NY Times authors find root cause of Great Recession and libs aren't gonna be happy

• Manhattan Buckeye

  Speaking of which, the WSJ has an interesting article:
  
  http://finance.yahoo.com/real-estate/article/113078/government-mortgage-cap-reduction-wsj
  
  The short story is we're #^$#ed. The. longer story is that the America wealth is so wrapped up in continuing depreciating assets that we can't monetize us out of this situation.
  
  Gut is correct in his post above, we have record low interest rates yet we still can't inflate us out of the problem, we can work hard to solve this economic mess but it is a multi-year if not multi-decade endeavor.
• I Wear Pants

  gut;823353 wrote:No, all the problems and near collapse were pretty much 100% related to mortgages. While cross-correlation of assets didn't help, nothing outside of mortgages comes close to bringing them down, nor could anything else really mitigate that mess.
  
  And you can blame the banks for nearly wrecking the economy, but even if you had reigned in risk there you STILL have a housing bubble. It's interesting with super low interest rates we've seen little inflation but have had several asset bubbles.

  
  The mortgages were the big problem, but all the products that were trading on the risk of those shitty mortgages made it a lot worse once shit went south.
• gut

  I Wear Pants;823420 wrote:The mortgages were the big problem, but all the products that were trading on the risk of those ****ty mortgages made it a lot worse once **** went south.

  
  Actually, they thought they were hedged and had insurance. Cross- correlation of assets mitigating the hedges made things worse, and it had never happened before but was a result of excess liquidity. The failure of insurance due to unforeseen cross-default risk was really a failure of regulation, but in large part the regulators were working from the same flawed risk models.
• I Wear Pants

  Yet every time someone mentions regulating anything the right screams about stifling business.
• Writerbuckeye

  

  I Wear Pants;827172 wrote:Yet every time someone mentions regulating anything the right screams about stifling business.

  
  That's not true and you damn well know it. People on here have talked all along about RESPONSIBLE environmental policies. Those would have to include regulations, would they not?
  
  So your blanket condemnation of conservatives is wrong -- as usual.
• tk421

  

  Speaking of risk and mortgages, the Obama administration has told banks to lend to minorities with bad credit and being on public assistance can not be used to deny someone a loan. Talk about failure to learn from the past.
  
  http://www.investors.com/NewsAndAnalysis/Article.aspx?id=577794&p=1
• gut

  I Wear Pants;827172 wrote:Yet every time someone mentions regulating anything the right screams about stifling business.

  
  Of course, worth mentioning the fed, FNMA and FreddieMac -all gubmit agencies - were at the heart of the mess.
• fan_from_texas

  Writerbuckeye;827296 wrote:That's not true and you damn well know it. People on here have talked all along about RESPONSIBLE environmental policies. Those would have to include regulations, would they not?
  
  So your blanket condemnation of conservatives is wrong -- as usual.

  
  Maybe this is a topic for another thread, but what would you consider responsible environmental policies?
• Writerbuckeye

  

  You're right, it is for another thread -- but things like not being able to dump sewage into streams or rivers, or toxic chemicals. Very basic, common sense laws that protect the environment. If I thought about it, I could probably come up with lots of examples, but this should be enough to disprove what was said.
  
  I'm not talking about AGW and the idiot laws that this administration wants to put into effect that do nothing but cripple industries unnecessarily with no definitive proof they are saving the environment from anything harmful.
• Footwedge

  I Wear Pants;827172 wrote:Yet every time someone mentions regulating anything the right screams about stifling business.

  Joe SixPack disagrees...LOL
  
  http://tvnewslies.org/html/day_in_the_life_of_joe_middle-.html
• believer

  

  Footwedge;832638 wrote:Joe SixPack disagrees...LOL
  
  http://tvnewslies.org/html/day_in_the_life_of_joe_middle-.html

  
  riiiiiiiiiiight :rolleyes:
• Writerbuckeye

  

  I've seen a version of that tripe before. Funny to see liberals acting like no conservative ever voted for any type of regulation -- ever.
  
