[peck420]

Thanos Thanos:

It was probably less the theory of low-income home ownership at fault than it was the practice of allowing the ones (i.e. the Wall Streeters) most likely to turn it into a criminal enterprise to be the ones to manage it. Classic letting the vampire provide security for the blood bank scenario, so to speak.

It wasn't the theory at all, that was at fault, and I apologize for giving that impression.

The fault lies pretty squarely on the politicos for writing garbage legislation in an attempt to buy votes. And, again, when they wrote more garbage legislation that allowed bankers to hide the coming crisis in other investments.

This was a problem that could have been avoided right from the get go, with some actual thought put into the original legislation, or at least had the damages mitigated if they had dealt with it prior to mixing it into every other investment market.

The only part the low income earners played, was using a tool they thought the governments had enacted for their actual benefit...which is, quite frankly, expected from every income class...they give you a tool, you use it if you can.

[Thanos]

The American obsession with deregulation pretty much ensured that the housing schemes were going unmonitored and unpoliced. Those who said a massive problem was brewing were pretty much ignored as the stock market raced past 10000 points. No one can justifiably say they were surprised by the inevitable collapse, not when seemingly everyone had done their own fair share in making sure that nothing could be done to prevent it from happening.

One of the questions I kept asking was why no one from Wall Street ever got prosecuted for their actions in the 2007/2008 collapse. I read up on a few things from Matt Taibbi and Elizabeth Warren and learned that basically there are no laws at all (and what few laws there were were pretty much gutted altogether by every US presidential administration from Reagan to Bush Jr.) to keep the financial sector from literally doing what it wants whenever it wants. Can't prosecute when something, no matter how crooked or destructive it is, isn't even regarded as being criminal. The pyramid schemers like Bernie Madoff are chump change when compared to what the really big boys are, completely legally, getting away with literally all the time.

[BartSimpson]

Thanos Thanos:

The American obsession with deregulation pretty much ensured that the housing schemes were going unmonitored and unpoliced.

Ah, not quite.

The Community Reinvestment Act (CRA) that started the ball rolling on derivatives, tranches, and other BS was not an act of deregulation, it was itself a new regulation.

http://en.wikipedia.org/wiki/Community_Reinvestment_Act

What's ironic is that the CRA was designed to eliminate the practice of 'redlining' which was a result of a Depression-era banking regulation that was designed to prevent banks from making risky investments in bad neighborhoods.

The CRA required banks to lend to minorities with bad credit and then to make high loan-to-value mortgages on properties with sketchy appraisals. Meaning that the loans were more or less unsecured by collateral.

To offset the impacts of the CRA the Congress required the Federal mortgage corporations Freddie Mac and Fannie Mae to underwrite the CRA-mandated loans.

So long as home values continued to increase then this volatile Ponzi scheme remained solvent. But when the market finally went south in 2008 the whole house of cards collapsed and trillions in equity disappeared. It also exposed all of the bad paper the banks had written and then passed off (via the Federal Reserve) as collateralized securities to the investment houses like Lehman Brothers.

Lehman acted in good faith in buying these securities that the banks and the Fed had sold as being high-yield but very secure bundles of CRA paper.

When the crunch came then investment houses like Lehman were left holding the bag for both the banks that wrote these equities and for the Federal government that caused them to exist in the first place. This is part of why no one in banking has been prosecuted is because if we prosecute the bankers then we MUST also prosecute those in government who told the bankers to commit fraud in the first place!

The only place where deregulation came into play in this debacle was when Washington Mutual and Bank of America's mortgage divisions sold their tranches to their own investment divisions - something that was illegal before deregulation. This amplified the exposure of these banks to the bad paper.

The solution is deregulation.

* Repeal the CRA and have the banks write mortgages that protect their depositors and shareholders instead of helping to buy votes for urban Democrats.

* De-charter Fannie Mae and Freddie Mac and let the banks take responsibility for writing bad paper if they do so. No more pooled risk.

If we do just these two things we can restore stability to the mortgage market.

The thing is you'l have to accept that people with bad credit will not be able to get loans on ramshackle homes in bad neighborhoods.

[OnTheIce]

andyt andyt:

Bullshit.

Pretty much sums up what we all think of your posts on this subject.

[ShepherdsDog]

There will always be inequality because not everyone is equally deserving or equally qualified. Komrad Andrei's view, where he earns the same as a doctor is just as flawed as the one where a banker or CEO earns millions in bonuses for destroying the economy or their company. Both will result in a dystopian society.

[andyt]

And all of you seem to have missed that this is exactly what Stiglitz is talking about - reducing what is describe in latter part of your paragraph. That is where the danger lies for the US other developed economies. Nobody is talking about bringing in communism. It's rectifying the extreme tilt to crony capitalism that's the issue here.

Just because some editor uses a simplistic headline has you all reacting like pavlov's dogs. The masters have you well trained.

[Thanos]

Just the usual lack of human ingenuity or cleverness in things economic or in the distribution of resources. I doubt you could get much agreement, at least from the current generation of swells or other ubermensch masters of the universe, on how much of a basic need qualifies as a "right" when it's practically impossible to even get them to agree that even the most minimal systemic fairness is in their own best interest too. Things like fair housing practices crept out of places like Scandinavia in the mid 19th century because even the wealthy of the era began to agree that it was kind of unsettling, and more than a bit mean-spirited, to see an entire family frozen to death on an Oslo or Stockholm sidewalk after they'd been evicted from a slum apartment in the middle of winter. Nowadays though? Listen to the most intense of the ideological free marketeers, judging by the ones I've seen on TV and the intarwebz, and a disinterested shrug is the best you seem to get out of them.

