Why the Liberal/Left caused the credit crisis
Discussion
I have the beginnings of a thesis here, so let's figure it out.
The current financial crisis can be traced back to doctrines and politics inspired not by greedy capitalists but by left leaning liberals.
Back in the Clinton years, under pressure from liberals and human rights movements, major decisions were taken to open up access to credit, liberalise the movement of money and make it easier for the poor to borrow money to buy a home.
I believe that these particular chickens have come home to roost.
The finance sector dutifully fulfilled its new mandate and offered money to those who would not normally be able to afford it.
To avoid getting saddled with too much concentrated debt, they packaged the debt up to spread the risk around.
Yes - policy makers should have regulated the sector.
Yes - governments should have controlled rising prices more effectively.
But the route cause of all this sits not with greedy capitalists but instead with misguided social democrats.
In the UK - again the Socialists have a lot to answer for.
Specifically, a tax obsessed Labour government encouraged asset price growth through loose fiscal policy, desperate for the tax revenues from the economy to splurge on public sector non-jobs in order to keep their power base strong.
I think this makes sense.
It is not the fault of capitalism.
Yet again, its the fault of f
king socialists.
Does this stack up?
If so, its time to tell the BBC and all the other idiots to shut the fk up IMO.
The current financial crisis can be traced back to doctrines and politics inspired not by greedy capitalists but by left leaning liberals.
Back in the Clinton years, under pressure from liberals and human rights movements, major decisions were taken to open up access to credit, liberalise the movement of money and make it easier for the poor to borrow money to buy a home.
I believe that these particular chickens have come home to roost.
The finance sector dutifully fulfilled its new mandate and offered money to those who would not normally be able to afford it.
To avoid getting saddled with too much concentrated debt, they packaged the debt up to spread the risk around.
Yes - policy makers should have regulated the sector.
Yes - governments should have controlled rising prices more effectively.
But the route cause of all this sits not with greedy capitalists but instead with misguided social democrats.
In the UK - again the Socialists have a lot to answer for.
Specifically, a tax obsessed Labour government encouraged asset price growth through loose fiscal policy, desperate for the tax revenues from the economy to splurge on public sector non-jobs in order to keep their power base strong.
I think this makes sense.
It is not the fault of capitalism.
Yet again, its the fault of f
king socialists.Does this stack up?
If so, its time to tell the BBC and all the other idiots to shut the f
k up IMO.Not sure about that thesis. As I understand it, the baddy of the piece is the Credit Default Swap that allows banks to profit off debt. It was invented by a British guy and took the markets by storm. The side effect was that, whilst profiting off debt, the banks also lost the ability to quantify the absolute amount of debt that they were covering.
It was quite a while before anyone really realised how much these new instruments had allowed huge markets to be built on deeply flakey foundations.
I don't think any politicians have the brain cells to understand the markets well enough to have recognised CDSs as a political tool. The more esoteric derivatives instruments are mind bending.
It was quite a while before anyone really realised how much these new instruments had allowed huge markets to be built on deeply flakey foundations.
I don't think any politicians have the brain cells to understand the markets well enough to have recognised CDSs as a political tool. The more esoteric derivatives instruments are mind bending.
Agreed about the credit default swap, but my thesis goes beyond this to the creation of the credit in the first place.
The left wing ideology behind the spreading of finance to the low paid, coupled with a social imperative suggesting entitlement to "own" property is behind it.
The credit default swap was a result of a desire to spread the risks inherent to lending money to people who should not have been offered credit. The liberalisation of finance was inspired by left wing thinking in support of the poor in the US.
The left wing ideology behind the spreading of finance to the low paid, coupled with a social imperative suggesting entitlement to "own" property is behind it.
The credit default swap was a result of a desire to spread the risks inherent to lending money to people who should not have been offered credit. The liberalisation of finance was inspired by left wing thinking in support of the poor in the US.
While many pundits are pointing to corporate greed and a lack of government regulation as the cause for the American mortgage and financial crisis, some analysts are saying it wasn't too little government intervention that cased the mortgage meltdown, but too much, in the form of activists compelling the government to pressure Freddie Mac and Fannie Mae into unsound – though politically correct – lending practices.
In a nutshell, Liebowitz contends that the federal government over the last 20 years pushed the mortgage industry so hard to get minority homeownership up, that it undermined the country's financial foundation to achieve its goal.
