DebateGate
General Category => 3DHS => Topic started by: Christians4LessGvt on September 22, 2008, 01:27:07 PM
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(http://images.bloomberg.com/r06/navigation/logo.gif)
How the Democrats Created the Financial Crisis
by Kevin Hassett
Sept. 22 (Bloomberg) -- The financial crisis of the past year has provided a number of surprising twists and turns, and from Bear Stearns Cos. to American International Group Inc., ambiguity has been a big part of the story.
Why did Bear Stearns fail, and how does that relate to AIG? It all seems so complex.
But really, it isn't. Enough cards on this table have been turned over that the story is now clear. The economic history books will describe this episode in simple and understandable terms: Fannie Mae and Freddie Mac exploded, and many bystanders were injured in the blast, some fatally.
Fannie and Freddie did this by becoming a key enabler of the mortgage crisis. They fueled Wall Street's efforts to securitize subprime loans by becoming the primary customer of all AAA-rated subprime-mortgage pools. In addition, they held an enormous portfolio of mortgages themselves.
In the times that Fannie and Freddie couldn't make the market, they became the market. Over the years, it added up to an enormous obligation. As of last June, Fannie alone owned or guaranteed more than $388 billion in high-risk mortgage investments. Their large presence created an environment within which even mortgage-backed securities assembled by others could find a ready home.
The problem was that the trillions of dollars in play were only low-risk investments if real estate prices continued to rise. Once they began to fall, the entire house of cards came down with them.
Turning Point
Take away Fannie and Freddie, or regulate them more wisely, and it's hard to imagine how these highly liquid markets would ever have emerged. This whole mess would never have happened.
It is easy to identify the historical turning point that marked the beginning of the end.
Back in 2005, Fannie and Freddie were, after years of dominating Washington, on the ropes. They were enmeshed in accounting scandals that led to turnover at the top. At one telling moment in late 2004, captured in an article by my American Enterprise Institute colleague Peter Wallison, the Securities and Exchange Comiission's chief accountant told disgraced Fannie Mae chief Franklin Raines that Fannie's position on the relevant accounting issue was not even ``on the page'' of allowable interpretations.
Then legislative momentum emerged for an attempt to create a ``world-class regulator'' that would oversee the pair more like banks, imposing strict requirements on their ability to take excessive risks. Politicians who previously had associated themselves proudly with the two accounting miscreants were less eager to be associated with them. The time was ripe.
Greenspan's Warning
The clear gravity of the situation pushed the legislation forward. Some might say the current mess couldn't be foreseen, yet in 2005 Alan Greenspan told Congress how urgent it was for it to act in the clearest possible terms: If Fannie and Freddie ``continue to grow, continue to have the low capital that they have, continue to engage in the dynamic hedging of their portfolios, which they need to do for interest rate risk aversion, they potentially create ever-growing potential systemic risk down the road,'' he said. ``We are placing the total financial system of the future at a substantial risk.''
What happened next was extraordinary. For the first time in history, a serious Fannie and Freddie reform bill was passed by the Senate Banking Committee. The bill gave a regulator power to crack down, and would have required the companies to eliminate their investments in risky assets.
Different World
If that bill had become law, then the world today would be different. In 2005, 2006 and 2007, a blizzard of terrible mortgage paper fluttered out of the Fannie and Freddie clouds, burying many of our oldest and most venerable institutions. Without their checkbooks keeping the market liquid and buying up excess supply, the market would likely have not existed.
But the bill didn't become law, for a simple reason: Democrats opposed it on a party-line vote in the committee, signaling that this would be a partisan issue. Republicans, tied in knots by the tight Democratic opposition, couldn't even get the Senate to vote on the matter.
That such a reckless political stand could have been taken by the Democrats was obscene even then. Wallison wrote at the time: ``It is a classic case of socializing the risk while privatizing the profit. The Democrats and the few Republicans who oppose portfolio limitations could not possibly do so if their constituents understood what they were doing.''
