patrick.net

They don't see it that way. They see themselves as pilots gliding a dead aircraft down, and if they are clever about it the plane will land in the water without breaking up and everyone will get off. Seriously I think that's how they think. There's a large helping of "we are just doing this to make things stable for now, later we will FIX the system." Of course we will NEVER get around to fixing it, because the broken parts benefit people who don't want it fixed.

@ RayAmerica

They certainly behaved as though values would appreciate forever, and maybe some of them (lenders) actually believed that. But there were certainly people in lending that knew it couldn't last. The end result was just too obvious when you looked at the types of loans that were being made.

@ Vicente

I see it about like you do. But did you happen to catch any of Bernanke's speech today? He said - twice - that recovery is slow in part because securitization isn't coming back quickly enough.

Bap33 says

iggyman says

There were some “liar loans” (stated income) made to self-employed subprime borrowers. But the vast majority (non self-employed) had to fully document their income. The abuses in the Alt-A (No Doc Loans) took place among prime borrowers, not low income sub-prime borrowers.

wouldn’t it be great if the IRS looked at the stated incomes of those now defaulting due to fibbing on thier loan docs and jailed all those that commited fraud? Or, made them pay the income tax that matched their stated income? That would be cool!!

Yes it would, but that would only add to the negative outlook of the program now wouldnt it?

Honest Abe says

BAP -please don’t try to use common sense to make any point here. Many simply can’t handle it.
kRuGmAns OPINION is just that - an opinion. Government mandated loose lending policies like CRA were at the root of our financial meltdown no matter how much liberal spin is put on the issue.
Social, feel good, programs are designed to help the poor, pander for votes and warm the hearts of the gullible…but what they really do is put more power in the hands of sociopathic bureaucrats.

I think JUST ME gave you all the facts you need, I find it quite silly how conservatives want to blame poor people then want to put in place a puppet name Michael Steele to gain their following. You will have to do more than that to gain the votes of the poor, impoverished minorities...

You will have to stop blaming them for your problems. It is easy to decipher between conservatives and liberals on these threads....Conservatives always display ill will and intent toward any legislation that targets poor communities.

You should take a close look in the mirror and realize we are all poor when compared to the board members of the company you work for...unless you maek over 250K.

RayAmerica says

I think a huge factor is being missed here; and that is that the lenders and all involved thought their liberal underwriting, appraisals, etc. would be covered by a continuing appreciation in housing. Loans that were marginal would have equity infused IF properties continued to appreciate. Also, Fannie and Freddie KNEW the Federal Gov’t would bail them out if things turned sour, and guess what? …. they did. Fannie & Freddie were processing an unbelievable 85% of all loans bundled and sold on the secondary market. The whole bubble burst when the appreciation ended and exposed the entire system for what it was, a system being fueled by hope and air. I still contend that Obama, et all are doing the very thing they shouldn’t do, which is pumping more air into the bubble (via tax credits) which will only bring another huge phase of collapsing prices along with more foreclosures.

Agreed, it will wind up being money lost on people who simply buy homes using emotion and not on the basis of good business sense.

justme says

justme

I agree, none of these programs had anything to do with GLB which opened the floodgates for ALT-A loans. There are a bunch of false conservatives on the thread attempting to blame poor people...

These are the bunch of bitter individuals that Obama was speaking of, I truly do not believe they have any concern for the conservative movement. What matters most to them is that as long as poor people and minorities are on the other side...they will vote the exact opposite and oppose any common sense ideas.

4X,
what amount is "poor"?

Attempting to blame poor people? They, and many others, suffered as a result of the housing meltdown. They wern't to blame - government intervention was to blame. Thats the point of this whole thread.

In case no one noticed, where is it written that its the governments job to raise the percentage of housing ownership in America??? In case no one noticed, look at the disaster that was caused by governments intervention in the housing market. Virtually every government agency and program ultimately causes prices to increase. Fanny Mae, Freddy Mac, FHA, CRA (the ignition source) etc. Its a toxic cocktail that caused housing prices to skyrocket, a housing bubble and its resulting collapse. If that isn't bad enough, add the total cost to the taxpayer to maintain the army of employees, the rent's, the retirement costs, etc, etc, etc.