"In an attempt to increase homeownership, particularly by minorities and the less affluent, an attack on underwriting standards was undertaken by virtually every branch of the government since the early 1990s," Liebowitz writes. "The decline in mortgage underwriting standards was universally praised as 'innovation' in mortgage lending by regulators, academic specialists, (government-sponsored enterprises) and housing activists."
http://www.wnd.com/index.php?fa=PAGE.view&page...
In a nutshell, Liebowitz contends that the federal government over the last 20 years pushed the mortgage industry so hard to get minority homeownership up, that it undermined the country's financial foundation to achieve its goal.
"In an attempt to increase homeownership, particularly by minorities and the less affluent, an attack on underwriting standards was undertaken by virtually every branch of the government since the early 1990s," Liebowitz writes. "The decline in mortgage underwriting standards was universally praised as 'innovation' in mortgage lending by regulators, academic specialists, (government-sponsored enterprises) and housing activists."
http://www.wnd.com/index.php?fa=PAGE.view&page...
Edited by Pesty on Thursday 25th September 20:23
Pesty said:
While many pundits are pointing to corporate greed and a lack of government regulation as the cause for the American mortgage and financial crisis, some analysts are saying it wasn't too little government intervention that cased the mortgage meltdown, but too much, in the form of activists compelling the government to pressure Freddie Mac and Fannie Mae into unsound – though politically correct – lending practices.
In a nutshell, Liebowitz contends that the federal government over the last 20 years pushed the mortgage industry so hard to get minority homeownership up, that it undermined the country's financial foundation to achieve its goal.
"In an attempt to increase homeownership, particularly by minorities and the less affluent, an attack on underwriting standards was undertaken by virtually every branch of the government since the early 1990s," Liebowitz writes. "The decline in mortgage underwriting standards was universally praised as 'innovation' in mortgage lending by regulators, academic specialists, (government-sponsored enterprises) and housing activists."
http://www.wnd.com/index.php?fa=PAGE.view&page...
Very valid points. Since Freddie and Fannie were somewhat "quasi-government" to begin with, they succumbed to pressure to be politically correct earlier than others. In a nutshell, Liebowitz contends that the federal government over the last 20 years pushed the mortgage industry so hard to get minority homeownership up, that it undermined the country's financial foundation to achieve its goal.
"In an attempt to increase homeownership, particularly by minorities and the less affluent, an attack on underwriting standards was undertaken by virtually every branch of the government since the early 1990s," Liebowitz writes. "The decline in mortgage underwriting standards was universally praised as 'innovation' in mortgage lending by regulators, academic specialists, (government-sponsored enterprises) and housing activists."
http://www.wnd.com/index.php?fa=PAGE.view&page...
Edited by Pesty on Thursday 25th September 20:23
toppstuff said:
Agreed about the credit default swap, but my thesis goes beyond this to the creation of the credit in the first place.
The left wing ideology behind the spreading of finance to the low paid, coupled with a social imperative suggesting entitlement to "own" property is behind it.
The credit default swap was a result of a desire to spread the risks inherent to lending money to people who should not have been offered credit. The liberalisation of finance was inspired by left wing thinking in support of the poor in the US.
Fair point. The question is though, would banks have taken on such huge risks if they couldn't pass it on to others? The CDS wasn't invented by the government, nor was it devised in response to unacceptably high debt risk (as far as I'm aware) - but it did enable massive lending whilst the risk was passed on. As a business, if you can make loans and also pass the risk onto someone else, then you don't need to be pressured to build your business as it's profitability is in direct proportion to the amount of market you can capture. The only problem comes when the whole edifice unravels..The left wing ideology behind the spreading of finance to the low paid, coupled with a social imperative suggesting entitlement to "own" property is behind it.
The credit default swap was a result of a desire to spread the risks inherent to lending money to people who should not have been offered credit. The liberalisation of finance was inspired by left wing thinking in support of the poor in the US.
As the new century began, both in the USA and Great Britain, manufacturing was or had been exported. Exported to the Far East, India and Eastern Europe. We were told this made economic sense. Labour costs were lower and workers at home did not have the will to work for the same wages. Industry gone, money markets and individuals found the new golden goose. Property. Money was moved into that area, either as direct investments in building projects or mortgages. Mortgages that allowed individuals to invest in property that needed to be built so enabling continuing work for the construction industry. Then companies providing mortgages began to pay staff by new deals. People started to give any semi sober soul, who could scratch a signature, a mortgage. Pick up your bonus for new deal. Sell the deal on, wash your hands, walk away. This was happening on a scale in the USA that defied belief. The cancer of debt, un-repayable debt spread around the veins of the world money markets. Banks looking for new deals borrowed more money to give to borrowers. Over and over until they ended up in the Northern Rock situation, not enough coming in to match their own debt repayments. In the USA the rush by banks to invest in an overvalued commercial property market, led to the same debt repayment problems. Governments certainly had a hand in the lack of control. But Bush has been there for nearly a decade, him lefty? Don't think so. The master of deregulation the market knows best, yes. As for the idea that Blair had a scintilla of left leaning in him is laughable. He was so far up the anus of where the power was, the city, you could only see his ankles. And they had PFI tattooed on them.