  I guess they'll need a security blanket or a teddy bear next.
• believer

  

  Writerbuckeye;832740 wrote:I've seen a version of that tripe before. Funny to see liberals acting like no conservative ever voted for any type of regulation -- ever.

  True, for example, if it weren't for Republicans their righteous program known as the Civil Rights Act of 1964 would never have gotten past their own filibustering racist southern Dems in the Senate.
  
  But - yeah - those eeeeevil wascally racist conservative Republicans want to starve old people, make poor kids go hungry, want women to be subjugated, BS, BS, BS............
• Footwedge

  gut;823353 wrote:No, all the problems and near collapse were pretty much 100% related to mortgages. While cross-correlation of assets didn't help, nothing outside of mortgages comes close to bringing them down, nor could anything else really mitigate that mess.

  There certainly were other vehicles which led the the financial collapse. The housing price manipulation was the grease that spun the wheel...that much is true....but to suggest that the entire ugly picture was housing related is patently false.
  

  And you can blame the banks for nearly wrecking the economy, but even if you had reigned in risk there you STILL have a housing bubble. It's interesting with super low interest rates we've seen little inflation but have had several asset bubbles.

  No, had you reigned in the risk, there would not have been anywhere near the bubble created. Housing speculators had to have complicity in their crimes.. Their crime partners were the banks.
• Writerbuckeye

  

  Many of those same banks that are Obama's buddies -- but nobody in the media talks about that.
• gut

  Footwedge;833565 wrote: No, had you reigned in the risk, there would not have been anywhere near the bubble created. Housing speculators had to have complicity in their crimes.. Their crime partners were the banks.

  
  And you don't understand that the primary driver of bubbles is excess liquidity (and, to a lesser extent, excess speculation). Central banks around the world - not just the Fed - continued to refill the punch bowl to stave off deflation. When you have that much excess capital sloshing around in the markets, you get asset bubbles.
  
  And, sorry, it was the housing bubble and subsequent collapse of the MBS market that buried the banks under a mountain of toxic assets. It begins and ends with housing, and when that collapsed causing credit markets to freeze, the collapse spread to other asset classes and business sectors.
• Cleveland Buck

  

  We are due for some severe deflation to correct the various markets that have been artificially inflated over the past 80 years or so. The only thing that will stop it is government interference until they bankrupt us. The thing is, if prices fell dramatically, wages could fall to where we were competitive globally.
• Footwedge

  gut;833669 wrote:And you don't understand that the primary driver of bubbles is excess liquidity (and, to a lesser extent, excess speculation). Central banks around the world - not just the Fed - continued to refill the punch bowl to stave off deflation. When you have that much excess capital sloshing around in the markets, you get asset bubbles.

  What liquidity was "sloshing around" whenever the speculators artificially propped up the dotcoms back in the 90's? Liquidity had absolutely nothing to do with the housing bubble. As I stated above, the "hype" of booming real estate was all orchestrated...and the banks were privy to exactly what was happening. They knew godddam well that the bubble was a huge fart floating on top of the bath water. They didn't care. Why should they? Know any banker CEO's that didn't recover their billions...at the hands of the taxpayers' IOU's? Wherby the housing market was the greae that turned the wheel, the financial collapse had MUCH more to do with liberal rules through deregulation.
  

  And, sorry, it was the housing bubble and subsequent collapse of the MBS market that buried the banks under a mountain of toxic assets. It begins and ends with housing, and when that collapsed causing credit markets to freeze, the collapse spread to other asset classes and business sectors.

  SMH. You cannot possibly...in a million years...... believe that nonsense.
• gut

  Footwedge;834727 wrote:
  SMH. You cannot possibly...in a million years...... believe that nonsense.

