This one is about the story that Wall Street and the 1% want us to believe and the reasons it is A Big Lie...
The second is a new Slate Blog called the Reckoning which I find refreshing -- 1 Neither the Republicans or Demos have truly recognized that America is close to a precipitous decline in power, influence, and wealth UNLESS we recognize that this truth and take steps to minimize the rate of descent; and 2) Who won the Iraq war? His answer which is pretty convincing: China.
thanks JayDee
I don't know why this hasn't caught more attention yet.
The washington post article you linked to lays out the complex causes for the financial collapse in the most straightforward way i have seen yet.
The Slate article includes a documentary everyone should watch. No matter what you think you know, it will alter your understanding of the bigger picture.
Oh brother... I guess the wrapping is the value of the gift. Of course the Republicans understand the precipitous decline. We are the ones screaming ""Idiots" you are doing it again! Exacerbating the problem... Where to start? The Washington Post is just a rehash of some things known, but mostly distorted, and most omitted Why Glass Steagall was repealed..not just that it was is the telling story. Mr. Clinton why did you breach the firewall ? Why did Treasurys go to record lows? Nice to see though a tacit recognition that when something receives a subsidy, it creates speculative bubbles and upward price pressures... something often denied. Real estate has been reset to the "true" market value. Every crisis has a start point. I see nary a mention that Fannie, Freddie, FHLA, all lowered credit standards, raised credit limits, and drove housing prices through the roof. 30 Year mortgages with zero down? Guess what.. conventional financing, 15% down, and 15 year term loans are not underwater..30 year, 0 down loans are.. 3 year car loans? No, 7 year car loans with nary a dent in principal. Monthly payments. Want to hear the really big lie JayDee? The 1% can rescue you by the salve of confiscation. It's the magicians trick... watch the distraction so you can't see the "trick". Slate and Post eh? Want to see the "truth" as you want to believe it so, then those are your publications. It's not straightforward at all JoB... hardly. Again... two parties.. in collusion. The largest mortgage holder in gods creation didn't know the products they were purchasing or the markets they were subsidizing? Good enough reason to liquidate Fannie and Freddie as I have ever heard. Politicians loved it... the housing bubble soaked up the displaced labor pool, hiding the trick of offshoring. Kept unemployment rates low, allowed munis to raise taxes beyond sustainability, created the illusion of sustainable yields, pension fund managers for the states gave out defined benefits retirement based on those assumptions. Want to be really scared? A crisis that makes housing look pale? Look at the underfunded pension plans...public and private.. WA State alone is 5 billion short.. they can't meet those defined pension plans. Trillion dollars per year comes out of the federal system for their pension funds... and they have yet to address the fund liability of those glorious federal benefits for current payrolls that have exploded in the last 30 years and will form the basis for calculating future retiree pension benefits. It makes Medicaire and SS look like modest little things to adjust. The solution to all this?.., tax all the wealth of all the 1%.. and ya get enough money to run the government for 178 days. Oh yea... and add another entitlement , Obamacare, .... Republicans do see the future prospects.
redblack
Member Profile
We are the ones screaming ""Idiots" you are doing it again!
doing what again? please explain how obama (and some milquetoast democrats in congress) are repeating the deregulation and low taxes that have led the middle class to the lowly state that it's in, which has caused wall street to wet its pants, which has frozen credit and lending.
please explain exactly what it is you think democrats are doing that even comes close to imitating the destructive behavior that republicans have exerted on our economy. because it sure as hell wasn't overregulation and taxation that got us here.
kootch, you tie yourself in pretzel knots absolving that trickle-down economic b.s., and you use tortured logic to decry taxation and regulation.
as a self-described rich man, what you fail to realize is that those of us whose wages have cratered don't see things the same way that you do. (or pretend to.) we're starting to eye the top 1% with some suspicion, see? they're still making it hand over fist, and, well, i'm sure there's another metaphor involving a fist that describes what's happening to the middle and lower classes.
and yet you come here day after day trying to convince the peasants to let the lords have more.
why do you do that?
Good post, JayDee.
The first author doesn't address the problem of the degree to which money- and credit-creating institutions like the Fed and Fannie Mae are subject to political influence from both the Right and Left. As I see it, that was a big part of the problem.