I think that Mrs Thatcher had something to do with liberalizing the financial sector, making it easier to obtain credit etc. Also widening the number of options (and products) available to people on the street (you and me) when it came to finances. I believe this happened back in the 80's. And I also believe that Mrs Thatcher was quite conservative. 
Tuna said:
Not sure about that thesis. As I understand it, the baddy of the piece is the Credit Default Swap that allows banks to profit off debt. It was invented by a British guy and took the markets by storm. The side effect was that, whilst profiting off debt, the banks also lost the ability to quantify the absolute amount of debt that they were covering.
It was quite a while before anyone really realised how much these new instruments had allowed huge markets to be built on deeply flakey foundations.
I don't think any politicians have the brain cells to understand the markets well enough to have recognised CDSs as a political tool. The more esoteric derivatives instruments are mind bending.
Are you getting confused between CDS and CDO?It was quite a while before anyone really realised how much these new instruments had allowed huge markets to be built on deeply flakey foundations.
I don't think any politicians have the brain cells to understand the markets well enough to have recognised CDSs as a political tool. The more esoteric derivatives instruments are mind bending.
DWP said:
As the new century began, both in the USA and Great Britain, manufacturing was or had been exported. Exported to the Far East, India and Eastern Europe. We were told this made economic sense. Labour costs were lower and workers at home did not have the will to work for the same wages. Industry gone, money markets and individuals found the new golden goose. Property. Money was moved into that area, either as direct investments in building projects or mortgages. Mortgages that allowed individuals to invest in property that needed to be built so enabling continuing work for the construction industry. Then companies providing mortgages began to pay staff by new deals. People started to give any semi sober soul, who could scratch a signature, a mortgage. Pick up your bonus for new deal. Sell the deal on, wash your hands, walk away. This was happening on a scale in the USA that defied belief. The cancer of debt, un-repayable debt spread around the veins of the world money markets. Banks looking for new deals borrowed more money to give to borrowers. Over and over until they ended up in the Northern Rock situation, not enough coming in to match their own debt repayments. In the USA the rush by banks to invest in an overvalued commercial property market, led to the same debt repayment problems. Governments certainly had a hand in the lack of control. But Bush has been there for nearly a decade, him lefty? Don't think so. The master of deregulation the market knows best, yes. As for the idea that Blair had a scintilla of left leaning in him is laughable. He was so far up the anus of where the power was, the city, you could only see his ankles. And they had PFI tattooed on them.
The President, whoever it is at whatever time, has little to do with regulations; that is done by lawmakers....i.e. Congress.im said:
toppstuff said:
~~~Why the Liberal/Left caused the credit crisis~~~
Only on PH topstuff, only on PH...
...although I'm sure someone will be along shortly to concur with you
Or perhaps you can't.
Greedy people found new way to make money by lending money to people they wouldn't have previously lent to. Took big gamble and failed big time. How is this the fault of the left.
Margaret Thatcher did more than any other leader in this country to encourage home ownership by the masses, something that has been celebrated in these pages before. My memory is somewhat sketchy but I don't think Maggie was a socialist.
The USA doesn't really have a leftist political tradition as such, the Democrats are more like our Tories, the Republicans are like right wing Tories. Therefore the "Left" has virtually no influence in the USA.
Margaret Thatcher did more than any other leader in this country to encourage home ownership by the masses, something that has been celebrated in these pages before. My memory is somewhat sketchy but I don't think Maggie was a socialist.
The USA doesn't really have a leftist political tradition as such, the Democrats are more like our Tories, the Republicans are like right wing Tories. Therefore the "Left" has virtually no influence in the USA.