[BartSimpson]

Thanos Thanos:

Just the usual lack of human ingenuity or cleverness in things economic or in the distribution of resources. I doubt you could get much agreement, at least from the current generation of swells or other ubermensch masters of the universe, on how much of a basic need qualifies as a "right" when it's practically impossible to even get them to agree that even the most minimal systemic fairness is in their own best interest too. Things like fair housing practices crept out of places like Scandinavia in the mid 19th century because even the wealthy of the era began to agree that it was kind of unsettling, and more than a bit mean-spirited, to see an entire family frozen to death on an Oslo or Stockholm sidewalk after they'd been evicted from a slum apartment in the middle of winter. Nowadays though? Listen to the most intense of the ideological free marketeers, judging by the ones I've seen on TV and the intarwebz, and a disinterested shrug is the best you seem to get out of them.

What it all boils down to is freedom. If people are free then they are also free to fail. But if they're not free to fail then they're not free at all.

I choose freedom, warts and all. I'd rather freeze to death on an Oslo sidewalk than be cold and hungry in some socialist slum like the council housing in the UK.

[Zipperfish]

Thanos Thanos:

Just the usual lack of human ingenuity or cleverness in things economic or in the distribution of resources. I doubt you could get much agreement, at least from the current generation of swells or other ubermensch masters of the universe, on how much of a basic need qualifies as a "right" when it's practically impossible to even get them to agree that even the most minimal systemic fairness is in their own best interest too. Things like fair housing practices crept out of places like Scandinavia in the mid 19th century because even the wealthy of the era began to agree that it was kind of unsettling, and more than a bit mean-spirited, to see an entire family frozen to death on an Oslo or Stockholm sidewalk after they'd been evicted from a slum apartment in the middle of winter. Nowadays though? Listen to the most intense of the ideological free marketeers, judging by the ones I've seen on TV and the intarwebz, and a disinterested shrug is the best you seem to get out of them.

James Moore, Conservative MP: "Is it my job to feed my neighbour's child? I don't think so."

[BartSimpson]

Zipperfish Zipperfish:

James Moore, Conservative MP: "Is it my job to feed my neighbour's child? I don't think so."

I don't see the problem here. Isn't it your contention that people are supposed to pay exhorbitant taxes so the government can feed your neighbor's child?

If it's my responsibility to take care of others then I don't need to pay the government to do it, too.

[Zipperfish]

BartSimpson BartSimpson:

I don't see the problem here. Isn't it your contention that people are supposed to pay exhorbitant taxes so the government can feed your neighbor's child?

I don't recall saying that. That is what is commonly known as the strawman logical fallacy.

Clearly James Moore saw a problem with it, as he apologized for those remarks later.

But yes, like most Canadians, I support a strong social safety net. Americans give a lot more to charity than Canadians. Different ethic.

Either way--whether through government programs or charity, it is the job of every human being to see to it that your neighbour's kid isn't hungry. In my opinion. Obviously a lot of people don't care for anyone but themselves.

[ShepherdsDog]

Hungry kid's will eventually steal from you out of desperation. My wife and I have always donated to food banks and Christmas wish lists, since university days. I was lucky then, and only ate bologna sandwiches and KD because I liked them, not because that was all I could afford.

[bootlegga]

Zipperfish Zipperfish:

BartSimpson BartSimpson:

I don't see the problem here. Isn't it your contention that people are supposed to pay exhorbitant taxes so the government can feed your neighbor's child?

I don't recall saying that. That is what is commonly known as the strawman logical fallacy.

Clearly James Moore saw a problem with it, as he apologized for those remarks later.

But yes, like most Canadians, I support a strong social safety net. Americans give a lot more to charity than Canadians. Different ethic.

Either way--whether through government programs or charity, it is the job of every human being to see to it that your neighbour's kid isn't hungry. In my opinion. Obviously a lot of people don't care for anyone but themselves.

I fully agree that we all have to help everyone around us. I didn't get a tax receipt or anything other than a good feeling from the two bags of groceries I dropped in the Food Bank bin at the supermarket this weekend. Knowing that maybe I helped someone less fortunate than myself is reward enough for me.

Actually, it depends on how you define charitable donations - if you remove donations to religious organizations like churches, the Americans fall behind most developed countries, including Canada.

According to the World Giving Index, we give more money than Americans do, but they volunteer more time.

https://www.cafonline.org/images/CAF_WG ... raphic.png

This isn't an us vs them issue either - when it was first released in 2010, the US was behind Canada in the rankings, so kudos to them for stepping up and putting others first.

http://www.theguardian.com/news/datablo ... ng-country

It's yet another way in which Canada and America are different culturally. They desire Life, Liberty and the Pursuit of Happiness, while we choose Peace, Order and Good Government. I'd argue helping those less fortunate than yourself helps in the Order department.

I don't think either way of life is better than the other, just different. That's why we have two countries instead of one.

[Zipperfish]

ShepherdsDog ShepherdsDog:

Hungry kid's will eventually steal from you out of desperation. My wife and I have always donated to food banks and Christmas wish lists, since university days. I was lucky then, and only ate bologna sandwiches and KD because I liked them, not because that was all I could afford.

I remember living for two weeks on 10 lbs beef heart and an industrial size can of sauerkraut.

[BartSimpson]

bootlegga bootlegga:

I don't think either way of life is better than the other, just different. That's why we have two countries instead of one.

Nicely stated.