House Passes $819 Billion Economic Stimulus

Thanks. It just seems like there's got to be a median between capitalism and socialism. Yes, it'll mean a large(r) government. Yes, it will probably mean salary caps of some kind for top earners. Yes, it might mean national healthcare. But a society has to take care of it's own, not take advantage of it's own, and since straight up capitalism clearly can't manage that, then there's got to be a different way.
"And politically correct is the worst term, not just because it’s dismissive, but because it narrows down the whole social justice spectrum to this idea that it’s about being polite instead of about dismantling the oppressive social structure of power.
Fun Fact: When you actively avoid being “PC,” you’re not being forward-thinking or unique. You’re buying into systems of oppression that have existed since before you were even born, and you’re keeping those systems in place."
Stolen.
The Culprit Is All of Us

By SCOTT S. POWELL

The government's meddling got us into this mess.



CONTRARY TO A VIEW POPULARIZED DURING THE 2008 presidential election season, the current economic crisis was not the result of deregulation.
The Bush administration made many mistakes, but deregulation was not one of them.
Not only was there no major deregulation passed during the past eight years, but the Bush administration and a Republican Congress approved the most sweeping financial-market regulation in decades.
The bipartisan Sarbanes-Oxley Act was enacted in 2002 to prevent corporate fraud and restore investor confidence after the collapse of Enron and WorldCom. It failed to prevent the accounting fraud and influence-peddling scandals at Fannie Mae and Freddie Mac. And even after those scandals were widely understood, regulators sent Fannie and Freddie back into the market to continue buying subprime loans, lending and borrowing with implied taxpayer backing.
Across the government, the Bush administration supported new regulations that added almost 1,000 pages a year to the Federal Register, nearly a record. If this is insufficient regulation, it's hard to imagine a scope that would be effective.
We are in this mess largely because critical thought and moral judgment have been subordinated to the politicization of our economy, resulting in regulatory gaps and excessive controls of the wrong kind.
Government regulations should be limited to those that increase and protect transparency and competition, protect public and private property, promote individual responsibility and enforce equal opportunity under the law. Even if the right laws and regulations could be found, they would prove insufficient to protect freedom and prosperity.
The Foundation of Economics
In his farewell address, George Washington said that religion and morality are essential to sustain democracy in America. He might well have added that virtue is just as indispensable to its economy. When the captains of banking and finance and their congressional overseers fail in moral judgment, the results are disastrous for everyone. As we are now witnessing in the real-estate, stock- and bond-market dislocations, once trust is lost, markets freeze and long-standing relationships break down, resulting in illiquidity, irrational pricing and severe losses.
Today's problems have their roots in programs and financial instruments that shifted the locus of moral responsibility away from private individuals and institutions to wider circles that were understood to end with a government guarantee. Heads of the top banks and financial institutions could approve substandard home-mortgage underwriting -- prone to increased default -- because those loans could be securitized by Wall Street and sold off to investors or to government-sponsored enterprises (GSEs), with no likely recourse to the financial institution of origin.
Our present crisis began in the 1970s, during the Carter administration, with passage of the Community Reinvestment Act to stem bank redlining and liberalize lending in order to extend home ownership in lower-income communities. Then in the 1990s, the Department of Housing and Urban Development took a fateful step by getting the GSEs to accept subprime mortgages. With Fannie and Freddie easing credit requirements on loans they would purchase from lenders, banks could greatly increase lending to borrowers unqualified for conventional loans. In the name of extending affordable housing, this broadened the acceptability of risky loans throughout the financial system.
No Surprise
The risk lurking in the GSE portfolios was acknowledged in the Bush administration's first fiscal-year budget, released in April 2001. It stated that Fannie and Freddie were "a potential problem" because "financial trouble of a large GSE could cause strong repercussions in the financial markets, affecting federally insured entities and economic activity." Fed Chairman Alan Greenspan issued repeated warnings that the GSEs "placed the total financial system of the future at substantial risk." Such warnings went unheeded even after accounting scandals rocked Fannie and Freddie.
The collapse and government seizure of Fannie and Freddie in September 2008 ended the experiment in partial socialization of the U.S. housing sector. Before we try complete concentration of federal financial power, we should understand that power and political corruption abrogated moral judgment on every level.
The poor and middle class were encouraged to live beyond their means and buy houses they couldn't afford; speculators were lured into excessive risk-taking; banks were rewarded for lowering their loan standards; and Wall Street found new windfall profits from securitizing and reselling bad loans in bulk. With the support of regulators, credit-rating agencies provided cover for the whole charade.
Spreading Failure
There is plenty of blame to go around on both sides of the political aisle. But the lesson should be clear that socializing failed businesses -- whether in housing, health care or in Detroit -- is not a long-term solution. Expanding government's intrusion into the private sector doesn't come without great risk. The renewing and self-correcting nature of the private sector is largely lost in the public sector, where accountability is impaired by obfuscation of responsibility, and where special interests benefit even when the public good is ill-served.
George Washington also warned against excessive partisanship, which distracts public councils and enfeebles public administration. Rather than blaming the party in power or the party formerly in power, the nation should stop living in denial of the mistakes of both parties.
Spreading failure across the entire economy risks turning a recession into a depression. Regulatory reform now must foster responsible behavior and financial accountability. Far better for our citizenry and businesses to have a strength and resourcefulness that comes from creativity, honesty and self-reliance than to have a growing dependence on a profligate government.
SCOTT S. POWELL is a senior VP at ELP Capital, which manages a commercial real-estate debt-based hedge fund; a visiting fellow at the Hoover Institution; and a Commerce Bridge board member.

