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You have attacked Laissez-faire economics a number of times in previous blogs, misrepresenting the value that the free market brings to a responsible and free people.
As a formally trained economist with graduate degrees from A&M and UT, backed by 20 yrs of professional work experience in both the public and private sector, I can confidently say that the majority of economists DO NOT give credit to the stimulus in averting a depression and keeping unemployment from being even higher. This is political propaganda NOT support by sound economic evidence!
As for my slant on history, I look forward to your evidence to the contrary. Which nations throughout the history of the world have had a more equitable distribution of wealth earned by the fruits of an individuals labor (not taken and redistributed by the government) than US?
The redistribution of wealth that you refer to is a DIRECT result of our government supporting Keynesian economic theory. Government intervention in the free market through Fannie Mae & Freddie Mac, The Community Reinvestment Act, affirmative action lending, Pro-homeownership tax codes, Federal Reserve manipulation of interest rates and artificially cheap credit combined with the private sectors reduced leading standards and unsound lending innovations such as 100 percent loans mislead investors and consumers and created an unsustainable market bubble, a market boom of excessive spending and indebtedness. This problem of excessive spending and debt can never be solved by more spending and more debt which is what our government is doing and encouraging through additional market intervention in the form of stimulus bills and bailouts!
The stimulus bills and bank bailouts (from both Bush/republicans and Obama/democrats I might add) also create an artificial floor for Wall Street and the banks. This government intervention does nothing to encourage a more sensible, more reasonable approach to lending and risk taking to replace the wild risks of recent years. If you are a bank/financial institution, why stop taking excessive risks that have the potential to produce huge profits when you know that the downside risk is protected with taxpayer funds taken by force from the public against their will (congress reported upwards of 95% opposition from the public to the stimulus bills) and lavished on you when you fail!
There MUST be consequences to excessive risk taking. No industry or nation is too large to fail. The solution is LET THEM FAIL and GO BANKRUPT!
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I need to correct a statement I previously made. Mark Zandi founded "Moodys Economy.com" a subsidiary of Moodys Rating Agency. Many believe he is a Republican and therefore a conservative economist, un-like Paul Krudman who is a self proclaimed Keynesian, socialist.
Zandi, however is a Democrat and he appears to be a Keynesian because he likes to publish detailed Keynesian multipliers for various government programs. I read his testimony to Congress this week and I think he has put down the "Kool Aid" and sobered up a little.
In addition I was asked to re-watch Ratigan's analysis of this latest financial crisis. His emphasis is first on Wall Street's complicity and then he casually mentions that politicians may have had a minor role. But the evidence points in the opposite direction.
He, Ratigan cites the repeal of Glass Steagel (GS). This was passed mainly so our banks and investment firms could compete with European Banks and with Fannie and Freddie. F&F were taking over the home mortgage business and crowding out the banks. In the long run it turned out the banks that did diversify did better than the banks that didn't.
Secondly the repeal of GS had another purpose and that was to strengthen the Community Reinvestment Act. This act forced banks to make subprime loans.
The number of subprime loans started increasing in 1999, leveled off due to the collapse of the Russian economy and then exploded in 2004 reaching 23% of the home mortgage business.
Most if not all of these loans were packaged into mortgage back securities (MBS) mainly by F&F and a few other banks. Of the 26 million subprime loans, 10 million were held or guaranteed by F&F and 5.2 million by Ginnie Mae/FHA.
F&F bought mortgages from mortgage companies and paid cash or MBS's in return. These securities went out into the world with triple A ratings and with the perception they were backed by the government. Investment firms bought these securities and insured them with credit default swaps. This insurance was very cheap because of the triple A rating.
This set our economy up for failure and it wrecked many lives. So someone help me here my "small mind" cannot help but think that the government had the major role in this stupid and costly fiasco. The rating agencies also were at fault and deserve much of the blame - Ratigan failed to mention any of this - BTW I think Ratigan is full of crap.
Of course I meant to say arguments instead of arrangements.
I think Mike does a good job of supporting his arrangements with facts. The vast majority of people who post online are merely repeating what they believe is their party line or repeating some talking point they heard on cable tv or some talk "hate" radio show.