  
  It's the truth - if you've read anyone who knows anything about economics like Bill Gross, Stephen Roach, even John Mauldin and others, instead of the obvious ignorant leftwig bloggers you get your bad info from, you'd know it is the truth - ever hear of the carry trade? You probably don't even realize that there are/were housing bubbles in the UK, Australia...Japan (back in the 90's) and some other places I'm forgetting. You don't realize that the it was a global punchbowl, hardly just the Fed and US Banks turning over money and pumping liquidity into the markets.
  
  And, no, you don't need excess liquidity to form an asset bubble, but the housing bubble was most definitely fueled by excess liquidity. Greenspan and other central bankers have even admitted as much for failing to take away the punch bowl sooner.
  
  As for any bankers who "didn't recover billions from the taxpayer" try asking some of the ones who worked at Bear or Lehman. Posts like your sadly reinforces that Americans know so little about economics and how markets work that we have no hope of electing politicians to fix this mess. People like you gobble up the class warfare BS and the "evil" Wall Street crap like crack.
• Footwedge

  gut;834887 wrote:It's the truth - if you've read anyone who knows anything about economics like Bill Gross, Stephen Roach, even John Mauldin and others, instead of the obvious ignorant leftwig bloggers you get your bad info from, you'd know it is the truth - ever hear of the carry trade? You probably don't even realize that there are/were housing bubbles in the UK, Australia...Japan (back in the 90's) and some other places I'm forgetting. You don't realize that the it was a global punchbowl, hardly just the Fed and US Banks turning over money and pumping liquidity into the markets.
  
  And, no, you don't need excess liquidity to form an asset bubble, but the housing bubble was most definitely fueled by excess liquidity. Greenspan and other central bankers have even admitted as much for failing to take away the punch bowl sooner.
  
  As for any bankers who "didn't recover billions from the taxpayer" try asking some of the ones who worked at Bear or Lehman. Posts like your sadly reinforces that Americans know so little about economics and how markets work that we have no hope of electing politicians to fix this mess. People like you gobble up the class warfare BS and the "evil" Wall Street crap like crack.

  
  Listen dude...I've probably forgotten more economics than you've ever learned. And nice hackjob on my "reading liberal blog sites". You are a novice here obviously, because most of what I link to are conservative economists...not liberal. The fact that you hold Wall Street blameless in the economic charade is a sad commentary regarding your overall knowledge of the subject matter.
  
  Does it bother you at all.....that those CEO's that had their hand out for W's 800 billion in 2008....are now making even higher per annum compensation than they did in 06 or 07? Call me a class warfarist all you want. If seeing CEO's compensation increasing 400 times to one ratio... higher than the 45 hour a week grunt...than knock yourself out. I'm a proud class warfarist then....
  
  The biggest farce that conservatives spew regarding economics is how the laissez faire system will provide a beautiful "invisibly hand" which will make the world a utopian paradise. That's utter bullshit. Even Adam Smith's "Wealth of Nations" clearly pointed out the caveats of his system....which he only promoted as a theory....but conceded would never work in practice...given the human innate desire to cheat, manipulate. collude, and monopolize. Do you think for one lousy, stinking minute that free market forces are at work today? In your wildest dreams....cuz they don't. Adam Smith...yes Adam Smith...that Adam Smith......made it adamently clear....that he hated the thought of a "Wall Street" totalitarian state, and the power of corporatocracy. His view on the "invisible hand" would be completely and utterly destroyed....and what a prophet the man turned out to be. Don't believe me? Read the goddam book....all 1200 pages and learn.
  
  Unfettered capitalism is a far worse "disease state" than an unfettered society...i.e..... a society deplete of all police...at the local. state and federal levels. Wouldn't that be grand. A policeless state. People like you Gut will never, ever, understand the utter misery the bastardization of capitalism has wrought....here in our country. Smith turns over in his grave at what has transpired.
• Footwedge

  In case anyone is interested....the founding father of free market capitalism....and his views on the corporatists...and the deleterious effects on the society at large.
  