.




Originally Posted by Scarlet
I'm glad this guy has an articulate opinion, but the premise of this piece is NOT true. (Our troubles begin with the CRA...)

The CRA does not require banks to make risky loans.

Most 'bad' loans that were made are not CRA loans.

The lending practices that started this problem started w/in the last 5 years. The CRA has been around since '77.
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Last edited by TillyMunchyWaves; 02-26-2009 at 07:03 AM. Reason: ETA
Indeed, that article contradicts itself. I'm not buying it.
"And politically correct is the worst term, not just because it’s dismissive, but because it narrows down the whole social justice spectrum to this idea that it’s about being polite instead of about dismantling the oppressive social structure of power.
Fun Fact: When you actively avoid being “PC,” you’re not being forward-thinking or unique. You’re buying into systems of oppression that have existed since before you were even born, and you’re keeping those systems in place."
Stolen.
My husband ran into an old neighbor of ours a couple days ago. She moved to the US from Poland I am guessing maybe 25-30 years ago. She said she came from a socialistic country and was afraid we were headed in that direction. She said whatever we have, even with its problems, is better than going to socialism and she sure hopes we stop before it's too late.
Originally Posted by munchkin
She is correct.. I believe too many people are letting the government step into areas where they don't need to be. Government is one of those things that if you let in an inch they will go a mile (obviously look at what is going on with everything right now.. not just the economy but with our rights.. gun laws.. free speech..etc.) I for one don't believe that the government should be in every part of my business, if I want to go by a gun I shouldn't have to have a million dollar insurance policy.. which doesn't even exsit! I think it is time to step back and remember that EVERYONE in the goverment (yes even the President) is a politican... and not a "friend".
A natural light redhead 3B... but for now a dark auburn 3A trying to get my hair back to "normal" and long...

Started CG 1/12/09

*Never* touching my CHI again..



My favs so far is the DevaCurl line.. minus the B'leavin.. it makes my hair tooo dry feeling and stringy!
So, you pay, what, $50 a month of insurance? In order to drive a car you have to have insurance. I don't really see the big deal.

This is not directed to anyone, it's just a thought that popped into my mind. I wonder if the same people worried about their guns and government in our personal lives, also voted for the homosexuals marriages to be illegal.


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Last edited by Trenell; 02-26-2009 at 01:44 PM.
My husband ran into an old neighbor of ours a couple days ago. She moved to the US from Poland I am guessing maybe 25-30 years ago. She said she came from a socialistic country and was afraid we were headed in that direction. She said whatever we have, even with its problems, is better than going to socialism and she sure hopes we stop before it's too late.
Originally Posted by munchkin
She is correct.. I believe too many people are letting the government step into areas where they don't need to be. Government is one of those things that if you let in an inch they will go a mile (obviously look at what is going on with everything right now.. not just the economy but with our rights.. gun laws.. free speech..etc.) I for one don't believe that the government should be in every part of my business, if I want to go by a gun I shouldn't have to have a million dollar insurance policy.. which doesn't even exsit! I think it is time to step back and remember that EVERYONE in the goverment (yes even the President) is a politican... and not a "friend".
Originally Posted by WhatsaCHI