John McCain did become the GOP Candidate, but the focus is on speaking time at debates and being a media darling. Mitt Romney (21:11) had more speaking time than that of John McCain (16:00).
If speaking time was translated to votes the 2008 election would have been Hilary Clinton vs. Mitt Romney.
While I agree that, Roger Ailes, did not want Fox to give Ron Paul equal time in the debates, it had little to do with him not winning the Republican nomination. Ron Paul is 75 years, he has been around forever, and his positions are well-known. He did extremely well in drawing crowds, obtaining campaign contributions and CNN, MSNBC, the MSM networks gave him ample air time. Dr. Paul was a frequent guest of Jon Stewart, Bill Maher, Chris Matthews, and Rachel Maddow where he was treated fairly and allowed to give his message.
Ron Paul was not the Republican (in the 2008 definition) the GOP wanted because he had a message of “We spent too much” and” We never should have invaded Iraq”... South Carolina is a Republican state that is very pro military. He was booed by the GOP audience in South Carolina GOP debates, when he made his anti-Iraq war statements, even thou he raised more contributions from the military in Iraq than any other candidate. Slimy people like Rudy Giuliani, Mitt Romney, John McCain, Duncan Hunter, and Fred Thompson mocked him during the debates. In fact a mini debate broke out between Ron Paul and Mike Huckabee. I watched all the GOP debates and it was quite evident that the candidate that would finally emerge would have to be for doubling down on Iraq, cutting taxes on the corporations, never mention President Bush’s faults, and most of all run-on a social conservative agenda…Ron Paul was against all of those except cutting taxes. Ron Paul’s humane approach to the illegal immigration was also a hindrance and he is not a social conservative.
To explain my New Hampshire example: New Hampshire is a Libertarian state, so they might have agreed with his views but they just couldn’t pull the trigger.
BTW I think the final 2008 tally gave Ron Paul 35 delegates, I don’t know what that is all about.
Exile, did you happen to see that Paul's time in that example was 6:31 versus 21:11 for Romney & 16:00 for McCain? If you were interested in looking at that objectively, you'd get the picture. If exposure doesn't matter, then there's no correlation between Romney and McCain having the top-two speaking times and being the top-two candidates.
They used a dirty circular argument to keep Paul out of sight. They justified limiting Paul's exposure because he was polling low, but he was polling low because he wasn't one of the chosen media darlings. That's a stone wall that's hard to break through.
These aren't sour grapes. I'm just addressing Mike's repeated dismissal of Paul's positions based on only getting 42 delegates. How many would he have gotten had he been given equal courtesy? It's hard to win in a rigged game. The reason Paul ended up in the final three was because of his grassroots support, which the media tried hard to blackout until they couldn't ignore him breaking single-day donation records any longer.
Now, how 'bout that artificially-stimulated economy! The public doesn't realize that the stimulus is creating bubbles that will pop to create more bogey men the govt can to "save us" from. If I wanted to expand the Federal govt and destroy the dollar, I'd do the same thing.
That is no excuse. If speaking time equals votes, than how come Mitt Romney, not John McCain became the GOP candidate?
Zorro, I don't think the GOP holds Ron Paul under its tent.
The GOP has a really big tent if it can hold Pat Robertson and Ron Paul in the same tent.
Mike says: "Ron Paul should have been lock in the "Live free or die state" of New Hampshire but he came in fifth"
Perhaps equal air time would have helped. Paul received a disproportionately-low amount of media coverage and debate speaking time.
Here's an example of the speaking times from a late-January 2008 debate:Romney: 21:11, during 13 timesMcCain: 16:00, during 13 timesGiuliani: 13:50, during 11 timesHuckabee: 12:11, during nine timesPaul: 6:31, during six times
He was the most dissenting voice in the race, yet he was crowded out by GOP homogeneity in bulk.
Texas is guilty in gerrymandering. The 14 congressional district is a prime example as well as the State House 30 district.
Anyone who wants and tries to change things in this area are ingorned or bullied away. This also can explain why people are moving out of the crossroads area.
