It's enough to make you want to move out of the US. You're opposed to bailouts yet you're also opposed to regulating the greedy unethical fools who destroyed the economy and necessiatated the bailouts. Are so many Americans seriously this stupid?
"The Obama/Pelosi/Reid axis of fiscal evil" Somewhere Joseph McCarthy is proud that his life's work has continued.
What they are doing, FB, is clearly showing that they are creatures of the GOP. As Republican Sen. Bob Corker works with Democrats to strike a deal on financial regulatory reform, tea partiers are coming after him. They are crying that Corker is a "Republican in name only!" who is bending over backwards to help Sen. Chris Dodd (D-CT) instead of joining the GOP in a filibuster threat. Tea Party Nation has enlisted members to bombard Corker (R-TN) with phone calls pleading with him "not to compromise" with the majority party. In an email obtained by TPMDC as a member of the group's mailing list, Tea Party Nation leaders give out Corker's six state office numbers and his Washington line. "The Obama/Pelosi/Reid axis of fiscal evil are on the move again and Bailout Bob Corker is the one vote that could stop this. Call him today!" Where is the absence of partisanship? Where is an "equal" call for defeat of this bill? More to the point... why, in god's name, would they be opposed to reform of the financial industry? Why? Because it is a Democratic bill, that's why. This "Tea Party movement" is nothing more than pissed off conservatives, most of them Republicans, who are outraged that a man of color was elected President. I hate being forced to say that, but as this "thing" (this "party") has evolved, it has become, as I predicted, another mouthpiece for the far-right wing of the Republican Party. Time for those who still believe that they are something else to get their head out of their ass and smell the coffee, assuming they still have a sense of smell, considering the growing stench of this "movement," a "movement" that is becoming more farcical by the day.
They've had opportunity after opportunity to show they are something more genuine and legit, but time after time they prove to be exactly what you claim they are.
I hated saying it, because I know too many Republicans who are fine people. Seriously. This "Tea Party" fiasco shows its racial bias more clearly day by day. Decent Republicans who know what's going on will distance themselves or lay low while the **** flies. Those who care nothing about principal and simply desire to win at any price will continue to pump up this phony "movement" for all they are worth. It really is disgusting. Heck, beyond disgusting. "The party of no?" I wouldn't say that. It is the party who's leadership has no sense of morality or decency.
It is really a chicken/egg debate. One of the many things that precipitated the need for bailouts are the bad mortgages out there and the "securities" that some of those mortgages were bundled into. The securities naturally go belly up...foreclosures rise...real estate values sag...jobs are lost. And so it goes. Why were there so many crappy mortgages? Lots of reasons. A big reason were the bills that Clinton and Bush signed into law in the name of expanded home ownership. It was a political football. This caused the need for relaxed credit evaluation so that the law could be complied with. Then Bush reduced the capital requirements for Fannie and Freddie to insanely low levels. This was bound to be the natural result. Add in the greed of the banks and the desire of people to buy more home than they can afford because their mortgage broker convinced them they can (bigger commission)...viola...instant meltdown, just add water.
Mortgages were not the cause. Without the Credit Default Swaps based on the mortgages we would have had a mild recession and a needed correction in housing prices. The mortgages were worth Billions but the CDS were worth Trillions. That's what took down Lehman, Bear Stearns, AIG, and all of the rest. It's the CDS and the derivatives (which I read the other day is an unbelievable 400 Trillion dollar industry), that need the regulation because they are large enough to destroy huge multinational corporations.
Seriously, Refman, if you can't even use the correct spelling of a French word, how can we begin to trust you on this issue? Viola: Spoiler Your sarcasm meter should have just gone... <object width="480" height="385"><param name="movie" value="http://www.youtube.com/v/L8ekKfNuTfE&hl=en_US&fs=1&"></param><param name="allowFullScreen" value="true"></param><param name="allowscriptaccess" value="always"></param><embed src="http://www.youtube.com/v/L8ekKfNuTfE&hl=en_US&fs=1&" type="application/x-shockwave-flash" allowscriptaccess="always" allowfullscreen="true" width="480" height="385"></embed></object>
Unbelievable. The republican lack of willingness to even allow a reform bill to the floor should be the death knell for the GOP....but instead the bat-**** crazy loony bin crowd marches on, only now with further heaping of hypocritical ass-hattery.
CDS played a role in triggering the meltdown, but the meltdown was coming regardless. There was an insane asset bubble that was going to pop, no way this can be a MILD recession when real estate prices drop 50% or more. This recession was the result of a big credit bubble bursting, which mortgages are part of.
It was a positive feedback loop...The repo market's need for a large asset classes to trade around as collateral. CDS and other instruments that seemingly hedged risks. In the residential market, Fanny and Freddie buying up mortgages and later going full tilt on derivatives. On the financial side, the willingness of brokers to overlook liars loans and approve ridiculous interest only or negative amortization loans. CDS in itself aren't deadly, but it allowed supposedly smart people assume they could overextend themselves and get away with it. Or maybe they were calculating enough to bank on the government letting them get away with it.
All I am saying is CDS is NOT the driver for this deep recession. Crappy subprime/negam mortgages were very popular way before CDS market became what it was. Without the bailout, CDS COULD POSSIBLY have caused total financial collapse, but this recession is the result of a massive asset bubble being popped. (from what I heard, the Lehman swaps didn't cause as much problem as people originally predicted)
You're missing a key part of the equation. Properties boom and bust all the time - but they were largely confined to local markets. Swaps and other derivative financial instruments (invented in the grand name of liquidity, and, lol, hedging) made possible an excess of leverage which means that overpriced homes in Florida caused Iceland to go bankrupt or the world's largest insurer to be brought down by a few hundred people in London.
Actually, CMOs, CDOs are sold to overseas investors for many years. The underlying asset bubble (this was a world wide credit bubble) is the main culprit. Iceland just like Florida, Arizona, Cali, overinflated their market and went bust. Hey, I am negative on CDS, especially the ones hold no collateral. But to say there would be no deep recession if we didn't have CDSs would just be silly.
And the reason why it was a worldwide credit bubble, rather than a local property bubble, was the availability of swaps and derivatives and other instruments which inflated it even further. Property markets go boom and bust all over the world all the time, the difference is that some of them don't have trillions of dollars in synthetic obligations riding on them.
You are giving synthetic CDOs far too much credit. I was watching multiple 500 million to billion dollar subprime deals getting done every month way before CDS became the craze. It sure wasn't CDS that created crap subprime deals in UK, Spain. The low interest rate environment had a lot more to do with the credit bubble than some CDS created in 2007. We can argue about this all day, but I was there to see it with my own eyes, and I can tell you the world wide bubble was well inflated before all the synthetic stuff became popular.
I think his point is that the world economy (and the financial sector, specifically) can handle some real estate market collapses. Subprime mortgages, by definition, are higher risk and thus they come with higher interest rates to compensate. What took this from a pretty decent recession to the recession-from-hell is the collapse of the financial sector, and that was, in large part, the result of all the securitization. That's the stuff that killed AIG, Bear Sterns, etc. Without those collapses, you probably don't have a systemic destruction of the entire financial sector. That collapse only exacerbated the drop in real estate rates, which made the collapse worse, which caused more job losses, which caused more drops in real estate, etc.
Securitization does not equal to synthetic CDO/CDS etc. Anyway, my point was we were going to have a bad recession world wide because we had a world wide inflation of asset value, while CDS might have exacerbated the problem (which we have mitigated somewhat by the bailout), I don't consider it the root cause.