It's always so ironic to me that the same people who shout that the gov't should stay out of our lives, are the very same people who want more gov't in our bedrooms, regulating our uterine contents, and deciding who can and cannot get married based on their genitals.
My husband ran into an old neighbor of ours a couple days ago. She moved to the US from Poland I am guessing maybe 25-30 years ago. She said she came from a socialistic country and was afraid we were headed in that direction. She said whatever we have, even with its problems, is better than going to socialism and she sure hopes we stop before it's too late.
Originally Posted by munchkin
She is correct.. I believe too many people are letting the government step into areas where they don't need to be. Government is one of those things that if you let in an inch they will go a mile (obviously look at what is going on with everything right now.. not just the economy but with our rights.. gun laws.. free speech..etc.) I for one don't believe that the government should be in every part of my business, if I want to go by a gun I shouldn't have to have a million dollar insurance policy.. which doesn't even exsit! I think it is time to step back and remember that EVERYONE in the goverment (yes even the President) is a politican... and not a "friend".
Originally Posted by WhatsaCHI

Wait... so, the mess we're in now, is that (in your opinion) the result of too much regulation or not enough regulation?
"And politically correct is the worst term, not just because it’s dismissive, but because it narrows down the whole social justice spectrum to this idea that it’s about being polite instead of about dismantling the oppressive social structure of power.
Fun Fact: When you actively avoid being “PC,” you’re not being forward-thinking or unique. You’re buying into systems of oppression that have existed since before you were even born, and you’re keeping those systems in place."
Stolen.
To me I believe that there has been wayyyy too much regulation going on lately. In my opinion I do not believe the government should bail anyone out of their forclosure.. I have seen way too many people here feel like just "giving up" on their house and moving somewhere else, not paying on their house, and going into forclosure. While this happens they sit in their pretty new houses (on post) and think about how wonderful it is that they're going to be bailed out... too me that is the exact oppsite of what should happen. I think people should try their hardest not to have a forclosure.. but it is too easy now to get out of it that people have the "I don't care attitude". I am only speaking of the people around where I live, as I have not seen other areas that have been affected. It just really irks me that I am paying my taxes to help these people out.


And to add... a million dollars insurance on EVERY gun would be more than $500 a month. I'm pretty sure over 75% of this country can not afford $500 a month for not needed insurance.


Also, I am not for nor against gay marriage... nor abortion... I could care less what people do with their lives, that will be on them.. not on me. So please do not put me in that "Oh she's so republican so she's against everything bracket... " I do not apperciate that... because I could care less if you're a Dem. or Repub.... we're all AMERICANS!!!
A natural light redhead 3B... but for now a dark auburn 3A trying to get my hair back to "normal" and long...

Started CG 1/12/09

*Never* touching my CHI again..



My favs so far is the DevaCurl line.. minus the B'leavin.. it makes my hair tooo dry feeling and stringy!
I think people should try their hardest not to have a forclosure.. but it is too easy now to get out of it that people have the "I don't care attitude". I am only speaking of the people around where I live, as I have not seen other areas that have been affected. !!!
Originally Posted by WhatsaCHI
Do you really think that most people just give up wihtout a fight. How do you know what's going through your neighbors minds


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No, I don't think everyone does...like I said I only know what goes on around me... I can't make assumptions for everyone else in the country like some other people do. I know how they feel because they flat out told me... I did not make the comment without knowing.. that would be wrong.
A natural light redhead 3B... but for now a dark auburn 3A trying to get my hair back to "normal" and long...

Started CG 1/12/09

*Never* touching my CHI again..



My favs so far is the DevaCurl line.. minus the B'leavin.. it makes my hair tooo dry feeling and stringy!
No, I don't think everyone does...like I said I only know what goes on around me... I can't make assumptions for everyone else in the country like some other people do. I know how they feel because they flat out told me... I did not make the comment without knowing.. that would be wrong.
Originally Posted by WhatsaCHI
So how many families are we talking, here.

you said

my opinion I do not believe the government should bail anyone out of their forclosure.. I have seen way too many people here feel like just "giving up" on their house and moving somewhere else, not paying on their house, and going into forclosure.
But then say
I am only speaking of the people around where I live, as I have not seen other areas that have been affected.
So you are saying that just b/c you've encountered people who "gave up" then no one should get any sort of help?


