Did the 2008 Financial Crisis Mark the End of Free-Market Economics?

[LowlyPion]

Latest Bill O'Reilly meltdown on the radio factor:

Threatens to beat up senators, threatens to stock them, and threatens to break someone's finger.

This is how many on Fox News apparently debate.

Sounds like Barney Frank and Chris Dodd are off the Christmas Card List.

 

[Art]

Take a walk to the nearest street corner or coffee shop or any local McDonald's and talk to the "average person" on main street.

Actually, start with retirees of steel mills or auto plants who lost pensions or benefits (or the employees) at any McDonald's (I live in Ohio...a key battleground state)...they (lifelong Democrats) are still counting on their $1,000 check from Obama and they ALL believe that 95% of all taxpayers will receive a tax cut.

I didn't misinterpret anything...I know exactly what he said and I know exactly how the "average person" interpreted his statements...so does he.

Obama can't deliver on his promises and won't admit it...he STILL maintains that he'll spend as much as he can.

And I'm sure all of those people you mention will receive their cheque as promised as they all are in the categories being targeted for relief by Obama.

All married couples making up to $90K p.a. will receive the $1000 and nobody making under $250,000 will see their taxes increase. So what's changed??

 

[WhoWee]

How can Obama POSSIBLY give everyone a check for $1,000?

 

[mheslep]

...Obama did not say he would cut taxes for 95% of US citizens. What he said was they would, 'not pay a dime more'

OBAMA: ...What I’ve called for is a tax cut for 95 percent of working families, 95 percent...
OBAMA: My definition — here’s what I can tell the American people: 95 percent of you will get a tax cut. And if you make less than $250,000, less than a quarter-million dollars a year, then you will not see one dime’s worth of tax increase.

http://www.clipsandcomment.com/2008/09/26/full-transcript-first-presidential-debatebarack-obama-john-mccainoxford-ms-september-26-2008/

 

[edward]

How can Obama POSSIBLY give everyone a check for $1,000?

The same way Bush passed out money for his economic stimulous package. And from the same source that McCain will get his $2,500 per person $5,000 per family medical benifit, borrow it!

 

[WhoWee]

Again...how can possibly allow ANYONE to borrow money foolishly...Bush's $600 most likely benefited China and the oil countries...a lot of people went to WalMart and bought gas.

As for the McCain proposal...I think we'll have to actually pay for our own health insurance to get the tax credit...I could be wrong?

 

[Evo]

My health insurance costs close to $6,000 annually, luckily my employer pays for most of it. Under McCain I would be screwed if I lost that. And taxing me on that? Is he nuts? Sure, rich people won't be affected, normal Americans will.

Also, do you remember Obama mentioning that the war in Iraq is costing $10 billion a month? “If we’re spending $10 billion a month in Iraq, that’s $10 billion a month we don’t have to deal with our problems here at home,” "in Iraq, where we’re spending $10 billion a month while Iraq has a surplus of nearly $80 billion.”

http://www.msnbc.msn.com/id/26906271/

If McCain intends to keep blowing $10 billion a month on the war according to him.

 

[mheslep]

The same way Bush passed out money for his economic stimulous package. And from the same source that McCain will get his $2,500 per person $5,000 per family medical benifit, borrow it!

That is revenue ~ neutral with the current employer based deduction.

 

[mheslep]

My health insurance costs close to $6,000 annually, luckily my employer pays for most of it. Under McCain I would be screwed if I lost that.

Why? Wouldnt you expect your employer to pay you the $6k as salary?

 

[WhoWee]

My family plan costs just over $14,000 per year and unfortunately I pay 100%. I really want a tax break.

Just a little personal story...when I broke my wrist 2 years ago, I had to wait in line about 3 hours at the emergency room behind about 17 or 18 people that had no insurance (state benefit cards they told me). We all talked for a long time and they said they had colds, coughs and fevers...no accidents among them. It turns out they don't go to a doctors office...they go to the emergency room for faster service.

They weren't required to pay a deductible for treatment or for prescriptions...but I did. I also paid a deductible for x-rays and the follow up treatments. My out of pocket was at least $500 for the incident...WITH insurance. They paid NOTHING to use the ER for colds and coughs...PLUS free Tylenol and cold medicines.

How fair is that? Should everyone have access to affordable health care...YES THEY SHOULD...but it has to be fair.

As for the war in Iraq...we need to charge the businesses who've rushed into make their millions for security...GE and Siemans got a $7 B contract this week. The Iraqi government also needs to either step up and take control or also pay our expenses...the new leadership wouldn't even be in power if we didn't put them into power...they need to pay for us to protect them.