ExileRon Paul should have been lock in the "Live free or die state" of New Hampshire but he came in fifth....As you well know, a candidate will find it hard to beat Ron Paul in the gerrymandered 14th congressional district.....That is why he is running under the Republican banner.
You said that Ron Paul did not get elected because.
1. 42 delegates2. He chose the Republican Party but the majority of Republicans do not support him.3. Most Americans don't want to abolish the CIA, EPA, FDA, IRS, or bring all the troops home.4. People want more than “NO” as an answer to our problems.
That is true, but numbers 3 & 4 are the most important the NO votes and the desire to abolish security forces. I am backing Cherry for Congress.
Mike your comments are also laced with sarcasm and condescension, they are flippant and sometimes just plain rude. If you don't believe me read over some of your responses that you have made to other people not just me.
As far I am concerned they don't bother me at all - I try to get at the truth and refuse to be dismissed or put down with a flippant comment. You also carry a lot of ideological baggage that you cling to with a "closed" mind - again read your comments.
You are not the only one who cares where this country is going - a free and open debate is essential, now more than ever. But whatever, adios, somehow we'll try to manage without you.
I have acquired many email friends through this blog but they are reluctant to go online because they say if they wanted those views, they would leave their radio on 1340 AM all day long. As you can see my opponents never apologize for their misstatements, nor do they acknowledge any points I may make now and then. It's all about labels, ideology, and turning the subject around to what they want to talk about.
I am not that naive and I don't have the abundance of patience, so that is the reason I am probably going to write two or three more blogs and call it quits…. As you'd have noticed most of the letter writers and pollsters are right-wingers these days, because of the recent election results(and the demographics). After the last election, the independents and left-wingers took their leave with the smile on their face. It's all about sour grapes.
Some conservative former posters still email me now and then and there are some level headed conservative posters that I still have friendly debates with but they are few and far between.
Now, I am not that presumptuous to think that I will be missed or that my partisan rhetoric didn't stir up the local conservatives, so I take my share of the blame.
And one other thing, Zandi owns and operates Moodys.com not to be confused with Moody's rating agency - very sneaky. Actually Mike I didn't think any Keynesian economists like the stimulus package - not big enough.
And Zorro, people with small minds have a right to be heard - this is a public forum, is it not? Small minded people everywhere rise up, be heard.
And Mike no more free medical advice for you and this time I mean it.
RollinstoneIt's simply amazing how many on- line physicians and psychiatrists that post on his blog and evaluate my state of being... I never get angry, if it's just insults and sarcasm, I can ignore with the best of them...BTW Where did you buy the computer that can see through cyberspace? On line observations remind me of Senator Bill Frist.
Your question..."And now please Mike, name just one economists that says the stimulus package has done anything." You did not list a caveat..Perhaps,you should've asked, name one right-wing, Ron Paulite economist that thinks the stimulus package has done anything.....I guess it would be a useless effort unless I checked out all the affiliations of the economist that might have had with the Democratic Party because the last eight years showed us how great the Republican economist are.
Mike, The main reason I don't comment on your blog very often is because you have so many small minded people who have drank the kool-aid that you attract in here. You have far more patience than I when it comes to answering and debating close minded people.
Zandi, is a democrat and a Keynesian like Krudman, who believes in massive government spending. And yes Mike you're right an increase and extension of unemployment was part of the stimulus. You will get an argument from some as to whether this increases or decreases unemployment.
I know for a fact that banking regulators have insisted that banks tighten their lending standards. And it's also well known that banks are buying from the Treasury instead of making loans. And the fed has been quietly buying up all the bad loans that the banks have - very stimulating I might add, but it's going to end in March.
And yes the stimulus did bailout a lot of states mainly those states with bloated budgets. This perpetuated and rewarded their excessive spending, and just delayed their eventual collapse. And BTW their BACK asking for more.
Your jabber about regulators taking over day to day operations didn't make sense, I never said they did - but they did require banks to tighten their lending standards.
This is from the Washington Post about Zandi:
"His political pedigree has set him apart. Zandi is often grouped with Martin Feldstein, President Ronald Reagan's chief economist and another early advocate of a robust stimulus bill, to validate the package's crossover appeal.