  A great summary of his writings here.....
  
  http://deoxy.org/korten_betrayal.htm
• Cleveland Buck

  

  Unfettered capitalism is ruined by only one thing and that is monopolies/oligopolies. If you use your government to regulate the size of companies in the market and nothing else, you have your "invisible hand". Prices stay low so wages can stay low and you can be competitive in a global market.
  
  You can't point to anything in this country over the last 100 years and call it unfettered capitalism or really capitalism at all. You have the federal government involving itself in almost every aspect of the economy and you have oligopolies in banking, oil, and auto industries among others that are "too big to fail" and therefore are pretty much government backed companies.
  
  I get the argument about the rise in CEO pay as opposed to regular workers, but that is exactly because of our system of government and big business in bed together to suck us dry, not because we aren't paying laborers enough or aren't taxing the rich enough. Get the government out of the economy completely and break up the big companies and that is how you have a sustainable free market.
  
  I'm not saying fuck safety nets for the poor. I know that there is a need to redistribute income to the lower brackets to maintain a civil society. I'm not even against a negative tax rate for low income earners where they get more back in their tax refund than they paid. It is imperative that the handouts go to people without telling them where to spend it though. Send them a check that they can spend on health insurance, food, or crack. When you give them health care, you drive up prices in that industry. When you give them grants for college education you drive up prices in that industry. Just write them a check and be done with it. And get rid of tax deductions for this and that. One tax rate per bracket or go with a sales tax.
  
  If prices were low enough that we could make a decent living on $2/hr, would it really be worth it for companies to move their manufacturing operations overseas? Of course not. People are worried about how much money they make when they should be worrying about how much they can buy with the money they do make.
• gut

  Footwedge;837122 wrote:Listen dude...I've probably forgotten more economics than you've ever learned. And nice hackjob on my "reading liberal blog sites". You are a novice here obviously, because most of what I link to are conservative economists...not liberal. The fact that you hold Wall Street blameless in the economic charade is a sad commentary regarding your overall knowledge of the subject matter.

  
  
  LMAO. Never have I said Wall Street is blameless, but it's wrong to make them a scapegoat. And you've demonstrated that you know jack shit about economics in multiple posts. Either that or you are just intellectually dishonest ignoring basic fundamentals and empirical data so you can spin your view. Jesus Christ go read something published within at least the last 50 years and maybe learn a little something about modern economics. Unfettered capitalism? Where? You do realize that a lot of regulation has been borne out of demand for the markets for more oversight and checks? You do realize that beyond what the govt requires, there is a whole huge list of responsibilities and regulations to be a registered security? When you have considerably less talented and less bright, typically, govt regulators being the watchdog their ability to succeed is grossly limited. This is repeated often - you have the original junk bond King causing a similar amount of chaos and destruction but today, in fact, high yield is a valuable and needed source of capital for growing companies. We've done pretty well with "unfettered" capitalism despite a series of financial/market collapses over the years. Globalization and unfettered govt spending is what is really driving the economy into the shitter.
  
  CEO pay is out of whack, but blame the shareholders. I don't see where it's the govt job to dictate what CEO's should make. And if you have issue what the common man makes, then maybe go remember what you supposedly forgot about economics and become one of the fatcats yourself because the simple fact is the CEO is more talented and creates (and the bad ones destroy) more value than the line worker. The CEO is not competing with the unskilled labor in India and China like Joe Sixpack. Those "fatcat" CEO's you're talking about lost hundred of millions in equity value that pails in comparison to their wages, but either you don't understand this or you choose to ignore it.
  
  Nor have I ever said that economic theory works flawlessly in practice - I've pointed out repeatedly that's often not the case, nor is natural correction always the most optimal outcome. But liberal redistribution is worst. The govt destroys the value of the dollar and everyone loses, something else you seem to struggle to comprehend.
  