From what I've heard so far, it sounds like Democrats and Republicans in high places colluded to pressure or entice lenders into creating dicey mortgage loans, on the principle that getting more people into their own homes would be good for America. (And wouldn't exactly hurt reelection campaigns, either.)
Honest lenders responded: OK. If that's what you want, as long as YOU (taxpayers) put up the cash and take all the risk.
Dishonest lenders responded: Yeeeeeeee-HAW!
I actually believe we should all pay more in taxes as well as reinvigorate our progressive income tax system by increasing taxes to a greater percentage on the rich. Our increasing indebtedness to China is not good and we should pay for cost of our government, including the wars and a reformed Medicare and Social Security. The fixes for SSI are relatively easy -- raise the retirement age, require means testing, and eliminate the SSI limit on income taxes. I've never had the fortune to max out the SSI limit, but I know people who do. Medicare is more of a sticky wicket--we need to limit medical care one way or another to control costs.
The top 1% are people who have $384,000/per year of AGI. I don't know anyone personally who qualifies, but a couple of my clients at work qualify. Americans are undertaxed compared to other nations. I cannot cite the reference, but a U.S. per capita tax rate of 25% sticks in my mind, way lower than the EU tax rates. However, continuing to use the Chinese Visa card to pay for the Federal deficit will lower our standard of living, and make us beholden to them. Being dogmatic and not considering changes to entitlements or tax increases is not a solution, it is slowly bringing our nation to it's knees.
--
My two cents.
Sure borrow more money fron China. We are borrowing 40 cents for every one of those deficits. JayDee... do the math. The 1% can't cover the bill... if you took everything they owned, it would run the country for less than six months... THERE ISN' T ENOUGH TO COVER THE SPENDING... WE ARE IN DEBT.. 16 TRILLION. Did you also notice Europe is now in worse shape? They are cutting spending even with a higher tax rate... they can't afford it either. Means test SS? It's not a welfare program.. it's the Social Security Trust fund...an annuity, paid into, with a promise of a return. I didn't ask the federal government to raid it and use it for every little cookie and treat congress could dream up to buy votes. Cut spending.. you've maxed out the credit cards. redblack.. you really should get familiar with the undoing of Glass Steagall... Financial Services Modernization Act Of 1999... it wiped every reform from the great depression...then maybe you can tack a few republican bloopers on for more effect.. this was the granddaddy of deregulation.
The total wealth of the top 1% (all of it, stocks bonds, property, family dog) 1.23 Trilion. Our current deficit..15.8 Trillion, our current Federal Operating Budget, 3.7 Trillion, ... So tell me how you are going to weave 19.5 trillion by raising the taxes of the top 1%? If you took it all .. every drop... even the lightbulbs in the lamps.. you can't do it. Then, of course these are the people who also finance local government, state government,.. and invest the capital necessary for those businesses you are waiting for to start hiring again. Getting a feel for it? See how big the overspending problem is? Tax the rich sounds good... it's a sound bite..but it ain't a solution. Oh yea..don't forget the small stuff.. like the Trillion in student loans that are now defaulting at the rate of 7.8 per cent... and the defaulting housing loans we are going to be held responsible for too.. That would be 5 billon next next quarter alone... and Fannie and Freddie are holding about 5.5 Trillion in home loans currently defaulting at a rate of 6%...and rising again. JayDee.. think the top 1% , the top 10% can cover all that? More to come. Obamacare is right around the corner....
Italy is now bankrupt JayDee... As of 2006, the highest tax rate in Italy has been roughly 43%. 1/3 of all single males still live at home, and it has the lowest GDP per capita in the major European countries... no incentive to work... the government takes it in taxes.
"The problem, Mint writes, is ” is apparently so bad that a third of all men over 30 live at home” in Italy. Naturally, this segment of the population is not participating in economic growth by having their own homes or apartments, utility bills, and the like. The case could be made that overly generous government benefits have softened the population’s will to work."
I'll pass on that European model thanks..
Ah yes.. that European powerhouse... Germany. Highest population migration out of the country in over 60 years.