However, Democrats lost Feldstein on Thursday when the Harvard professor published a Washington Post op-ed declaring the House bill "an $800 billion mistake" laden with ineffective provisions.
Zandi is not exactly a convert to the cause. "I'm a registered Democrat," he acknowledged."
And for your own good Mike, calm down you are going to bust a vein in your neck, I can see it coming.
Since you have forgotten maybe this will refresh your memory when Governor Perry & Sanford tried to reject the stimulus unemployment money.
In 2008, as the recession deepened, Congress provided 33 extra weeks of benefits. Earlier this year, President Obama’s stimulus plan offered an additional 20 weeks in states where unemployment surpassed 8 percent, if they adopted new federally recommended rules governing these extra weeks
You make definite statements that are not true i.e. “Unemployment insurance is not part of the "stimulus package.”
THE SAFETY NET: Jobless get a little extra helpMany of those who are unemployed will get a boost from the stimulus bill, including a $25 increase in weekly benefit checks through 2009 that should help not only those who are out of work but the broad economy as that money gets spent.Currently, the nationwide average weekly check to those receiving unemployment benefits is $295.05, ranging from $179.08 in Mississippi to $408.28 in Hawaii, according to the National Employment Law Project.
That is just one source.Then you go want to say indefinite unemployment cannot be sustained..Duh, who said it could? I was explaining how unemployment compensation created stimulus… I explain why the administration chose to help the state pay for the public employees instead of putting it to work on infrastructure, which would have created more jobs..They chose to save jobs but there is not any data there to verify that.
The banks will not lend to consumers because they have gone back to the tight standards they used to have before the crisis and it is more profitable to take 0% money and do other things that do not involve the consumer credit risk… The government did not take over the banks, so the regulators did not take over the day-to-day operations. The government has not passed finance legislation to control leverage. I know you hate government but you are making things up.
As I said before(I don't expect you to understand) we could use a little inflation right now,it’s deflation that we cannot tolerate.
Unemployment insurance is not part of the "stimulus package." Secondly indefinite unemployment insurance is not sustainable, then what? And although layoffs have decreased, employment hasn't picked up at all.
"According to the Labor Department there is 6.4 unemployed workers for each available job opening. That’s up from 6.1 in October and a record high for this statistic. Job openings fell to 2.42 million in November from 2.57 million in October. Put into prospective the peak in job openings was 4.8 million in June 2007." So where are the jobs that were created????
It's interesting that the administration refuses to use the word stimulus anymore - it is now "targeted opportunities." What's been stimulating is the tremendous increase in the money supply to make up for the drop in "velocity." When velocity picks up, if it does, so will inflation.
There is still a problem with banks and lending though and it's one of those unintended consequences. The fed is lending money to banks at near zero interest. The banks are using this money to buy treasuries that pay 3.5% interest instead of making loans to small businesses that involve more risk. In addition the bank regulators will not allow banks to make loans that contain hardly any risk - typical bureaucratic over reaction.
The fed has also warned banks that in March interest rates will be going up and to have their portfolios ready. And thanks Mike for that career advice I value your esteemed judgement on everything, really!
ZorroI don't disagree that China is making great strides and yes they have implemented capitalist ideas but they still use the full weight of their government to finance and make sure the laws are in place to carry out their ideas… They still have an environmental problem because there are polluting their atmosphere with their growth… You're right; they're not having squabbles about global warming but are determined to be the first green innovators. According to November's Business Week, China is committing to have 15% of their national electricity come from wind solar and other renewable energies by the year 2020. They have partnered with GE ($80 million) because they are one the world’s top producers of wind turbines….. We are still talking about Al Gore, local weather reports, and buying the oil company propaganda.
Guess what? We currently have a trade surplus with China because we recently supplied them with the soybeans they needed because some South American country could not. That’s new, a trade surplus.
That's easy, none other than John McCain's economic adviser ,Mark Zandi..BTW I know all the Ron Paulite talking points but Moody put out a study that stated that for every dollar we invest in unemployment compensation, we get back about $1.34... That little thing in economics is called money in circulation,priming the pump.
