. Johnson misappropriated $200 Million when he was with Fannie Mae and also grossly underreported his income whilst there.
The top 3 people who were recipients of campaign money from Fannie Mae while this was all going on were Chris Dodd (Nearly was Obama's running mate), Obama and John Kerry. Hmm. However Dodd and Kerry have long careers, Obama got an average of $42,000 per year in campaign contributions from Fannie Mae, FOUR TIMES what any other Senator got per year. In the same time frame, McCain got roughly 2% annually of what Obama got from Fannie Mae.
Check out Robertson vs Citibank from 1994. Obama represented a plaintiff who sued Citibank claiming that he wasn't getting a loan from them for a house because he was Black.
This is all very out in the open, as f
ked up as our government is, it's relatively transparent.Basically, the Government said "Write the loans, we'll back them".
The Banks did. Then gas prices skyrocketed, rates went up, people could no longer afford to pay their bills. You have to remember that the pound and the dollar have very roughly similar buying power in our respective countries. I watched gas go from $1.30/Gal to $3/gal in very short order, this past summer it was over $4/gal. In the same timeframe Petrol in the UK went from about 85p/L to 120-125p/L. Your gas went up 50%, ours went up over 200%. We also have a lot of homes here that use oil for their heating. Imagine if you make $30,000 a year and instead of spending $200/mo on heating oil in the winter, you are now paying $500-600/mo, plus your Gasoline costs go from $80-100/mo to $250-300/mo.
That's an extra $500+ per month on average, or $10,000 per year in gross pretax income you just lost due to skyrocketing fuel prices. Meanwhile your $750/mo Mortgage is now $950/mo as rates have gone up and property taxes have gone up.
Now what's going to happen when you take home about $2,000 per month? You can pay your mortgage and put gas in your car and heat your home, or you can eat.
Meanwhile you have people like Nancy Pelosi blaming it all on the Bush Administration. Look, it takes a lot for me to apologize for Bush, he's caused a massive Federal deficit, he's a diplomatic nightmare, he's spearheaded the largest expansion of government since the depression, but in this case, he isn't to blame for once.
Feel free to Google away.
Or and here's a controversial idea, the policies made sense when they where designed but then ran uncontrolled and in bush's 8 years in power nothing was done to fix the faults, blaming the previous administration and latching on to people who come up with reforming ideas that may help you out the other side.
I have yet to see a causal relationship established TBH. I mean house price recessions (and indeed other sectors) have happened under lot's of different governments, even in countries with different economic models and policies. There isn't even a vague correlation as far as I can see.
I've always been skeptical about the real power governments have over markets though so I might be bias.
I've always been skeptical about the real power governments have over markets though so I might be bias.
Engineer1 said:
Or and here's a controversial idea, the policies made sense when they where designed but then ran uncontrolled and in bush's 8 years in power nothing was done to fix the faults, blaming the previous administration and latching on to people who come up with reforming ideas that may help you out the other side.
The policies were stupid when they started, it was idiotic left wing idealism "Hey, we'll set it up so poor people can buy houses" The Banks came back with "What on EARTH are you fools thinking?" The Government replied with "You have no choice, but we control corporations who will buy the paper so do it anyway". Reforms were attempted, politicians shot them down (Did you read what I posted?), generally the same ones who were getting lots of money from lobbyists and Fannie Mae.Historically house prices in America have roughly followed inflation. There's been peaks and valleys over the years but nothing like this, the occasional local market excepted (Texas in the 1980s during the oil bust, etc..)
Since the inmates started running the asylum, home prices spiked in a huge way. I sold off my property almost 3 years ago. One house that comes to mind sold for $275,000 in 2002, it was worth $245,000 in 1998 and $180,000 in 1987. I sold it for $475,000 in 2006, it's now worth about $295,000. Guy 2 doors down from me just lost his house to foreclosure.. he paid over $720,000 for it, I doubt it'll bring much over $500,000.
People are defaulting on mortgages all over the place. So now these mortgage-backed securities are worth very little, so Fannie Mae is in a bind. Since Fannie Mae can't sell these mortgages to investors, they can't buy them from said banks, so the banks can't write new loans.. so they are losing a fortune, so they are going broke, so our whole economy is in the toilet. NY City just announced that they expect to lose 160,000 jobs or so because of this. It's become very difficult to get a car loan, car sales are tanking because of it.
All because the Government thought it would be smart to give houses to deadbeats.
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