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To me I believe that there has been wayyyy too much regulation going on lately. In my opinion I do not believe the government should bail anyone out of their forclosure.. I have seen way too many people here feel like just "giving up" on their house and moving somewhere else, not paying on their house, and going into forclosure. While this happens they sit in their pretty new houses (on post) and think about how wonderful it is that they're going to be bailed out... too me that is the exact oppsite of what should happen. I think people should try their hardest not to have a forclosure.. but it is too easy now to get out of it that people have the "I don't care attitude". I am only speaking of the people around where I live, as I have not seen other areas that have been affected. It just really irks me that I am paying my taxes to help these people out.
Originally Posted by WhatsaCHI
Ok, I have a couple of things I'd like to point out about this portion of your post.

Can you point directly to how over-regulation has led to foreclosures? Because from where I sit, it's a LACK of banking regulation that has created a climate in which banks lend anyone and everyone just about any amount of money they want for a house, whether or not they can afford it, and creating mortgage packages that deceive uneducated borrowers into thinking they can afford them.

It sounds to me like you're interested in punishing people who borrowed money badly, but not in punishing the banks who made it possible for people to borrow money badly. Why is that?
"And politically correct is the worst term, not just because it’s dismissive, but because it narrows down the whole social justice spectrum to this idea that it’s about being polite instead of about dismantling the oppressive social structure of power.
Fun Fact: When you actively avoid being “PC,” you’re not being forward-thinking or unique. You’re buying into systems of oppression that have existed since before you were even born, and you’re keeping those systems in place."
Stolen.
I know of three families around here that are going through that. I think certain people SHOULD have the help, like the ones who DIDN'T buy more than they could AFFORD, who lost their jobs and now are looking at having no where to live. I don't believe that people who knew they couldn't afford what they have, or just let it go to waste because they don't "feel like paying on the house this month" should recieve any help what so ever. To me it's like patting them on the back and telling them "it's alright, at least you tried.. here is some money to help you through your troubles even though you put yourself in this position". Sorry, but I would rather my hard earned tax money go somewhere else....


As for the banks.. I do believe they should be punished... leaving the government out and letting them solve it on their own (because yet again, they put themselves in the position due to the fact they were giving these loans out to people who they knew good and well couldn't afford them).... if going bankrupt is the answer let it be... there are many other banks out there.... who have stood through this mess due to the fact that they weren't negligent with their loans.
A natural light redhead 3B... but for now a dark auburn 3A trying to get my hair back to "normal" and long...

Started CG 1/12/09

*Never* touching my CHI again..



My favs so far is the DevaCurl line.. minus the B'leavin.. it makes my hair tooo dry feeling and stringy!
I know of three families around here that are going through that. I think certain people SHOULD have the help, like the ones who DIDN'T buy more than they could AFFORD, who lost their jobs and now are looking at having no where to live. I don't believe that people who knew they couldn't afford what they have, or just let it go to waste because they don't "feel like paying on the house this month" should recieve any help what so ever. To me it's like patting them on the back and telling them "it's alright, at least you tried.. here is some money to help you through your troubles even though you put yourself in this position". Sorry, but I would rather my hard earned tax money go somewhere else....
Originally Posted by WhatsaCHI
I don't know anyone that just chooses not to pay on thier mortage. Its not like people didn't pay thier mortage and went on a shopping spree. Most people were "robbing peter to pay paul". They didn't pay thier mortages because they had to choose between all the other bills they had to pay.

Personally, i think the banks bare a larger portion of the responsibility for this problem than the people that brought more than they could afford. Let's be realistic here...if the banks had not come up with these "creative loan approval processes" then people would not be able to get $600K houses and only make $40K a year. A lot of people that purchased homes under these programs were low income, and i think they got taken advantage of point blank.

I'm in the process of purchasing a bigger home and I can tell you that when I brought my condo 3 years ago...the shameful tatics that some of these loan officers were trying to use was crazy. I knew walking in a wanted a 30 year fixed with as low an interest rate as I could get...and that was all i was looking at. I was approached with ARMs that jumped by hundreds of dollars every 2 years and was told that I would prob have gotten bonuses and raises so the jump shouldn't be a concern *yeah right*.