  Policeless state? LMAO, what a horrible example, and also horribly wrong....Besides security being one of the truly good things govt provides and does fairly well, is there not private security available for hire? When there is capital available and a profit to be made, the markets do quite well. But when not, such as with defense, roads and other infrastructure it makes sense for society to share that burden. We end-up paying more for nearly everything the govt does that could be handled by private industry, unless you think those 3.5M federal workers or whatever work for free.
• Writerbuckeye

  

  Cleveland Buck;837183 wrote:Unfettered capitalism is ruined by only one thing and that is monopolies/oligopolies. If you use your government to regulate the size of companies in the market and nothing else, you have your "invisible hand". Prices stay low so wages can stay low and you can be competitive in a global market.
  
  You can't point to anything in this country over the last 100 years and call it unfettered capitalism or really capitalism at all. You have the federal government involving itself in almost every aspect of the economy and you have oligopolies in banking, oil, and auto industries among others that are "too big to fail" and therefore are pretty much government backed companies.
  
  I get the argument about the rise in CEO pay as opposed to regular workers, but that is exactly because of our system of government and big business in bed together to suck us dry, not because we aren't paying laborers enough or aren't taxing the rich enough. Get the government out of the economy completely and break up the big companies and that is how you have a sustainable free market.
  
  I'm not saying **** safety nets for the poor. I know that there is a need to redistribute income to the lower brackets to maintain a civil society. I'm not even against a negative tax rate for low income earners where they get more back in their tax refund than they paid. It is imperative that the handouts go to people without telling them where to spend it though. Send them a check that they can spend on health insurance, food, or crack. When you give them health care, you drive up prices in that industry. When you give them grants for college education you drive up prices in that industry. Just write them a check and be done with it. And get rid of tax deductions for this and that. One tax rate per bracket or go with a sales tax.
  
  If prices were low enough that we could make a decent living on $2/hr, would it really be worth it for companies to move their manufacturing operations overseas? Of course not. People are worried about how much money they make when they should be worrying about how much they can buy with the money they do make.

  
  Very well done. The two best examples of government screwing up the marketplace are health care and education. Both are out of control and are fast becoming out of reach of most people. A true free market without government interference in both of these would have kept it within reach of most people, and so many wouldn't have a feeling of entitlement that now exists (further screwing up the system).
• majorspark

  

  Cleveland Buck;837183 wrote:Unfettered capitalism is ruined by only one thing and that is monopolies/oligopolies. If you use your government to regulate the size of companies in the market and nothing else, you have your "invisible hand". Prices stay low so wages can stay low and you can be competitive in a global market.
  
  You can't point to anything in this country over the last 100 years and call it unfettered capitalism or really capitalism at all. You have the federal government involving itself in almost every aspect of the economy and you have oligopolies in banking, oil, and auto industries among others that are "too big to fail" and therefore are pretty much government backed companies.
  
  I get the argument about the rise in CEO pay as opposed to regular workers, but that is exactly because of our system of government and big business in bed together to suck us dry, not because we aren't paying laborers enough or aren't taxing the rich enough. Get the government out of the economy completely and break up the big companies and that is how you have a sustainable free market.
  
  I'm not saying fuck safety nets for the poor. I know that there is a need to redistribute income to the lower brackets to maintain a civil society. I'm not even against a negative tax rate for low income earners where they get more back in their tax refund than they paid. It is imperative that the handouts go to people without telling them where to spend it though. Send them a check that they can spend on health insurance, food, or crack. When you give them health care, you drive up prices in that industry. When you give them grants for college education you drive up prices in that industry. Just write them a check and be done with it. And get rid of tax deductions for this and that. One tax rate per bracket or go with a sales tax.
  
  If prices were low enough that we could make a decent living on $2/hr, would it really be worth it for companies to move their manufacturing operations overseas? Of course not. People are worried about how much money they make when they should be worrying about how much they can buy with the money they do make.

  Excellent post. I could not agree more. The constitution was meant to regulate the size of "big" government. To keep it broken up between competitive government entities. Once those constitutional firewalls were slowly breached an unholy alliance began to form between "big" business and "big" government. They are in bed together playing the right against the left like fiddles.