Big "helpful" government is a costly mistake...and we're all paying the price. I like the idea of voting for a candidate who would stop the war - but only if that same candidate wouldn't promise a whole list of other socialsitic goodies to the voters. Financially America can't stand more debt.
Google: IOUSA.

Honest Abe says

Attempting to blame poor people? They, and many others, suffered as a result of the housing meltdown. They wern’t to blame - government intervention was to blame. Thats the point of this whole thread.
In case no one noticed, where is it written that its the governments job to raise the percentage of housing ownership in America??? In case no one noticed, look at the disaster that was caused by governments intervention in the housing market. Virtually every government agency and program ultimately causes prices to increase. Fanny Mae, Freddy Mac, FHA, CRA (the ignition source) etc. Its a toxic cocktail that caused housing prices to skyrocket, a housing bubble and its resulting collapse. If that isn’t bad enough, add the total cost to the taxpayer to maintain the army of employees, the rent’s, the retirement costs, etc, etc, etc.
Big “helpful” government is a costly mistake…and we’re all paying the price. I like the idea of voting for a candidate who would stop the war - but only if that same candidate wouldn’t promise a whole list of other socialsitic goodies to the voters. Financially America can’t stand more debt.
Google: IOUSA.

So where is it written only the elite rich should be afforded home ownership?...just because you and I are priveleged enough to own doesnt mean we should exclude others from the American Dream.

how much is rich? poor?

slow people should run the 100 at the olympics in your world too, right 13X?

Bap33 says

how much is rich? poor?
slow people should run the 100 at the olympics in your world too, right 13X?

I would refer to the rich corporations that run our nation using greedy methods. Poor people would be anyone that cannot put a roof over their head, food on the table and love in their hearts. Even the slow people as you call them, have an open playing field in which they can attempt to compete at the Olympics. With hard work, slow people can learn to run fast. If I were to correlate this for you, this means that poor people should be afforded the opportunity to purchase within their means in areas where their incomes meet the price ranges.

In comparison to my recent purchases of 1.5 million, 2.3 million, anyone that would buy a home for 170K would be poor....

This is one of the few blogs I've seen do a FPP on georgism, which IMO is the only answer to the above questions about wealth and poverty.

Henry George's book, Progress & Poverty, was a runaway bestseller in the late 19th century, and was written to describe the serial nature of land booms and poverty among those who do not own land.

Before discovering it in late 2003 I was living in the Bay Area and was befuddled by LLs raising the rents on everyone during the dotcom rush, most of them profiting on fully depreciated property. Without the three-factor analysis of George -- that Land, Labor, and Capital are separate and distinct, I lacked the critical element to see the fundamental flaw of our post-Prop 13 system, and that there was a third way between it and the non-optimal if not outright disastrous "Socialist" central-planned economies. Henry George was no friend of the Socialists of his day.

I have no moral problem with wealth accreting to wealth via capital risk. I do have a problem with wealth accretion due to profiting from outright ownership of natural resources, that which was not produced by labor.

So much of today's economy is outright rentierism. That the british banks even had a term for this, "buy to let", sickened me when I heard it but now brings nothing but schadenfreude.

Financially America can’t stand more debt.

Google GINI.

The whole bubble burst when the appreciation ended and exposed the entire system for what it was, a system being fueled by hope and air.

And increasing wages from the 90s, the 2001-2003 tax cuts, lower interest rates, de-facto increased leverage via SISA/NINJA, and the rise of IO, negative amortization up to 120%. All those got the ball rolling 2002-2004, and the speculative element kept it going into overshoot 2005-2007.

It only hit me a couple of years ago that land values put all of us on a treadmill. Given that land is fixed in supply and demand is unbounded if not infinite, the cost to acquire the land ownership privilege will always be maximally expensive relative to area incomes/purchasing power.

It has always been this way. The richest private landowner in the US -- Robert Morris -- was thrown into debtors prison in the late 18th century due to massive failure in land speculation (he had the right idea but was a bit too early), and every generation since then has seen a boom/bust cycle rip through the economy like the SE Asian tsunamis.

Conservatives bemoan the very low if nonexistant Federal income taxes that poor people are subjected to, without realizing that these low taxes function nearly entirely as rent subsidies to the LLs. Raise taxes on the poor, eg. via mandated health insurance, and rents will HAVE to come down. Can't get blood out of a stone.