The administration knew the economy was in free fall,so they did not want a shortage of state employees such as fireman, teachers and policeman,so their first efforts were concentrated on helping states pay for those services... you might not agree but that was their call.
Keep your day job,it has been said Republicans are bad at trying to be a comedians..:-)
China is kicking the wold's collective economic butt right now. It's stunning how far they have come in such a short period of time. While we argue and point fingers they are taking giant steps in catching up and on their way to becoming the world's leading economy. It's strange how little people know about this phenomena and how the Chinese have used the capitalist system to augment Communism. I fear our nation is in decline from fighting too many stupid wars and bogeymen. The dual wars on drugs and terrorism have sapped our strength and we are little better off for the effort. It's as if we are trying to hold back the tide. Doesn't anyone see the herculean effort and resources we are expending to fight a thousand or so Al-Qaeda and a handful of drug cartels can bankrupt us? Where is the light at the end of the tunnel? I don't have the answers but the course we are on seems really wrong.
What Ron paul said about the "affordable housing" program was dead on, a bulls eye. On the other hand what you said, I quote:
"We have a central banking system to control the interest rates and influence domestic policies such as unemployment…. Most economists give credit to a stimulus package as one of the reasons we averted a depression and unemployment would have been much higher.
"Controlling interest rates"? That statement caused a severe pain in my lower digestive tract. Would you call what the fed has done with interest rates, controlling?
And now please Mike, name just one economists that says the stimulus package has done anything. They have only spent about 40% of it and most of that went to shore up state and local governments and to expand federal payrolls. And BTW the pay for those federal jobs is about 50% higher than private sector jobs and they all have Cadillac healthcare plans.
You may be interested to know Mike that pain is moving lower - you know I should go see a doctor before they pass healthcare "reform." Because before they are done, it will make what they did to housing and the economy as maybe not so bad - in fact we may be looking back at the present as good times.
Rollingstone said“BSpotter, Ron Paul should be hoisted on our shoulders and carried round the country - he should be president but he won't because he has no ideas about how to spend other peoples money, too bad.”These are just four reasons Ron Paul did not get elected.
1. 42 delegates2. He chose the Republican Party but the majority of Republicans do not support him.3. Most Americans don't want to abolish the CIA, EPA, FDA, IRS, or bring all the troops home.4. People want more than “NO” as an answer to our problems.
I've heard Ron Paul say that we should have let AIG, Morgan Stanley, and others go bankrupt. What would have happened if we would have led this domino effect take place? The creditors of all those Wall Street giants would not have gotten paid; they would have gone into bankruptcy,also. Unemployment would have been much higher.
It's relatively easy to tickle one's ears during hard economic times. All you have to do is tell them what they want to hear with one-sided hypotheticals. Name one country that has implemented the economic views of Ron Paul? I just don't believe there's a perfect economic system… A theory has to be tried and tested.
I mentioned, Alan Greenspan’s, Laissez-faire mindset, when he said that the government should not try to regulate fraud because the market will always self correct. He recanted.
The purpose of this blog was not to endorse Keynesian economics but rather to accept the fact that we have a reality-based economic system , like most industrial nations, we have a central banking system to control the interest rates and influence domestic policies such as unemployment…. Most economists give credit to a stimulus package as one of the reasons we averted a depression and unemployment would have been much higher… Your slant on history has yet to be proven.
We recently had a large redistribution of wealth; it went from the taxpayers to Wall Street..I.e. Goldman Sachs reported a $12 billion profit; guess how much the taxpayers paid for the bailout AIG , who in turn use that money to pay its debt to Goldman Sachs?
I will not read the rest of your comments because I don't want to get into the Fox News, Rush Limbaugh gibberish.
You have a good day.
AltonTechnically you are right, Frank Raines, was the CEO of Fannie Mae not Freddie, my mistake but my main point was that the right-wing made him one of the culprits of the financial crisis.
We will never have a true free market as long as we have the Federal Reserve…. Alan Greenspan said he had to go against his principles when he took the job as a Federal Reserve Chairman…. We have a credit-based economy, having said that, that calls for regulation. It has nothing to do with elites but more to do with the mindset of the Fed chair, whoever it might be. The way our economy is structured, the Fed Chairman is the most powerful person, when it comes to domestic policies.