As for the average Iraqi citizen...oh well...better that you borrow money to pay us than for us to borrow money to protect you.

Again, enough is enough and fair is fair. We don't have any money. If we insist on being the world's policeman...then someone needs to pay for our expenses. Otherwise, we need to stay home and police our own borders.

 

[Ivan Seeking]

A great Round Table discussion on ABC's This Week. Watch Newt Gingrich turn liberal democrat.
http://abcnews.go.com/Video/playerIndex?id=5903025
http://abcnews.go.com/thisweek

 

[Ivan Seeking]

Obama needs to beat this one to death. I'm glad to see that he got my email.
http://edition.cnn.com/video/#/video/politics/2008/09/29/sot.obama.what.economy.cnn?iref=videosearch

 

[mheslep]

http://edition.cnn.com/video/#/video/politics/2008/09/29/sot.obama.what.economy.cnn?iref=videosearch

What leadership? Couple days ago he expressed hope that the bailout would get through and now he torpedoes it. Then he misleads on the causes of this financial problem when its important that all understand the reasons it came to pass. Lying drivel. I used to have some respect for this guy. No more.

 

[edward]

What leadership? Couple days ago he expressed hope that the bailout would get through and now he torpedoes it. Then he misleads on the causes of this financial problem when its important that all understand the reasons it came to pass. Lying drivel. I used to have some respect for this guy. No more.

Lying drivel on both sides.

 

[mheslep]

Fed Chaiman Bernanke last year on the looming risks posed by Fannie and Freddie
http://www.federalreserve.gov/newsevents/speech/Bernanke20070306a.htm

"...The GSEs’ second line of business is the main focus of my remarks today. It involves the purchase of mortgage-backed securities and other types of assets for their own investment portfolios. This line of business has raised public concern because its fundamental source of profitability is the widespread perception by investors that the U.S. government would not allow a GSE to fail [and the perceptions were correct], notwithstanding the fact that--as numerous government officials have asserted--the government has given no such guarantees. The perception of government backing allows Fannie and Freddie to borrow in open capital markets at an interest rate only slightly above that paid by the U.S. Treasury and below that paid by other private participants in mortgage markets. By borrowing at this preferential rate and purchasing assets (including MBS) that pay returns considerably greater than the Treasury rate, the GSEs can enjoy profits of an effectively unlimited scale. Consequently, the GSEs’ ability to borrow at a preferential rate provides them with strong incentives both to expand the range of assets that they acquire and to increase the size of their portfolios to the greatest extent possible."

Do GSEs actually do any good by making residential mortgages available / lower cost? No:

"The GSE portfolios have been the subject of much controversy. First, analysts disagree about whether the GSE portfolios serve any public purpose. The GSEs themselves argue that their purchases of MBS provide additional support to the mortgage market, particularly during periods of financial stress. In contrast, research at the Federal Reserve Board and elsewhere has found that the GSE portfolios appear to have no material effect on the cost or availability of residential mortgages.2"

"A second element of the controversy surrounding the GSE portfolios arises from the fact that they are not only large but also potentially subject to significant volatility and financial risk (including credit risk, interest-rate risk, and prepayment risk) and operational risk. Many observers, including the Federal Reserve Board, have expressed concern about the potential danger that these portfolios may pose to the broader financial system; that is, the GSE portfolios may be a source of systemic risk (Greenspan, 2005a). Systemic risk is the risk that disruptions occurring in one firm or financial market may spread to other parts of the financial system, with possibly serious implications for the performance of the broader economy."

From McCain, 2005:
http://www.govtrack.us/congress/record.xpd?id=109-s20060525-16&bill=s109-190

"...I join as a cosponsor of the Federal Housing Enterprise Regulatory Reform Act of 2005, S. 190, [which failed] to underscore my support for quick passage of GSE regulatory reform legislation. If Congress does not act, American taxpayers will continue to be exposed to the enormous risk that Fannie Mae and Freddie Mac pose to the housing market, the overall financial system, and the economy as a whole."

Bush Administration, 2003, which led to the Senate bill above:
http://query.nytimes.com/gst/fullpage.html?res=9E06E3D6123BF932A2575AC0A9659C8B63&sec=&spon=&&scp=3&sq=%202003%20fannie%20freddie%20labaton&st=cse

"The Bush administration today recommended the most significant regulatory overhaul in the housing finance industry since the savings and loan crisis a decade ago."