Jimbeaux said:
DWP said:
As the new century began, both in the USA and Great Britain, manufacturing was or had been exported. Exported to the Far East, India and Eastern Europe. We were told this made economic sense. Labour costs were lower and workers at home did not have the will to work for the same wages. Industry gone, money markets and individuals found the new golden goose. Property. Money was moved into that area, either as direct investments in building projects or mortgages. Mortgages that allowed individuals to invest in property that needed to be built so enabling continuing work for the construction industry. Then companies providing mortgages began to pay staff by new deals. People started to give any semi sober soul, who could scratch a signature, a mortgage. Pick up your bonus for new deal. Sell the deal on, wash your hands, walk away. This was happening on a scale in the USA that defied belief. The cancer of debt, un-repayable debt spread around the veins of the world money markets. Banks looking for new deals borrowed more money to give to borrowers. Over and over until they ended up in the Northern Rock situation, not enough coming in to match their own debt repayments. In the USA the rush by banks to invest in an overvalued commercial property market, led to the same debt repayment problems. Governments certainly had a hand in the lack of control. But Bush has been there for nearly a decade, him lefty? Don't think so. The master of deregulation the market knows best, yes. As for the idea that Blair had a scintilla of left leaning in him is laughable. He was so far up the anus of where the power was, the city, you could only see his ankles. And they had PFI tattooed on them.
The President, whoever it is at whatever time, has little to do with regulations; that is done by lawmakers....i.e. Congress.Einion Yrth said:
im said:
toppstuff said:
~~~Why the Liberal/Left caused the credit crisis~~~
Only on PH topstuff, only on PH...
...although I'm sure someone will be along shortly to concur with you
Or perhaps you can't.
t like you rushing to its defense is worth a mention.I mean, you are defending it right? Your not...stalking...me.......are.....you...........
I've tried but cannot find even the most right-wing of financial institutes or personnel therein making similar claims.
Please feel free to point me in the direction of other movers & shakers in the financial world who are espousing similar views and perhaps it'll have some credance.
Lets look at just one sentance here:
toppstuff said:
The left wing ideology behind the spreading of finance to the low paid, coupled with a social imperative suggesting entitlement to "own" property is behind it.
Heres the truth:1. The left do not believe in the "spreading of finance to the low paid" and never have. The extension of finance and loans has been developed by the financial sector in its quest for profits. It is a market the financial sector considered under-developed that has now been exploited to its ultimate fate. Poor/desperate people will always take hand-outs - even if they can't afford the repayments - the capitalist system just started dishing them out like never before.
2. And please
the left believing in the entitlement to own property I'm sorry, did I just sleep through the Thatcher years. Property ownership is one of the last things that the left believe in and the further left you lean the more that becomes true until you reach the "all property is theft" brigade.Edited by im on Thursday 25th September 23:35
im said:
Einion Yrth said:
im said:
toppstuff said:
~~~Why the Liberal/Left caused the credit crisis~~~
Only on PH topstuff, only on PH...
...although I'm sure someone will be along shortly to concur with you
Or perhaps you can't.
You're like a bad STD rash EY - despite the application of cream - you always pop back up fluffer.
The absurdity of the premise makes it unworthy of even attempting to rebuke. However the fact that it has been raised here and has a t
t like you rushing to defense is worth a mention.I've tried but cannot find even the most right-wing of financial institutes or personnel therein making similar claims.
Please feel free to point me in the direction of other movers & shakers in the financial world who are espousing similar views and perhaps it'll have some credance.
You clearly feel that there is some semblance of truth to it though...?
I'm a Brit in the States, I got a mortgage in 90 or 91 just befor Clinton arrived on the scene. It was fairly easy to borrow money, I got a no doc loan
as I wasn't working and had no income or business at that time. This loan was sold on to Fannie Mae in the secondary market.
After Clinton was elected there was a push to make sure that minorities were able to secure loans as there were some murmurs that colour was a bar to getting a mortgage. There was probably some truth to that. The problem was that along with the minorities that should have been able to get loans, loans were also given to those who perhaps should not have.
The loans were package and picked up by the Fannies. It's easy now to say those loan originaters should not have processed those loans but at the time they were the HUD rules. If you don't follow those rules you can see yourself at the wrong end of a law suit for discrimination.
HTH
BTW I have not defaulted
Edited to put an extra couple of letters in "descrimination"
Edited by jeff m on Thursday 25th September 23:37
jeff m said:
im said:
Einion Yrth said:
im said:
toppstuff said:
~~~Why the Liberal/Left caused the credit crisis~~~
Only on PH topstuff, only on PH...
...although I'm sure someone will be along shortly to concur with you
Or perhaps you can't.
You're like a bad STD rash EY - despite the application of cream - you always pop back up fluffer.
The absurdity of the premise makes it unworthy of even attempting to rebuke. However the fact that it has been raised here and has a t
t like you rushing to defense is worth a mention.I've tried but cannot find even the most right-wing of financial institutes or personnel therein making similar claims.