Mounds of Materials
Now that the collapse has occurred, the roadblock built by Senate Democrats in 2005 is unforgivable. Many who opposed the bill doubtlessly did so for honorable reasons. Fannie and Freddie provided mounds of materials defending their practices. Perhaps some found their propaganda convincing.
But we now know that many of the senators who protected Fannie and Freddie, including Barack Obama, Hillary Clinton and Christopher Dodd, have received mind-boggling levels of financial support from them over the years.
Throughout his political career, Obama has gotten more than $125,000 in campaign contributions from employees and political action committees of Fannie Mae and Freddie Mac, second only to Dodd, the Senate Banking Committee chairman, who received more than $165,000.
Clinton, the 12th-ranked recipient of Fannie and Freddie PAC and employee contributions, has received more than $75,000 from the two enterprises and their employees. The private profit found its way back to the senators who killed the fix.
There has been a lot of talk about who is to blame for this crisis. A look back at the story of 2005 makes the answer pretty clear.
Oh, & there is one little footnote to the story that's worth keeping in mind while Democrats point fingers between now and Nov. 4: Senator John McCain was one of the three cosponsors of S.190, the bill that would have averted this mess.
http://www.bloomberg.com/apps/news?pid=20601039&refer=columnist_hassett&sid=aSKSoiNbnQY0 (http://www.bloomberg.com/apps/news?pid=20601039&refer=columnist_hassett&sid=aSKSoiNbnQY0)
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Okay, genius.
What is the solution NOW?
Approve the bailout?
Do nothing?
Rewrite the bailout?
Had Phil Gramm not made bundling mortgages legal, the problem would have been averted.
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You boneheads will eat any line of shit from McCain advisers.
Kevin Hassett
From Wikipedia, the free encyclopedia
Kevin Hassett is senior fellow at the think tank American Enterprise Institute where he directs economic policy studies. He regularly appears on Bloomberg Television. He advised President Bush in his campaign, and he currently serves as a senior economic adviser to the John McCain 2008 presidential campaign.
Hassett is coauthor with James K. Glassman, of Dow 36,000: The New Strategy for Profiting From the Coming Rise in the Stock Market. It was published in 1999 before the dot-com bubble burst. The book predicted that the Dow Jones industrials index would rise to 36000 within three to five years--i.e., 2002 or 2004. Hasset also writes for the AEI magazine The American.
Hassett obtained a Ph.D. in economics, from the University of Pennsylvania and a bachelor's degree in economics from Swarthmore College.
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You boneheads will eat any line of shit from McCain advisers.
Oh like anyone that writes about the problem doesn't vote?
Yeah boss "Kill the messenger" dats alot easier than dealing with the facts.
Yeah sure go find a martian to write about it! ::)
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So let me see if I understand this. Despite controlling the administration and the Congress for almost 8 full years, the Republicans could do absolutely nothing to protect Americans from corporate greed because the Democrats wouldn't let them?
Even if that were true, and not merely childish and laughable excuse-making, why would anyone want yet another Republican administration if it's been proven powerless in the past to protect the American people from the hands of the evil Democrats, and McCain was just along for the ride, equally powerless, even though in the majority?
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[youtube]http://www.youtube.com/watch?v=usvG-s_Ssb0[/youtube]
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CU4, in all seriousness, I advise you impartially - - it won't make a bit of difference anyway, since there is NO WAY that John Insane can win this one now - - return to your "experience" vs. "inexperience" pitch.
Not only is "Blame the Democrats" NOT gonna fly, but it has the added disadvantage of making you look lame, pathetic, childish and DESPERATE.
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Sorry Michael reality just will not allow me to:
Former Clinton White House Budget Director Franklin Raines = 50 Million from Fannie Mae
Former Clinton Justice Department Official Jamie Gorelick = 26 Million from Fannie Mae
Jim Johnson Obama VP Selection Team = Millions from Fannie Mae
Top 3 Fannie/Freddie $ US Senate Members:
Democrat Chris Dodd $
Democrat Barack Hussein Obama $
Democrat John Kerry $
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"since there is NO WAY that John Insane can win this one now"
michael, I wouldn't be so sure. Saracuda has made it a race!