Barnie Frank in response to the administration proposal:
http://www.taxfoundation.org/blog/show/23617.html

The more people, in my judgment, exaggerate a threat of safety and soundness, the more people conjure up the possibility of serious financial losses to the Treasury, which I do not see. I think we see entities that are fundamentally sound financially and withstand some of the disastrous scenarios. And even if there were a problem, the Federal Government doesn't bail them out. But the more pressure there is there, then the less I think we see in terms of affordable housing.

 

[mheslep]

Lying drivel on both sides.

Video annotation: "How did we get into these difficult times?" next frame -
"Deregulation" implying McCain, or Bush caused this financial mess, by doing deregulating exactly, what? We don't really know, but he must have done some deregulation somewhere.
Bull S. Same lies Obama is telling. No big deal, except after the banks are locked down with new regs, we will then get the same GSE monsters set loose again in the name of affordable housing (which they never provided) by Frank et al.

 

[WhoWee]

Did anyone see Newt Gingrich last night...WOW??

If good ole Newt thinks this poorly of Paulson (and co)...does this make him a Conservative Democrat or a Liberal Republican...I'm a little confused?

Either way...he MIGHT have a point about the SEC rule "mark to market" which influences liquidity ratios...and it seems we'll soon find out...even though accounting firms said not to...TODAY the SEC relaxed regulations. The BIG question now...WHAT EFFECT WILL THIS HAVE ON DERIVATIVES contracts directly related to mortgages?

 

[Ivan Seeking]

What leadership? Couple days ago he expressed hope that the bailout would get through and now he torpedoes it. Then he misleads on the causes of this financial problem when its important that all understand the reasons it came to pass. Lying drivel. I used to have some respect for this guy. No more.

He is calling it dead on. We now have a gun to our heads because of the failed Republican economic philosophy, and eight years of abuses and mismanagement. He supports the bailout, just not the failed policies that brought us to this point.

Even Newt says a core problem appears to be "mark to market", and should be eliminated. That is called regulation. Welcome to liberal solutions from the former Republican Speaker Of The House.

RIP Republicans. You had your chance and you have failed miserably - catastrophically! And we will be lucky if this doesn't get much much worse before it is over. No one even knows if we can recover and avoid a complete collapse. But either way, the Republicans will be forced vote for this and abandon their philosophy. They have no choice because they have failed. That is why they are so angry.

 

[Astronuc]

From McCain, 2005:
http: //www.govtrack.us/congress/record.xpd?id=109- s20060525 -16&bill=s109-190

That is McCain on May 25, 2006 as one can see in the url.

The right wing blogs/media have been misrepresenting the date. The Senate bill was introduced in Jan 2005 by Chuck Hagel (for himself, John Sununu and Elizabeth Dole). This was pointed out in another thread. I've had conservative friends send me the same piece of erroneous information that McCain saw trouble at Fannie Mae and Freddie Mac in 2005. He either didn't, or he ignored it or dismissed it like all the others, except for Hagel, Sununu and Dole. He got on board as a co-sponsor in May of 2006, 17 months after the bill was introduced.

McCain and others didn't push it in 2007 when it was reintroduced.


And one has to wonder why McCain has former Fannie Mae and Freddie Mac staff in his campaign.

Aquiles Suarez, listed as an economic adviser to the McCain campaign in a July 2007 McCain press release, was formerly the director of government and industry relations for Fannie Mae. The Senate Lobbying Database says Suarez oversaw the lending giant's $47,510,000 lobbying campaign from 2003 to 2006.

And other current McCain campaign staffers were the lobbyists receiving shares of that money. According to the Senate Lobbying Database, the lobbying firm of Charlie Black, one of McCain's top aides, made at least $820,000 working for Freddie Mac from 1999 to 2004. The McCain campaign's vice-chair Wayne Berman and its congressional liaison John Green made $1.14 million working on behalf of Fannie Mae for lobbying firm Ogilvy Government Relations. Green made an additional $180,000 from Freddie Mac. Arther B. Culvahouse Jr., the VP vetter who helped John McCain select Sarah Palin, earned $80,000 from Fannie Mae in 2003 and 2004, while working for lobbying and law firm O'Melveny & Myers LLP. In addition, Politico reports that at least 20 McCain fundraisers have lobbied for Fannie Mae and Freddie Mac, pocketing at least $12.3 million over the last nine years.

http://www.motherjones.com/mojoblog/archives/2008/09/9663_mccain_fannie_freddie.html

Loan Titans Paid McCain Adviser Nearly $2 Million
http://www.nytimes.com/2008/09/22/us/politics/22mccain.html

Senator John McCain’s campaign manager was paid more than $30,000 a month for five years as president of an advocacy group set up by the mortgage giants Fannie Mae and Freddie Mac to defend them against stricter regulations, current and former officials say.