Alton, as I have told you before I don't like to make a habit of doing other people's research for them just because they doubt what I'm posting is true…. I will make his rare exception.
From the congressional hearing
Here’s a fascinating exchange between Alan Greenspan and Representative Henry A. Waxman from today’s hearing on Capitol Hill (as reported by Michael Grynbaum):Referring to his free-market ideology, Mr. Greenspan added: “I have found a flaw. I don’t know how significant or permanent it is. But I have been very distressed by that fact.”Mr. Waxman pressed the former Fed chair to clarify his words. “In other words, you found that your view of the world, your ideology, was not right, it was not working,” Mr. Waxman said.“Absolutely, precisely,” Mr. Greenspan replied. “You know, that’s precisely the reason I was shocked, because I have been going for 40 years or more with very considerable evidence that it was working exceptionally well.”Over the last 30 years or so years, the world has been deeply influenced by a laissez-faire economic philosophy, which has shifted the world toward an embrace of markets. And markets certainly do many things very well. (Can you name a country that has prospered without relying to a great extent on an open, market-based economy? Or at least moving toward one?) But it certainly seems as if this country, at least, went too far toward laissez-faire economics. I wonder whether we might now be at the beginning of a period in which we move back somewhat in the other direction. And I wonder if historians will someday look back at that exchange between Mr. Greenspan and Mr. Waxman as a sign that the change was coming.
I don't expect any thanks or have illusions that it will change your mind.
I don't appreciate people that tried to exaggerate my opinions with their one-sided hypotheticals.
I ask you rollinstone if you will take a look at the video again and tell me specifically what Dylan laid out that you believe is false. I'm not interested in knowing what your opinion is of personalities, political parties or pundits. Please tell me what Dylan laid out that is false. We need to fix what went wrong and we can't do that if people are blinded by their bias.
You sound like you oppose a free market and support “controlled markets or regulated markets” in which governments directly or indirectly regulate prices, wages and supplies. In a free market economy allocating of goods are within a society: purchasing power mediated by supply and demand within the market determines who gets what and what is produced, rather than the state. I do not believe a pure free market is possible, there will always be governments and the elite in their desire for power over the individual will regulate free markets. I may surpirse you in believing that the Glass-Steagall Act should have never been repealed (the repeal was signed into law by your minor role President Clinton). By the way Frank Raines, a Carter and Clinton man, was never with Freddie Mac and he was gone by Jan 2005. While I believe the Fed is a secret group of unregulated Elite that have too much control our financial markets, I would like to know where the data is that support your statement about Greenspan. I am a strong supporter of Ron Paul and his efforts to keep the government honest.
I'm glad Ratigan brought in Eliot Spitzer to talk about morality and ethics - it really lent credibility to his case.
The repeal of Glass-Steagel was only passed with Democratic help and only after the act was modified to strengthen the Community Reinvestment Act (CRA).
The repeal of Glass Steagel allowed banks to diversify their risks. It has been pointed out that the institutions that did both banking and investment did better than banks who did diversify.
Private banks were driven to the sub prime market by the CRA and by the fact that F&F's market share increased to the point they own half the mortgages in the USA. F&F was able to do this because they could offer lower financing charges due to subsidies and government backing that gave them an unfair advantage.
But this whole thing got unhinged when Congress allowed F&F to start making sub prime loans. With Congress cheering them on F&F went on a binge where they essentially made mortgages to anyone with little or no down payment or identification.
Then they lied about how many these bad loans they had made. This is where some serious fraud occurred. It contaminated all the triple A rated mortgage back securities. Investors all over the world purchased this garbage thinking they were safe investments. Their life savings went up in a puff of smoke and everyone responsible walk away.
And don't you find it strange "Zorro" that the securities that failed are these mortgage backed securities and not other securities. I agree Wall Street did some dumb things in collusion with regulators or right under their noses. But if the government had not been involved cranking out easy money and encouraging bad loans this would have never happen. Wall Street alone could not have made this happen.
rollinstone, agreed, he has nothing to offer big business... other than market competition. I've followed Paul's speeches to the House and statements to the public closely since early 2001, and it's been frustrating to watch the economy follow the course he has predicted. But he's no wizard -- the brand of economics that lead to the meltdown is very predictable.