I went to one national bank and they tried to push me towards an ARM where they didn't even check your credit, they just verified that u had a job and had been employed for 3 years, but the APR was through the ROOF. When I responded that my credit is fine and I wasn't interested, I was then steered towards another ARM where all u made were interest payments for 10 years, and then that infamous ballon payment hit. When I told the loan officier she was crazy as hell, she told me "well, all u have to do is refiniance before the ballon or sell and take the equitiy and buy another house". Well...the housing market crashed...and FAST. A lot of people that went this route don't HAVE any equity and are upside down on thier mortages but the banks don't care, they gave these shady loans and they want thier money come hell or high water!

I was an educated consumer, and I knew what the pit falls were, but a LOT of people heard " really low mortage payments" and jumped on it. I don't think anyone went into this trying to get over on the system or trying to purchase more house than they could afford. And I know from personal experience, that with the sales tactics that were used, I can see why so many people are in the mess that they are. I was lucky that my dad was a licensed real estate agent (part time retirement gig) and that I got good advice when purchasing my condo.
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I totally agree with you! When we bought our house, we were approached as well with all the ARM's and stuff... BUT my DH and I had a set amount that we could afford and we were fortunate to have a fixed rate at a good percent so we didn't have to hear all the hoop-law about the ARM's . We too were also educated by my parents about buying a house (my dad knows the ropes) so we weren't going into it blindly like some people. I do somewhat agree that it was the banks fault, but I am not holding all the fault to the banks, as well as the people. Everyone knows their limit... I don't care who you are.. when you know you can't afford a 600K house, why do you follow through? I don't understand...


A couple of the families that I was referring to had the ARM's .... they even came to me saying how wonderful it was because they have such a low rate..even though I warned them what would happen they didn't listen. That's their fault that they were not well enough educated in the buying process. Also, some of these families weren't really robbing peter to pay paul.. they were robbing peter to pay peter. In other words, they found another place to live that is "nicer" and paid for that instead of their house....and they are one of the ones that is getting the help. How does that not make you sick?
A natural light redhead 3B... but for now a dark auburn 3A trying to get my hair back to "normal" and long...

Started CG 1/12/09

*Never* touching my CHI again..



My favs so far is the DevaCurl line.. minus the B'leavin.. it makes my hair tooo dry feeling and stringy!
It does make me sick, however, you can't pick and choose who gets it and who doesn't...because a lot of people that need it won't get it if we go that route. A lot of people were preyed on by preditory lenders. A lot of people have lost thier jobs and simply can't pay the bills. I lot of people went into this housing maket trying to get "something for nothing" and ended up in a mess. In all honesty, how do you tell one from the other? I don't think you can...because its open to interpretation.
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Yeah, I know.. I just wish there was some way you could tell... like having to fill out a form or some kind of check.... oh well. I guess some people will just have to consider themselves "lucky" .
A natural light redhead 3B... but for now a dark auburn 3A trying to get my hair back to "normal" and long...

Started CG 1/12/09

*Never* touching my CHI again..



My favs so far is the DevaCurl line.. minus the B'leavin.. it makes my hair tooo dry feeling and stringy!
You seem to be viewing this whole mess through the filter of your own experience. I can't blame you for it, but it's not a very complete view of what's going on.

Firstly, it's difficult to legally separate the people who knew better than to buy the house they did and those who didn't, and got into an unforeseeable bind.

Secondly, who (or what organization) should be responsible for punishing the banks if not the government? The banks clearly can't self regulate. If it were just a matter of letting the banks fail, what would happen to all the people who have accounts? They'd just end up taking their money from the government anyhow. That's why banks are federally insured. The bank goes under, the government gives your "your" money back. Except it's not "your" money, it's the government's money that they're giving you to replace the money lost by the bank that went bankrupt.

And there are wide reaching economic problems that come with many national and international banks going under all at once. If we were talking about one bank, or a few small banks, that'd be one thing. But we're talking about several of the largest banks in the world. We're not just talking about a couple of banks failing, we're talking about our entire economic system crumbling around us. It's a lot more complicated that just telling them, Sorry, guys, you f cked it up, now you'll have to pay the consequences.
"And politically correct is the worst term, not just because it’s dismissive, but because it narrows down the whole social justice spectrum to this idea that it’s about being polite instead of about dismantling the oppressive social structure of power.
Fun Fact: When you actively avoid being “PC,” you’re not being forward-thinking or unique. You’re buying into systems of oppression that have existed since before you were even born, and you’re keeping those systems in place."
Stolen.

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