Hmmmmm.

 

[WhoWee]

Some regulation IS necessary...again, look at the looming derivatives trading issue...and let's not forget good ole' programmed trading. I don't want to see strangleholds, but safeguards help us sleep at night.

 

[Ivan Seeking]

Yes, I'm essentially a free-market person myself. But I'm not an ideolog. There is a difference between free markets and running amok. No one wants excessive regulation. But when you are a crook lobbying Congress, and I mean the crooks that got us in this position, there is one rule: Any regulation is bad. This is also the philosophical position of the ideolog.

 

[Ivan Seeking]

What was the state of the budget when Clinton left office? Oh yes, it was in the black and on a trajectory to a $5 trillion surplus. It took the Republicans two years to turn this around. And now, after eight years, here we are - by the time this is done and the war is over, we will be in debt for at least $12 trillion.

That is about $40,000 for every US citizen.

Pelosi said what needed to be said.

 

[SpecificHeat]

With the failures of Freddie, Fannie, and now AIG, we have seen an earth-shaking failure of free-market economics.

It is NOT, repeat NOT "free-market economics" which have failed, contrary to the pronouncements of tax-and-spend liberal naysayers.
What HAS failed is socialism, which of course Democrats continue to push with reckless abandon. Socialism has failed everywhere it has been tried, from the USSR to Cuba to North Korea to the cesspools of Africa. Nevertheless Democrats press on without a clue and without a fact.

It was Congress that passed legislation in 1977 ordering banks to loan to unqualified borrowers to let them buy homes they should not have bought. As a result of Chris Dodds, and Barney Franks, and others like them, subprime loans went from 2% to 30%.
Not that liberals care, mind you. For Democrats, emotions and feelings trump facts, reality, and integrity.

/// Change may be the only thing left in your pockets after our adventure with McCain's deregulation and Republican control of the government.


///

Obviously that author prefers the traditional tax and spend mentality of Democrats, which is completely eclipsed by the Litmus Test of infanticide to the tune of ~1,000,000 innocent unborn babies every year.

 

[mheslep]

What was the state of the budget when Clinton left office? Oh yes, it was in the black and on a trajectory to a $5 trillion surplus.

False, ridiculously so. The trajectory was into a recession.

 

[LowlyPion]

False, ridiculously so. The trajectory was into a recession.

Oh really. And this Bush War of National Adventurism to wipe out non-existent WMDs, and all the tax rebates and tax cuts for the RICH, and the McCain championed deregulation has managed to lessen this imagined slump? It hasn't guaranteed the slump along now with the possibility of serious recession or depression with deficits stretching to the event horizons of our grandchildren's generation and beyond?

Bush and the Right Wing Economics of Enriching the Rich is a total failure. He can't go home to hide in Crawford soon enough.

 

[mheslep]

That is McCain on May 25, 2006 as one can see in the url.

The right wing blogs/media have been misrepresenting the date. The Senate bill was introduced in Jan 2005 by Chuck Hagel (for himself, John Sununu and Elizabeth Dole). This was pointed out in another thread. I've had conservative friends send me the same piece of erroneous information that McCain saw trouble at Fannie Mae and Freddie Mac in 2005. He either didn't, or he ignored it or dismissed it like all the others, except for Hagel, Sununu and Dole.

My mistake, 2006. How do you go from not immediately co-sponsoring a bill to 'ignoring' or 'dismissing' trouble at the GSEs?

He got on board as a co-sponsor in May of 2006, 17 months after the bill was introduced.

The point being that McCain attempted to restrict the GSEs, spoke against the GSE system on the floor, while Sen. Obama embraced them. That is the issue at this point. The Democratic philosophy was, and still is apparently that these pseudo governmental organizations were great, we need to keep doing more of the same as soon as things settle down.

McCain and others didn't push it in 2007 when it was reintroduced

Didnt push it? 2007 was the third appearance of this bill in some form. He's not on the banking committee, his publicly stated views on the subject were clear.

And one has to wonder why McCain has former Fannie Mae and Freddie Mac staff in his campaign.

Yes McCain seems to be heavy with former lobbyists on his campaign which I could do without. I could also do without Obama being the #2 recipient of contributions from Freddie/Fannie.

 

[CRGreathouse]

Yes, I'm essentially a free-market person myself. But I'm not an ideolog. There is a difference between free markets and running amok. No one wants excessive regulation. But when you are a crook lobbying Congress, and I mean the crooks that got us in this position, there is one rule: Any regulation is bad. This is also the philosophical position of the ideolog.