Please feel free to point me in the direction of other movers & shakers in the financial world who are espousing similar views and perhaps it'll have some credance.
You clearly feel that there is some semblance of truth to it though...?
I'm a Brit in the States, I got a mortgage in 90 or 91 just befor Clinton arrived on the scene. It was fairly easy to borrow money, I got a no doc loan
as I wasn't working and had no income or business at that time. This loan was sold on to Fannie Mae in the secondary market.
After Clinton was elected there was a push to make sure that minorities were able to secure loans as there were some murmurs that colour was a bar to getting a mortgage. There was probably some truth to that. The problem was that along with the minorities that should have been able to get loans, loans were also given to those who perhaps should not have.
The loans were package and picked up by the Fannies. It's easy now to say those loan originaters should not have processed those loans but at the time they were the HUD rules. If you don't follow those rules you can see yourself at the wrong end of a law suit for discrination.
HTH
BTW I have not defaulted :DDDD
Assault on the mortgage lenders: in the name of racial justice, the Clintonites want the power to decide who gets a home of his own - efforts to impose regulations on banks to make loans even if applicants are not creditworthy
MR. LUDWIG'S idea of ending discrimination is for blacks and whites to have the same rejection rates, regardless of the legitimate reasons for differences. The crackdown is already well under way, as the Administration turns many of its bank examiners into discrimination police by re-interpreting the Fair Lending Act of 1968 and the Equal Credit Opportunity Act of 1974.
Mr. Ludwig is in the process of rewriting regulations for the Community Reinvestment Act so as to offer further inducements for banks to allocate credit by race. In the past, banks and thrifts were rated on the efforts they made to reach out to minorities. Under a directive from President Clinton, however, Ludwig plans to introduce new CRA regulations that will require lenders to meet certain numerical guidelines in total minority loans
http://findarticles.com/p/articles/mi_m1282/is_/ai...
also
http://findarticles.com/p/articles/mi_m1355/is_n19...
Following a landmark lending discrimination settlement, U.S. Attorney General Janet Reno recently issued a stern warning to all banks which practice red-lining--you're breaking the law and face possible litigation.
Reno's warning came on the heels of a recent settlement of an unprecedented lending-bias case against Chevy Chase Federal Savings Bank, a suburban Washington, D.C., bank that was accused of bias in marketing services to predominantly Black and minority areas.
It was revealed that until recently, Chevy Chase had no branches located in predominantly Black neighborhoods.
As part of the settlement, Chevy Chase and its B.F. Saul Mortgage unit agreed to invest $11 million in neighborhoods that the Justice Department claims they refused to serve.
USA Today recently reported from 1976 to 1992 that Chevy Chase underwrote 97 percent of its loans in predominantly White areas.
The bank denied the charges of bias, but did agree to make $140 million in subsidized or below-marketrate mortgage loans to neighborhoods it is accused of discriminating against.
U.S. Attorney Eric Holder added the settlement is also unique because the cash will be funneled directly to the community rather than to the government.
"It provides hope that one day we can relegate red-lining...to the yellow pages of old history texts," Holder said in USA Today.
COPYRIGHT 1994 Johnson Publishing Co.
COPYRIGHT 2008 Gale, Cengage Learning
Edited by Pesty on Thursday 25th September 23:42
http://www.city-journal.org/html/10_1_the_trillion...
The Trillion-Dollar Bank Shakedown That Bodes Ill for Cities
Howard Husock
The Clinton administration has turned the Community Reinvestment Act, a once-obscure and lightly enforced banking regulation law, into one of the most powerful mandates shaping American cities—and, as Senate Banking Committee chairman Phil Gramm memorably put it, a vast extortion scheme against the nation's banks. Under its provisions, U.S. banks have committed nearly $1 trillion for inner-city and low-income mortgages and real estate development projects, most of it funneled through a nationwide network of left-wing community groups, intent, in some cases, on teaching their low-income clients that the financial system is their enemy and, implicitly, that government, rather than their own striving, is the key to their well-being.
The CRA's premise sounds unassailable: helping the poor buy and keep homes will stabilize and rebuild city neighborhoods. As enforced today, though, the law portends just the opposite, threatening to undermine the efforts of the upwardly mobile poor by saddling them with neighbors more than usually likely to depress property values by not maintaining their homes adequately or by losing them to foreclosure. The CRA's logic also helps to ensure that inner-city neighborhoods stay poor by discouraging the kinds of investment that might make them better off
Gassing Station | The Pie & Piston Archive | Top of Page | What's New | My Stuff