Dylan Ratigan breaks it down for you in this video. What happened and who is to blame is made real simple you in this video.
And in case you are interested, Dylan Ratigan has been called a libertarian and fan of Ron Paul. Get yourself educated, please, all of you putting out the political spin doctor posts.
BSpotter, Ron Paul should be hoisted on our shoulders and carried round the country - he should be president but he won't because he has no ideas about how to spend other peoples money, too bad.
Mike, you've referred to me as a "Ron Paulite" on a few occasions. (I can't deny that most of our views on govt coincide.) So I don't disappoint, may I submit to the discussion these 2000-2004 words & deeds of warning from Ron Paul in the area of the housing bubble?
In chronological order--
“Economic Problems Ahead”, 11/13/2000:www.house.gov/paul/congrec/congrec200...
Introduction of “Free Housing Market Enhancement Act” on 7/16/2002:www.house.gov/paul/congrec/congrec200...
“Fannie Mae and Freddie Mac Subsidies Distort the Housing Market”, 9/10/2003:www.house.gov/paul/congrec/congrec200...
“Zero Down for the American Dream”, 6/21/2004:www.house.gov/paul/tst/tst2004/tst062...
More from Dr. Paul on the topic of economic bubbles:www.google.com/#hl=en&q=bubble+site:h...
Where did all this worthless money come from?
How is this meltdown an indictment of Laissez-faire economics when the entire thing had the government's fingerprints on it?
Are you really that naive to think that the government is completely innocent? How about the credit rating firms? Innocent?
No they are not innocent, did you know they are also GSE's. They are suppose to act like a securities watch dog for the government.
You want to completely white wash the role of the federal government in this fiasco but it won't wash. And thank you for your concern I am feeling better.
I want to address your continual misrepresentation of the Laissez-faire economic theory. This economic philosophy simply believes that industry and markets should be free of government restrictions and government market manipulation. This approach asserts the importance of the free, competitive market in which individual suppliers and individual purchasers maximize the efficient production, distribution, and allocation of goods and services as well as the maximization of individual choice, and emphasizes the need to keep government regulation to a minimum. Laissez-faire economists believe that an unregulated economy would tend to move towards full employment, and thence market equilibrium.
This is in comparison to the Keynesian economic theory which believes that market equilibrium could be reach before full employment. Therefore, if governments wanted to reach full employment they must intervene in the market by stimulating or reducing aggregate demand (market manipulation). Government intervention and market manipulation is in the form of tax (fiscal) policy, government expenditure, and monetary policy (changes in interest rates and the supply of credit). As we look at the current government intervention (increased monetary supply, easy credit, manipulation of interest rates, stimulus programs, etc) and the resulting increase in unemployment and debt, we must ask if this philosophy is working.
You have said (in other posts) that you do not support the laissez-faire theory because it does not address greed but what economic theory does? Keynesian? Austrian? The answer is none! Greed is an issue of the heart not of theory. If you believe that government intervention in the form of Keynesian economics will address greed, you must then believe that government policy makers, regulators and employees are less likely to be greedy. But history proves this belief to be wrong!
Throughout history, governments that intervene or control the economy have seen the concentration of wealth confined to the hands of a small number of government officials and their supporters. The first nation to have a more equitable distribution of wealth (i.e. a large middle class compared to a relatively small lower and upper class) was the U.S. and its free market economy.
I'm not saying that the regulators dropped the ball; it's the mindset that I was writing about.
I remember 1999, 2000, 2005;my portfolio was getting fat and I would have advised the government to step back and leave things alone but I didn't have the intelligence,data, or any reason to believe that Wall Street would hire the mathematicians/ scientist to devise financial schemes to increase their profit margins in the short terms but disregard factors that were not in their control that could bring the whole country to its knees.