They used 2 year teaser rates because it increased their profit. They knew that after the two year teaser period was up, most borrowers would have to refi into another sub-prime loan. Lenders had borrowers on a tread mill, and they liked it that way. CRA had nothing to do with it.

yup, the parallel is revolving credit card debt. Fixed mortgages suck, the real action was hooking people on more leverage at floating rates.

Troy says

The whole bubble burst when the appreciation ended and exposed the entire system for what it was, a system being fueled by hope and air.
And increasing wages from the 90s, the 2001-2003 tax cuts, lower interest rates, de-facto increased leverage via SISA/NINJA, and the rise of IO, negative amortization up to 120%. All those got the ball rolling 2002-2004, and the speculative element kept it going into overshoot 2005-2007.
It only hit me a couple of years ago that land values put all of us on a treadmill. Given that land is fixed in supply and demand is unbounded if not infinite, the cost to acquire the land ownership privilege will always be maximally expensive relative to area incomes/purchasing power.
It has always been this way. The richest private landowner in the US — Robert Morris — was thrown into debtors prison in the late 18th century due to massive failure in land speculation (he had the right idea but was a bit too early), and every generation since then has seen a boom/bust cycle rip through the economy like the SE Asian tsunamis.
Conservatives bemoan the very low if nonexistant Federal income taxes that poor people are subjected to, without realizing that these low taxes function nearly entirely as rent subsidies to the LLs. Raise taxes on the poor, eg. via mandated health insurance, and rents will HAVE to come down. Can’t get blood out of a stone.

Check out this site: http://www.housingbubblebust.com/Fed/GDPvsHSG.html

You are one deep thinker.

Bap33 says

4X,
what amount is “poor”?

My definition would be households making under 12K per year whose head of households cannot afford the basic necessities (Food, Water and Shelter) and/or are living in substandard conditions. The Democratic party has been known as poverty pimps because they seem to prey on this voter base where as the Republican party seems to show no remorse for the conditions these people live under.

Clarence - no one has excluded others from the American dream. If you mean people are excluded from buying a home, thats simply not true. ALL buyers, however, do need: (1) good credit (2) down payment, closing costs and cash reserves, and (3) the ability to repay. It is not a requirement that a persons ethnicity even be disclosed on a loan application.

That is precisely why the government interfered with the CRA...to force banks to make loans to those who did not meet normal, prudent lending guidelines by having the three items I mentioned above. How safe would you feel getting on an airplane when you knew for a fact that normal, prudent safety standards had been eliminated (MEANING YOUR LIFE WAS ON THE LINE)?

Troy. America can't stand more debt. Here is a quote from the Wall Street Journal, Oct 11, 2009: "The cost on the debt repayment on the national debt represents more than 40 cents of every dollar that came in from individual income taxes." And what do we get for that??? Absolutely NOTHING. Why should our government be allowed to continue to waste "zillions" of dollars on politicians pet projects, pork and bridges to no where? Why should our government be allowed to burden future generations for spending which took place before they were even born? Isn't that taxation without representation?

Many have forgotten that politicians WORK FOR US...NOT the other way around. It's long overdue to start supporting individuals who stand for freedom and liberty - like Ron Paul. He represents common sense, freedom, the rule of law, personal responsibility, sound money and a strong DEFENSIVE military.

The two party system is devisive, the politicians like it that way. It keeps people fighting with each other without concentrating on the REAL PROBLEM...which is out of control politicians from BOTH parties.

@Honest Abe.
I voted for RP. Ross Perot
I also voted for RP. Ron Paul
I guess I'm a rebel. lol

Isn’t that a clear example of TOO MUCH DEBT?

nah, debt is just deferred taxation.

Not that I think gov't spending is all that wealth-accreting. Much of it is just spent on sub-optimal crap.

I'm a left-libertarian so I find the current system offensive from many angles.

The problem isn't "politicians" it's we the people. The teabagger jazz is just blah-blah-blah to me; the dynamics of the situation we're in are complex and have no simple solutions.

You fill your posts with a lot of keywords like "liberty" and "grandkids" but your rants are really content-free. You are scared by words but apparently lack the capacity to understand the system as it is. Sure, interest is a crushing burden -- but one man's interest payment is another man's income.