As recently as 2007, TheNewEditor.com reported that Germans were emigrating at their highest rate since the 1940′s, resulting in a “brain drain” on the nation’s brightest and most motivated people.
As a result of “high taxes and bureaucracy, thousands of Germans have upped sticks for Austria and Switzerland, or emigrated to the United States” — 155,290 during the year in question, which rivals “levels last experienced in the 1940s during the chaotic aftermath of the Second World War.
Furthermore, emigrants are generally said to be highly motivated and educated, while those immigrating to Germany are increasingly poorer and less educated — perhaps more inclined to consume Germany’s generous social benefits.
Jaydee?
K-man:
I will reply tomorrow as I have spent too many of my weekend hours on a computer, some for my day job...Yes, I am a wage slave and need to have some off-line time. I would encourage you to reread my second post: We all need to pay more taxes. All of us, just not the 1%. However, the 1% should pay more as a percentage of their AGI. Do you disagree with progressive taxation? If so, why? Makes sense to me.
I do disagree with progressive taxation with this kind of disparity. If my citizenship is worth 15% of my income, so should it be for anyone else. Progressive tax rates are determined by those who don't pay them. At some point, the very people who are graced with the desire, the intellect, the attitudes and the opportunity reach a point where they feel abused. It becomes a numbers game for politicians. The 90% throw as much of the burden as they can on the 10% who pay 78% of the tax burden. Then in a remarkable show of hubris, tell us it isn't enough! Politicians know this. They know the populist appeal to give more, and take from someone else is a sure fire way to find an elected office. Worse, it does set up and endless cycle of corruption. every major corporation also knows there is an open door, a hidden side entrance for donors. Labor unions deliver votes for protected benefits the taxed can only dream about. Businesses seek tax breaks with massive lobbying, and if they can't get it.. they roll on local governments to get property tax breaks, We have a tax code of over 72,000 pages. They are all special interests seeking protections from taxes. Fannie Mae delivers 1.4 million in campaign funds, shields itself from audits. Maybe it's about time when a politician says let's fund a* million program, we ALL seriously contemplate and ask "is this what we really need?" I have to pay my proportional share...is it worth being taxed for? It's simple to vote yes, when you don't get the bill but get the benefits. Federal income tax is one game where 48% of the population who have no skin in the game get to dictate the rules and play on long after they are out of chips . The idea is to not stay fixed in place, We want you to achieve, prosper, grow the wealth, increase the national standard of living. You cannot tax your way to prosperity..there is no such thing as equal outcomes. If you don't like paying 15% of 30K a year... great! Use the tools of a resource laden country and pay 15% of 150K, better still, pay 15% of 1 million. Ah the protests... but the truth is in large measure, your life is a collection of individual choices. You have all the freedoms to make them and... live with them. You know the bleakest fiscal forcast? Those who are going to inherit this debt debacle.
http://en.wikipedia.org/wiki/Andrew_W._Mellon A worthy read.
redblack
Member Profile
The total wealth of the top 1% (all of it, stocks bonds, property, family dog) 1.23 Trilion.
cite?
here's one:
http://sociology.ucsc.edu/whorulesamerica/power/wealth.html
In the United States, wealth is highly concentrated in a relatively few hands. As of 2007, the top 1% of households (the upper class) owned 34.6% of all privately held wealth, and the next 19% (the managerial, professional, and small business stratum) had 50.5%, which means that just 20% of the people owned a remarkable 85%, leaving only 15% of the wealth for the bottom 80% (wage and salary workers). In terms of financial wealth (total net worth minus the value of one's home), the top 1% of households had an even greater share: 42.7%.
redblack
Member Profile
DP wrote:
From what I've heard so far, it sounds like Democrats and Republicans in high places colluded to pressure or entice lenders into creating dicey mortgage loans, on the principle that getting more people into their own homes would be good for America.
dude, that's the big lie. read the article!
the fact is that mortgage-backed securities were paying 5 - 12% interest, DP. T-bills were paying near zero.
investors wanted banks to make those loans - desperately - and they got laws loosened so that they could.
i'll concede that both parties colluded on loosening the regulations under pressure from big money, but i won't concede on the root cause of the meltdown:
greed.