I don't think so. There are plenty of businesses profiting from government regulation/intervention, because it changes the playing field. In my state there are several industries I can think of that benefit (at the expense of the population!) from the state regulations on their industry.

What was the state of the budget when Clinton left office? Oh yes, it was in the black and on a trajectory to a $5 trillion surplus. It took the Republicans two years to turn this around. And now, after eight years, here we are - by the time this is done and the war is over, we will be in debt for at least $12 trillion.

That is about $40,000 for every US citizen.

The budget was in surplus, the economy was in recession. That the budget is a lagging indicator of economic performance surprises no one.

Of course the Republicans had to work overtime to spend us as far into debt as we are in now!

Obviously that author prefers the traditional tax and spend mentality of Democrats

As opposed to the tax-and-spend mentality of the Republicans?

Actually, Republicans and Democrats have mainly moved to deficit spending...

 

[SpecificHeat]

Oh really. And this Bush War of National Adventurism to wipe out non-existent WMDs, and all the tax rebates and tax cuts for the RICH, and the McCain championed deregulation has managed to lessen this imagined slump? It hasn't guaranteed the slump along now with the possibility of serious recession or depression with deficits stretching to the event horizons of our grandchildren's generation and beyond?

Bush and the Right Wing Economics of Enriching the Rich is a total failure. He can't go home to hide in Crawford soon enough.

1. It was NOT, repeat NOT Bush's "War of National Adventurism."

Congress, with full access to all classified information, debated the use of force to make Saddam Hussein comply with about 13 separate United Nations Mandates to disarm. This he failed to do over a period of about 11 years. Bush-haters call 11 years "rushing in."

2. No less a liberal than John Kerry said in 2003, "If you don't think Iraq has WMDs, you shouldn't vote for me.

3. HOW MANY TIMES have you seen the quotes by Democrats on Saddam Hussein's WMDs?
HOW MANY TIMES? And yet you Democrats and Bush-haters persist in calling Bush a "liar".

4. Bill "loathing the military" Clinton ran for president PROMISING Americans a tax cut.
He broke his own word, and for that you Democrats rewarded him with a second term, in stark contrast to your failure to reelect Bush (41) when he broke his "read my lips" promise.

5. The tax cuts were highest for the lowest tax bracket, viz. 15% down to 10%.
For those of you who seem to be mathematically challenged, this is a 33% cut in taxes.

For the next bracket, taxes were reduced by less than 33%.

For the roughly 40% of families who do not pay federal income taxes, no TAX CUTS are possible. But you can count on these 40% to vote Democrat, particularly after hearing the supremely "intelligent" Democrats (is there any other kind, really) repeat "Tax cuts for the rich" ad nauseum.

6. As to "right wing economics" being a "total failure," please address this august body on the "left wing economics" being a "total success."

Start with Cuba, and proceed to North Korea and then the former USSR.

This begs the question of why so many Democrats still live in America when its economic system is a "total failure."

 

[mheslep]

I don't think so. There are plenty of businesses profiting from government regulation/intervention, because it changes the playing field. In my state there are several industries I can think of that benefit (at the expense of the population!) from the state regulations on their industry.

Agreed. GE, for instance, plays in a dozen industries - energy - finance - medical, but they won't touch anything that is not heavily regulated as those areas represent a low barrier to entry for low cost garage operations.

...Of course the Republicans had to work overtime to spend us as far into debt as we are in now!

Agreed.

As opposed to the tax-and-spend mentality of the Republicans

That's no-tax and spend anyway Republicans.

 

[LowlyPion]

1. It was NOT, repeat NOT Bush's "War of National Adventurism."

Congress, with full access to all classified information, debated the use of force to make Saddam Hussein comply with about 13 separate United Nations Mandates to disarm. This he failed to do over a period of about 11 years. Bush-haters call 11 years "rushing in."

This is most definitely not true. Dick Armey has recently discussed how Cheney in closed door meetings out and out lied about there being direct evidence of WMDs.
http://latimesblogs.latimes.com/presidentbush/2008/09/cheney-lied.html

As we now know. Cheney was simply lying, lying, lying. And look at the grand coalition of forces the US managed to engage in the Iraqi effort too. This was not a War supported world-wide. To see it as anything but the prosecution of an agenda that the Administration has never really shared with the public. Apparently if they had their way the US would be in Iran as well.

It's my opinion that it ultimately is Bush's War. It was Bush's psychological need to return to Iraq as his Daddy did but do it up right and really crush it. It was apparently Bush/Cheney/Rove flexing their Jingoistic muscle against radical Muslims.

Why are we still fighting the Crusades so many centuries later?