The bottom line over half of the wealth of this country is controlled by a small minority. Until we address this -- via "socialism" -- we are just rearranging deck chairs.

Troy,
Please cite your example working anyplace, at any time, in history .... without a war or revolution. Ready, go.

BAP, you asked earlier why some people are so pro-government in the face of turmoil. Truth tellers are viciously attacked precisely because of the validity of their message. Or as Ron Paul says: "Truth is treason in the empire of lies."

And there are simple solutions, the rule of law is simple, yet disregarded by politicians who will not abide by the law of the land - the constitution. Sound money is a simple solution, but The Fed and the liberal government politicians want to spend us into a black hold with their pet projects and refuse to follow the constitution. Freedom is a simple solution but the government has a sociopathic aversion against it. Government wants, for the benefit of the government,to micromanage every aspect of peoples lives, you know - they want to create a total nanny-state.

It always strikes me as odd that some completly dismiss waste, fraud, mismanagement, debt, irresponsible spending as no big deal. "Sure, interest is a crushing burden - but one man's interest is another mans income". The trouble is WE have to pay it back. Some people dismiss others rants as content free yet they themselves offer NO SOLUTIONS AT ALL.

Is that your solution? Socialism is spreading poverty equally amongst everyone. Its been tried countless times and the result is always the same, a lower standard of living, reduced productivity, hunger and social unrest. The harder the politicians try to satisfy the UNLIMITED demands of tens of millions of government dependents the faster the money will run out.

How about some real solutions. Cut spending, lower taxes, sound money, less regulation. WERE HEADED IN THE WRONG DIRECTION - HAVENT' YOU NOTICED YET? Ugh.

BAP - my barbs were meant for Troy - not you. I'm on the side of anyone with common sense, like you. Abe.

=Ready, go.

Norway, Sweden, Finland, Denmark.

Socialism is spreading poverty equally amongst everyone.

Socialism is a tool. It can be used and abused.

FWIW, as a left-libertarian I only want socialism to the degree that it is necessary to ensure everyone access to that which is needed to become and remain a productive member of society.

Jeffersonian idealocracy can work when there's half a continent to settle and profit from, but once the land is taken independence and malthusian conservatism will not work over the long run.

I am a hyper capitalist and believe in entrepreneurialism and the profit motive. I also think that established, hereditary wealth is a present drag on progress, if and when it pursues rentierism, for rentierism -- speculating in land, profits from natural resource extraction, and abusive skill arbitrage among our professional caste -- is simply leeching on the truly productive members of society who are producing through their labor the wealth of the nation.

The harder the politicians try to satisfy the UNLIMITED demands of tens of millions of government dependents the faster the money will run out.

Money's not the problem. Wealth creation is. We need to create more and consume less. More doctors. More nurses. More factories. More capital formation.

Less "investment" in real estate, less lawyers, less prisons, less military expenditure, all this is just pissing away our wealth.

The problem with non-governmental approaches is that "private equity" is intensely conservative and prefers the status quo, if not the status quo ante of the 19th century unregulated Gilded Age.

FWIW, I think income and sales taxes should be minimal and taxes on land value and resource extraction be maximal. You give me this & I'll support your minarchy.

Troy, thank you.
Would you share just a few details about those countries, please.
1) immigration laws, and rates of immigration from non-anglo countries.
2) demographic of non-Anglo residences and percentage break-down by nationality.
3) Amount spent on Defense, amount sent out in foreign aide, amount spent on FEMA / or Red Cross type of services.
4) Smog laws / EPA equivelant and cost to maintain.
5) Average number of non-citezens giving birth for free in hospitals over the past decade
6) Increase in non-domestic children in schools / on public aide
7) legal system access
8) divorce rate / teen-unwed mother rate

I know that's alot, but I think the details of your point are very important and knowing the details will help me (and others I think) see the whole picture. Thank you.

I'm not a racist or culturalist and I think everyone, given a conducive environment, can become productive members of society. Scandinavian countries are already non-anglo so I don't know what you mean by that.

It is true that the nordic nations have the advantage of a lot fewer mouths to feed and a lot more homogenous, common culture extending back into the mists of time to bolster their sense of common community.