Messr redblack.
i'll concede that both parties colluded on loosening the regulations under pressure from big money.
DP's statement is not a lie. I have video tapes of the entire leadership team of the democratic party saying almost EXACTLY that. Frank, Dodd, Waters, Shumer.. all of them. I take first hand accounts a tad more seriously than journalistic accounts. It is an element of the debacle.
Funny thing,...you totally choose to ignore the role of Fannie and Freddie. Remember, they too had a vested interest in greater returns, In fact my friend, on those very inflated, very questionable loans. I present Mr. Franklin Raines. Raines took a whopping 16 million dollar "bonus" playing that Treasury/mortgage backed security spread. The very Franklin Raines that Maxine Waters read into the congressional record as "having exhibited excellent leadership at Fannie Mae". Now call me a dumbass, but would you have me believe that the largest mortgage holder in the world...could not asess the quality of their portfolio? A simple performance audit could. One that he and congress refused to entertain. Fannie spread millions to preserve the scam. The congressional campaign donation in the aggregate, were in the millions. The story of Armando Falcon, the whistle blower is an amazing one. You should read it. Raines was able to claim his bonus, based on a phantom 8 billion in profits, made on mortgage backed securities. That's profits, falsely stated. His personal enrichment as a political appointee counted on those returns of 5% and better, Remember, this is the man that raised the credit lines, downgraded the FICO score requirements, permitted the 5% down, then to 0% down. Tens of millions in bonuses were paid to Fannie execs.
Given those standards, the banks went hog ass wild. So many loans were processed, even Fannie couldn't digest all that bad paper. So, MBS became an institution to institution transfer, even banks and sovereigns could purchase them. AIG enters the scene and our fate was sealed. when the loans weren't performing, AIG credit rating was downgraded and they had to come up with additonal collateral and ooops.. they didn't have it, and the loans themselves were not adequete as they were suspect. ALL participated with the understanding that Fannie and the federal government were underwriting the risk. Which in fact was true. We not only bailed out US banks... bad enough... we bailed out foreign banks. .
Here's the bottom line. Fannie made the market. Without them, no matter how greedy the banks, they could not sell the toxic bundles.
When the skeezer loans started to defaults, the house of cards fell on us.
I'm sorry. I wasn't knowingly lying.
I did read the first article, r/b, and all I'm saying is that I didn't see anything in there about how political leaders on both sides saw these lower interest rates as a great thing at the time, because it was increasing home ownership and seemed to be boosting the economy. I remember hearing politicians talking about that on TV, including GWB. And I liked him for that.
Was it morally wrong for the government to try and help home buyers by lowering mortgage rates? Gosh. I don't think so. As first-time buyers, my wife and I benefitted from a government program that shaved a whole 1% off our rate, so how could I be against other people getting at least the same good deal as me?
I don't think the problem was that pols wanted to get more people into houses. Matter of fact, I think that was a very humane impulse. I just think they went about it wrong is all, by further leveraging an already way over-leveraged mortgage market.
That's all I'm saying . . .
That about sums it up. Our impulse as taxpayers is to do good too.
It's what happens to pervert our good intentions that makes for the great divide. The Rural Electrification Act was to bring electricity to the poor, rural, homes and communities. Not to give as a grant program for a ski resort developer in Aspen. But it happened.
Kootchman:
Not all of the more liberal folk will agree with me, but I think both sides need to accept that we need common ground and not dogmatic reflexive posturing to solve our common problems…This is my opinion.
1) You are right about our tax system being gamed...but I am not the one reaping the benefits despite my professional job. I am all for a fixed % tax rate for all income, personal and corporate (since corporations are people now too.) No deductions, no shams where income from capital gains is taxed at a lower rate, or corporations like GE and Boeing pay ZERO and even get free money back. Fixed percentage income taxes typically screw low-income folk but they can claim a credit to ease some of the pain. Despite that, a progressive tax makes lots of sense -- Ask Mr. Buffett: If you have a lot you should contribute more because a civil society benefits the haves more than the have nots. I.e. you can accumulate the cash because the have nots will not be mugging you for it. But that is not borrowing money from China--that is paying our way through (yes) "taxes"...because that would be better than borrowing from Hu Jintao with interest. Both Democrats and Republicans (especially the second Bush) relied/rely on the Chinese Visa card to pay for deficit spending—part of the 16 Trillion you are so concerned about.