I'm just calling for one single piece of legislation, reinstate, Glass-Steagall,with simple language like "Banks cannot become investment firms"
Rollingstone I don't think anybody really cares about your state of health but you and Victore both place all the blame on the federal government. If Wall Street went amuck; it's the government's fault but the government should not regulate.
The Legislation the Bush administration was proposing to regulate Freddie and Fannie never made it out of committee.The GOP had control of Congress. That's a fact...but don't let facts get in the way...be like Sarah Palin.
Are you really that naive to think that Wall Street is completely innocent?How about the credit rating firms?innocent?
You're probably wanting to puke because the greed of Wall Street will be exposed; hurting your cause of a single blame solution.
So far what you've said, (if I may) is that the regulators themselves dropped the ball. That the regulators may be corrupt. Oh my gosh (slap head) we need regulators to watch the regulators, yes that's the answer.
And say what you will, Barney Frank used all his considerable influence to stop any reform of F&F. And you're right you didn't mentioned that F&F lied about the number of sub prime and Alt-A loans they were holding - I mentioned it and it is true.
It is corruption at the highest level of a government back entity. And they got away scot-free with huge bonuses - I have to puke now, sorry.
For five years Barney Frank said Freddie and Fannie were in good shape when the Bush administration wanted to rein them in. Now he is a hypocrite for trying to blame it all Wall Street but he did not force anyone to come up with financial schemes, influence the Fed or the credit rating firms.
Maxine Waters did assist minority owned banks by steering government aid to her husband’s bank during a financial crisis but it had nothing to do with the bigger picture.
Victore The only way Barney Frank or Maxine Waters could influence anything is with favorable legislation. That's two votes. Perhaps you can provide me with a source show their role.Barney Frank was the House banking head and I believe Maxine Waters was a member,whose husband benefited, by the subprime loans but had nothing to do with our country nearing depression.
I am going to take steps in naming the culprits..My next blog will include the bond rating firms...i.e.
WASHINGTON -- As the housing market collapsed in late 2007, Moody's Investors Service, whose investment ratings were widely trusted, responded by purging analysts and executives who warned of trouble and promoting those who helped Wall Street plunge the country into its worst financial crisis since the Great Depression.Will
I didn't mention a conspiracy but more of a free market mindset in this first installment. I have said before that having a mindset is not criminal but Alan Greenspan came to realize that the market cannot regulate itself.
I have also said that the country was rolling along, so no leader wanted to step up and be the one responsible for stop in the merry-go-round...Brooksly Born tried and failed.
RollingstoneIt is quite obvious that you have your mind made up because I never mentioned Freddie & Fannie reclassifying subprime loans,so why don't you just ignore the blog and have a good day.BTW the rating agencies were in on the scheme... If Moody didn't do it, their competitor would. The perfect storm.
Reading comprehension?I never blamed four men, said this was the first installment of a series of blames.The Fed's low interest rates throughout,refusing to regulate,and an unwillingness to recognize the problem.
I got my information from the Frontline Special title" warning", dated October 11,2009,"Too Big to Fail",NYT,Business Week,Newsweek and Time. Where do you get your information from? Rupert Murdoch's Wall Street Journal?..Much more to follow..FIRST INSTALLMENT.
If it wasn't for sarcasm.
"SEC chairman, Arthur Levitt, Fed Chairman Alan Greenspan, Treasury Secretary, Robert Rubin, Larry Summers and Fed Chairman Alan Greenspan."
So you are blaming this mess on these four men (you have Alan Greenspan listed twice, I guess he was twice as bad).
These four men brought down the world's financial system - is that correct? And "affordable housing" had nothing to do with it? Bad mortgages had nothing to do with it? The housing bubble had nothing to do with it? Fannie and Freddie reclassifying sub prime loans as prime loans to "trick" the rating agencies had nothing to do with it? The Democrats blocking reform of Fannie and Freddie had nothing to do with it? Fannie, Freddie and Congress forcing banks into making sub prime loans had nothing to do with it? The Federal Reserve had nothing to do with it?
And finally not one a single regulator saw this coming are if they did, did nothing. Yeah let's get more regulators and create several departments and layers of management. Then we can all sit back, relax, and see how it works. Gosh I hope it works as good as our dozen or so intelligence agencies.