The lack of the latter is one of America's main problems but it's solvable if we address the underlying problems in the current system, most of them simply economics-related IMO. I don't hold the eurosocialist nations to be paradises but there's a lot we can learn from them. America got by on the myths of the wild west and pioneering spirit, but now that all the good land's taken we have to think more about how we become more productive as a people.

Please excuse my ignorance, I thought "anglo-saxon"(sp) was the correct term for the northern region peoples. What is the proper term for the caucozoidial folks that populate the regions you mention?

You say you are not a culturalist, but you mention the lack of common culture as being a possible issue in America, now that all of the good land is gone. Would the good land include areas outside of America?

Would you please give your best try at putting some numbers to my questions? I did a few searches and have numbers, but they will be slanted in my way, so I would like to read yours first. My point will obviously come from the details of the locations and peoples you suggested we follow, so please do not find offence in my questions. Thanks.

Of course Civilization and economic success depends greatly on parentage and culture in the general but like I said above I am more of a "classist" than a culturist or racist, ie. in any country and people wealth begets progress and poverty begets strife.

Humans are naturally more generous to people who share commonality and naturally suspicious of those who don't. Americans have been dealing with these issues since we got off the boats 400 years ago, and the nordic/scandinavian countries are now beginning to deal with the friction as more third-world immigrants flock to their socialist safety-net systems. [to answer your question, Anglo-Saxon refers to germanic tribes that ended up in England, first battling the Welsh & Celts, and later invading nordic peoples]

The original question above was about how eurosocialism can be established without violence, and I gave examples of the nordic countries.

I find Honest Abe's opinion: "Cut spending, lower taxes, sound money, less regulation. WERE HEADED IN THE WRONG DIRECTION" ideologically-driven and not empirical.

Gov't spending, High/low taxes aren't the problem, what this money is going towards is the problem. If gov't spending is accretive -- wealth enhancing -- then it can assist private enterprise. Same thing with regulation. cf. Bhopal, India and present-day China for the natural state of an unregulated economy, not to mention the topic of CRA and how the financial system was allowed to go off the rails this decade.

http://dorkmonger.blogspot.com/2008/11/cutting-red-tape.html

The top 10% of this country own about two-thirds the wealth. The masses toil for them. In a democracy, something's gotta give here.

Back on topic, I find the idea of cutting taxes naive in the extreme because it is ignorant of a fundamental feedback dynamic of our economy, that of land prices and disposable income.

AFAICT, every dollar of less taxes will eventually result in a dollar higher in rents and mortgage payments. And the converse is true, too. Every dollar of increased taxes results in lower land values and lower rents.

This is why I think that without taxing land more we will not really stabilize the system that well. The Eurosocialists address the problem sideways by taxing the crap out of everything, but more targeted taxes are in fact possible.

The problem with a “governmental approach” is they flat out don’t know what the hell they are doing, and care even less about the negative unintended consequences they create in the aftermath. Plus it opens the door to waste, fraud, mismanagement, misallocation of resources, and corruption…

I certainly agree with this 100%. A people get the government they deserve, good and hard, as the wise man said. Only 20% of this country has their head on straight IMO. If that.

Troy the 50 poorest countries in the world all have the same symptoms…low income, grinding poverty, restrictive authoritarian laws, hunger and little hope for the future.

They also have the commonality of too many ~~~~ people and not enough land. The governmental dysfunction IMO is not a cause but an effect of their poverty.

Hereditary wealth does not negate opportunity

In the general I most certainly agree with you. The injustice only comes from wealth crooks acquiring natural wealth and then leasing it out to others who then do the actual work in the system. This is a net drag on equality and advancement and requires 30% or so of our economy to be involved in unproductive tail-chasing of CRE and real estate rentierism.

I have no problem with wealth getting returns from capital risk, the Gates and Googles. We all, however, cannot be billg. Someone has to stock the shelves, rotate the tires, and clean the toilets, and these fungible jobs simply lack bargaining power to become anything other than a race to the bottom in any unregulated economy. Quality of life in the eurosocialist systems is IMMENSELY better for the bulk of the people than here in the states. This is not a failure of our people but due to the fundamental feedback of land economy and rife rentierism the masses are subjected to here.