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Spending is the other half -- Unless you favor higher % tax rates, you need to cut spending. I am all for cutting spending as long as corporate tax breaks disappear, farm subsidies disappear (growing corn for ethanol only raises the price of corn and animals that eat corn.), and other breaks (like mortgage interest) disappear. We must shrink the military--it is the 800 pound gorilla that is treated like it is invisible. Yes, we need a military, but when our spending far outranks our current need or place in the world (as a % of World GDP), it is an expensive drag on productivity through taxes, or increased borrowing. Corporations that lobby for Cold War weapon systems are part of the problem. You don’t fight asymmetric warfare with F-35s.
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You mention Italy -- Their problem is two-fold and has less in common with the U.S. despite indebtedness. The Euro is a common currency, but monetary and financial policy was left up to individual countries. That is a recipe for disaster. Investors rightfully doubt that Italy can repay their debt--that is why their government bonds are paying 7% interest. Our T-Bills are running at historic lows of 2-3% for 10 Year to 30 year T-Bills. Why? Because people still trust the full faith and credit of the U.S. We need to address both spending, taxes, and our long term challenges but we don't need to gut government or give more money to the privileged and elite as "tax breaks" when "we" already have very low tax rates. This goes for Obama and the Republicans. We as a people need to demand better governance, and accept sacrifice as part of that to pay for it. All of us. Or should I say all of U.S.?
Again, my opinion.
In the main I agree. However, Mr. Buffett is a bit smarter than us. When you read the AIG scandal, his Bank of American/Obama deal, his paltry settlement for Berkshire Hathaway ... well.. the list is indeed very long. He SHOULD have taken a multi-billion dolar hit for AIG aione...or course he wants taxes raised... we covered his losses as pat of TARP. I am not suprised to see his ardor for Obama support of his economic plans, or his $83,000 per plate fund raiser... I mean it's the least you can do for a man that dropped hundreds of billions of taxpayer dollars in your portfolio. Gott give it to em' though..he's a schmoozer...and knows the tlalking points. See, those are details the lefties won't delve into.. they are more than sound bits and require a bit of reading.
Yea.. and we are in a sense fortunate. We get to see a micrcosm of the direction we are heading... Italy got mired in social spending beyond its ability to pay, it was sunk buy deficits, We are increasing ours to the tune of 8 billion per week and rising, It happens, at the personal, corporate, and national level. Once you are in the financial hole, you become a credit risk. Italy died on a national deficit of around 3 trillion... we are at 15 trillion, with liability for 1 Trillion in Student loans, 7.8 trillion in FHA loans, booth with increasing default rates. Our deficit is expected to hit 17 trillion by the 2012 election season... The only reason we are not paying those rates? We keep printing money and devaluing the dollar. It's no comfort to me that we are more credit worthy than Italy... we are headed in the same direction. We have a spending problem that eclipses our tax fiasco by a hugh magnitude.
redblack
Member Profile
Funny thing,...you totally choose to ignore the role of Fannie and Freddie.
and you're totally exaggerating their role in the crash, when, in fact, as an institution, they didn't really have anything to do with it.
remember that fannie/freddie is a public/private partnership. as such, it is subject to political and market influences via public servants and shareholders. and i showed you a NYT cite from 1999 that proved that banks were pressuring fannie to lower their underwriting standards.
maybe this isn't your intention, but the typical conservative small-government response would be to tear down the entire institution because it got corrupted by the likes of raines and clinton and bush. kind of like saying, "there are welfare cheats among us! therefore, welfare should be abolished!" or that the FBI should be dissolved because j. edgar hoover was a transvestite.
which is why i ignore your constant berating of fannie/freddie. this is wall street's turd, and they need to polish it.
redblack
"this is wall street's turd, and they need to polish it. "
they'll just repackage it as a diamond and sell it to the unsuspecting ... us :(
Or maybe.. just maybe.. we have wised up:)
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