Palin draws crowd of 60,000 in The Villages
By Bill Cotterell - news-press.com capital bureau - September 21, 2008
(http://d.yimg.com/us.yimg.com/p/ap/20080919/capt.a0f650539369445f8879ba35a88aafa4.mccain_2008_mnss101.jpg?x=229&y=345&q=85&sig=.pOV3NcOJBO0NvwGN4vdTg--)
THE VILLAGES, FLORIDA -- Republican vice presidential nominee Sarah Palin told wildly cheering, flag-waving, chanting supporters that John McCain is "the only great man in this race" and promised Sunday he will fix the nation's economy if voters give the GOP four more years in the White House.
"He won't say this, so I'll say it for him," the Alaska governor said in an almost confidential tone at the close of her first Florida stump speech. "There is only one man in this election who has ever really fought for you. John McCain wore the uniform of his country for 22 years -- talk about tough."
The Villages, a vast, upscale planned community north of Orlando, has about 70,000 mostly adult residents -- many of them military retirees -- who vote reliably Republican in statewide races. Tens of thousands inched along roads into the picturesque town square of the complex, where they stood in sweltering heat for about four hours as local GOP officials and a country band revved up the crowd.
"Sa-Rah! Sa-Rah!" they chanted at every mention of her name, applauding loudly and waiving tiny American flags that were distributed -- along with free water bottles -- by local volunteers. The fire chief estimated the crowd at 60,000.
Admiring throngs mobbed the Palin family's arrival and departure, snapping souvenir pictures. Autograph seekers thrust campaign signs, caps with the McCain-Palin logo and copies of magazines with her face on their covers, and the Palins responded warmly.
Palin, her husband and three of their children arrived in Orlando but spent a family day at Disney World, she said as she introduced her entourage to the enthusiastic crowd. She joked about similarities and differences of the two states at opposite corners of America, but was all business when she focused on the need for a large voter turnout in a hotly contested state with 27 electoral votes.
Recent polls have given the McCain-Palin ticket a single-digit edge but Florida is clearly up for grabs. Sen. Barack Obama, D-Ill., campaigned from Jacksonville to Miami late last week and the Democrats have mobilized a massive volunteer effort statewide. McCain, who led the Jan. 29 state primary with a big boost from popular Gov. Charlie Crist, has strong support in the vital I-4 corridor and across North Florida, where conservative southerners tend to register as Democrats but vote Republican in statewide races.
In a theme Palin would pound home, GOP Chairman Jim Greer Greer said Obama and his running mate, Delaware Sen. Joe Biden, have records of voting for higher taxes and have said on the campaign trail that they would increase regulation of financial markets.
"John MCain and I are going to take our case for reform to every voter in every background and every party, or no party at all," said Palin. "We're going to Washington to shake things up."
She said "John McCain warned Congress that we needed to do something before these problems became a crisis," but that Washington -- including Obama and Biden -- did not act for months as financial giants teetered and toppled.
"Americans are caught in kind of a perfect storm between high taxes, high gas prices, greed on Wall Street and a shortage of courage in Washington," she said. "But we need new leadership in Washington -- we need serious reform on Wall Street."
Palin, whose son shipped out for Iraq this month, made a point of asking veterans and military members in the crowd to raise their hands for a round of applause.
Then she recalled that McCain took an early, unpopular stance in support of the Iraq troop surge, a policy shift now widely credited with stabilizing Iraq. "That's the kind of man I want as commander in chief," she shouted, as applause and whoops rose in the town square. "John McCain is the only great man in this race."
http://news-press.com/apps/pbcs.dll/article?AID=/20080921/NEWS0107/80921022 (http://news-press.com/apps/pbcs.dll/article?AID=/20080921/NEWS0107/80921022)
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CU4, you could DOUBLE or TRIPLE all those pay-outs and you'd still have to ask yourself: WHO WUZZIT who controlled the White House for the past two Presidential terms, and who controlled Congress for most of them?
