Friday, October 03, 2008

The Answer to Biden's Debate Opening

Have you seen the video about the genesis of the financial crisis?

I don't know anything about the producer, but the facts are accurate.

Partisanship is not my driving motivation in politics, but the media are covering for Jimmy Carter, Bill Clinton, Christopher Dodd, Barney Frank, and Barack Obama. Their bullying of banks to make bad home loans set in motion the current crisis.

The Obama/Biden campaign is allowed to repeat, as Biden did tonight in the vice presidential debate, that the failed economic policies of the Bush administration, including accommodation of greedy Wall Street operators, produced the crisis.

No. Unbridled political correctness in home mortgage policy and corruption by people for whom aforementioned Democrats ran interference, and from whom said Democrats received huge campaign contributions, created this mess.

I heard audio on a talk-radio show this week of a congressional hearing in 2004 or 2005 at which Republicans were raising questions about the government sponsored home loan agencies Fannie Mae and Freddie Mac. Barney Frank led the Democratic effort to squash the challenges, insisting that there was no evidence of any problems.

Now comes this video that puts more of the puzzle pieces together. Click here to watch it.

1 comment:

OmaSteak said...

I disagree with your premise to an extent. There were/are many smaller banks that did not make lots of bad loans and are doing quite well. I do agree that the larger national banks and investment banks had/have a much closer relationship with politicians and regulators...some would say very corrupt relationships. The root cause of the current crisis was as old as time...greed. There was easy money to be made in the short term and lots of borrowers/lenders/investors/regulator/politicians did so. To get that last dime off the table, lots of bad business decisions were made with large reliance on derivatives trading multiplying existing leverage of "assets". Like all market bubbles, it gets nasty when the bubble bursts. This won't be the last time it happens since there are only two emotions that move markets...fear and greed. If/when the bailout bill passes, the indicator to watch to see if the bailout is working is the "ted spread". If the bailout is working, this indicator will move to a value of 1.00 or less...the closer to zero the better. I doubt the bailout is "the solution" since each quarter, more subprime adjustable rate mortgages will reset to higher rates and defaults will continue...and as the economy slows more, more people will lose jobs, thereby resulting in even more mortgage defaults...and the cycle will continue until housing prices reach bottom and the excess housing inventory is reduced...that will take time. The best one can do now is reduce unnecessary expenses, eliminate existing debt, avoid any new debt and concentrate on maximizing returns on cash savings in FDIC insured accounts not in the stock market.