I live and work in Sunnyvale and have seen ZERO black people as peers here since I got here in 2000. Something is fundamentally screwed up in our system. I'm interested in solutions, not ideological bs that didn't work 200 years ago (hint: Hamilton won that argument) and won't work now.

If they lost their place and missed their “Window of time” they would have to wait for 6-9 months for their next available opportunity to see a dentist.

An NHS dentist. Dentistry isn't even covered by Medicare any more so the US has no socialist dentistry so the wait time for an equivalent in the US is infinite.

The UK still has private dentistry for those willing to pay instead of wait and AFAICT medical services are so critical that I simply don't trust the free market in providing them -- providers have too much pricing power due to there guilding (limiting supply), asymmetrical information (they're the experts), and inelastic demand that is usually not price sensitive (health is wealth).

Wait a minute, to make matters ever worse the Obama Administration is piling on unprecedented massive amounts of debt on the American people while at the very same time stating that “debt accumulation is unsustainable”.

Obama's administration is responsible for two months of gov't spending now since the fiscal year started last month.

Therefore Thomas Jefferson was right after all.

Jefferson was right about a lot of things, but it's not longer the 18th century and his agrarian-centered outlook isn't going to work now.

What the teabaggers ignore is that private corporations and concentrated wealth can be just as tyrannical as the worst collectivized hellhole.

stop managing our great country in a “loosey-goosey” manner which has lead us to the brink of economic collapse

I agree with this, however. As a left-libertarian I'd like to see DC focus on national issues and my state government focus on everything else, like it should be. The problem with this is that California is about the optimal size but most states are just a bit too small to be independent states in the full sense of the word.

Addendum:

"I am conscious that an equal division of property is impracticable. But the consequences of this enormous inequality producing so much misery to the bulk of mankind, legislators cannot invent too many devices for subdividing property, only taking care to let their subdivisions go hand in hand with the natural affections of the human mind." --Thomas Jefferson to James Madison, 1785

heh.

This is an addendum to the addendum dated November 18, by Troy.

"If the American people ever allow private banks to control the issue of their money, first by inflation, then by deflation, the banks and corporations that grow up around them will deprive the people of their property until their children wake up homeless on the continent their fathers conquered."

This is EXACTLY what's happening today in America. END THE FED. Support The Campaign For Liberty. Vote for Ron Paul and Peter Schiff.

or vote for someone who will make sensible changes over a phased approach, like what Obama is doing now. All this talk about destroying our current system is getting a bit silly...as if any of us are expert enough to know what we are talking about.

Yes, sensible changes like Ron Paul suggests. Obama is NOT making sensible changes. He is a financial illiterate. He has never owned a business nor was he even in the Boy Scouts. He (and Bush) are spending us into a black hole with no escape. OK, well there are several ways out: (1) Default on all the debt that government has created (and the Chinese won't be loaning us any more money (2) continue to devalue our currency until hyperinflation (3) massive tax increases and confiscation of everyones assets (Bank savings accounts, 401K plans, safe deposit boxes, etc.) There of course the possibility of two or all three of the above to happen at the same time. This is where government becomes tyrancial.

I am expert enough to know what I am talking about because: I read, I have common sense, I understand history repeats itself, I understand incorrect "cures" of the past, repeated again now, will NOT solve our problems. I understand if too much spending and debt got us into this problem, more spending and more debt is not the correct answer. I understand the value of sound money is necessary for the financial health of individuals, businesses, and the country as a whole.

There are solutions to our problems and the government is doing EXACTLY the opposite. The government is preventing the economy from fixing itself, which it would, WITHOUT more government intervention. The governments "solutions" will extend process and make it more painful for all (except the political class).

Honest Abe says

He has never owned a business nor was he even in the Boy Scouts.

Wait a second. He wasn't in the Boy Scouts??? Can I change my vote??

elvis says

I’ve heard that reference before. I think it means even though Obama wasn’t even a boy scout…he’s now the Commander and Chief of the most powerful military in the world. It is kind of ironic when you think about it.

How is that ironic? Does being a Boy Scout have any relevance to being Commander in Chief? Does he often find himself in a situation where he needs to set up a tent? Or help old ladies cross the street?