The answers to those questions just won't go away.
What you're really saying is that a Republican White House and a Republican Congress are powerless in the face of three bought-up Democrats. (You'd also have to get people to believe that Fannie Mae and Freddie Mac supported only Democrats, but that's another story.)
If that's the case, why vote for Republicans anyway? It's like voting for a Sheriff who got 53 votes out of a hundred cast, but then turned around and went to hide in his basement after three townsmen told him to.
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How long till the McCain/Palin camp has a release explaining what they meant to say other than "60,000"?
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Well, looks like the Republican Crypto-Fascist Party is determined to go with "Blame the Democrats." Can't stop 'em, and it's probably all for the best. Good luck with that, and can you possibly take on a few more Hillary staffers before the whole ship goes down?
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How long till the McCain/Palin camp has a release explaining what they meant to say other than "60,000"?
Is someone questioning the size of the HUGE crowd?
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<<Is someone questioning the size of the HUGE crowd?>>
Well, we were, but when we saw "huge" go into capital letters, we knew we were licked.
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Well, we were, but when we saw "huge" go into capital letters, we knew we were licked.
Yeah backing up spurious accusations can be such a pain.
(http://farm4.static.flickr.com/3141/2877578464_afcdbf02c0.jpg?v=0)
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Sure don't look like SIXTY THOUSAND to me! But I can easily see that every one of them is a loser.
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How long till the McCain/Palin camp has a release explaining what they meant to say other than "60,000"?
Is someone questioning the size of the HUGE crowd?
Not yet, but the McSame/Palid campaign has already lied once or twice about crowd sizes.
http://www.bloomberg.com/apps/news?pid=20601070&sid=a1J0tfV3XJYs&refer=politics (http://www.bloomberg.com/apps/news?pid=20601070&sid=a1J0tfV3XJYs&refer=politics)
McCain-Palin Crowd-Size Estimates Not Backed by Officials
By Lorraine Woellert and Jeff Bliss
Sept. 13 (Bloomberg) -- Senator John McCain has drawn some of the biggest crowds of his presidential campaign since adding Alaska Governor Sarah Palin to his ticket on Aug. 29. Now officials say they can't substantiate the figures McCain's aides are claiming.
McCain aide Kimmie Lipscomb told reporters on Sept. 10 that an outdoor rally in Fairfax City, Virginia, drew 23,000 people, attributing the crowd estimate to a fire marshal.
Fairfax City Fire Marshal Andrew Wilson said his office did not supply that number to the campaign and could not confirm it. Wilson, in an interview, said the fire department does not monitor attendance at outdoor events.
In recent days, journalists attending the rallies have been raising questions about the crowd estimates with the campaign. In a story on Sept. 11 about Palin's attraction for some Virginia women voters, Washington Post reporter Marc Fisher estimated the crowd to be 8,000, not the 23,000 cited by the campaign.
``The 23,000 figure was substantiated on the ground,'' McCain spokesman Tucker Bounds said. ``The campaign is willing to stand by the fact that it was our biggest crowd to date.''
``Since day one, this campaign has been consistent that we're not going to win or lose based on crowd size but the substance of John McCain's record,'' Bounds said.
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<<``Since day one, this campaign has been consistent that we're not going to win or lose based on crowd size but the substance of John McCain's record,'' Bounds said.>>
Oh. Well, in THAT case, you'd better send Palin and her husband back to Anchorage to answer questions for Troopergate.
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Senator John McCain has drawn some of the biggest crowds of his presidential campaign since adding Alaska Governor Sarah Palin to his ticket on Aug. 29.
Isn't that what really matters?
BTW what is Biden averaging?
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<<Isn't that what really matters?>>
Not when the count is rigged.
<<BTW what is Biden averaging?>>
Who's Biden?
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So, Christians, your clever theory is that the Democrats caused the mess because they received contributions from some executives?
How does that work, exactly?
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Who's Biden?
Right