Chicago Tribune -- The Chicago freaking Tribune! -- endorses Obama

[Dinner]

Originally posted by Ben Kenobi


I don't see Pelosi et al riding that train. The bailout wasn't about 'regulation' but about nationalisation and control.

The regulations which were eliminated by Clinton simply have to be restored.

You don't know jack. Bush was not out to nationalize the US financial sector. He had to be strong armed into even requiring any equity stake and even then they opted for non-voting shares only. The bailout was all about preventing a complete financial melt down by injecting fresh capital into bankrupt (or nearly so) companies.

Clinton did sign off on some of the deregulation, to his fault, but the worst of it was written by Phil Gram and then championed by people like Alan Greenspan and the Bush SEC chairman who's name escapes me right now. Most of it happened after Clinton left office.

[Dinner]

Originally posted by Ben Kenobi

Agreed. Neither of which should cost 700 billion to fix.

The $700 billion is the cost for damage already done. In fact before all is said and done it will be well over $1 trillion. I agree that if deregulation had not occurred or if timely action would have been taken to reregulate the private sector then the cost would have been lower but your boys in Red controlled every branch of government so what are you complaining about?

BTW some 80% of these subprime loans were made by private institutions. Fannie and Freddie only originated or bought up something like 20% of them while most of the loans came from hedge funds or banks. The loose monetary policies of the Bush Administration left the financial markets awash in cash and companies were flailing about trying to figure out how to profitably deploy all this cheap capital. That is why you found ever easier credit terms no money down, low teaser rates, and even credit to people who previously couldn't get any.

Private lenders found they could charge high interest rates (low teaser followed by ever higher rates even if the prime went down), make a killing, and then bundle it as a mortgage backed security which they sold on to a greater fool.

[Q Classic]

Originally posted by Ben Kenobi


Did he lead a girlscout troop?

This Obama aid is powerful stuff.

I dunno, the fact that he's taking quite a bit of economic advice from the Chicago school is very heartening...

[Dinner]

He did teach there and several of his top advisers are from there so it's no wonder he's a follower of the Chicago School.

[-Jrabbit]

Obama's got some game.

He graduated magna *** laude from Harvard Law, and was also an editor (1st yr) and president (2nd year) of the Harvard Law Review - the first African-American selected for that post. He taught constitutional law at UChicago for several years as well.

What was McCain's class rank again?

[Q Classic]

Now, -Jrabbit, stop trying to highlight Obama's credentials. That just makes him seem...

Oh, how was it that conservative Republican representative from Georgia put it?

"uppity".

[Ben Kenobi]

Ok, we all know he's an unparalleled scholar. I was asking about leadership?

Since none of you really answered my question, I would assume someone who leads their girl scout troop has more leadership experience then Obama.

I'm a bit surprised Zkribbler, if you are trying to convince someone, it would be better to actually listen to their argument.

[Ben Kenobi]

BTW some 80% of these subprime loans were made by private institutions.

What makes you think I care whether the institutions are public or private? They are still responsible for the bad decisions that they made. They should all take the heat for it and that includes Fannie and Freddie.

It's a fact that the Clinton administration changed the rules that unless they accepted subprime mortgages that they would face heavy penalties. Why are we then surprised when they default and the lenders go down with them.

If Clinton had left well enough alone, we wouldn't be in this mess. If we undo his changes, it will stop further messes, but they still have to clean up the one that's there.

And I don't see why 700 billion of pork is necessary to ensure that they are saved. All I saw were the usual congressional pork riders. Congress here to save the day, but make sure my district gets some of that pork.

[Ben Kenobi]

You don't know jack. Bush was not out to nationalize the US financial sector. He had to be strong armed into even requiring any equity stake and even then they opted for non-voting shares only. The bailout was all about preventing a complete financial melt down by injecting fresh capital into bankrupt (or nearly so) companies.

No, this was all for more of Pelosi's pork and the meltdown was an excuse to get in while the getting was good. Giving taxpayer dollars to bankrupt companies is like pissing into the wind.

Clinton did sign off on some of the deregulation,

All this subprime mess is his. The bundling and the distribution came later, which is why it's everybody's problem.

[-Jrabbit]

Ben, let me express to you how grateful I am that you are not a voting American.

[Theben]

Originally posted by Ben Kenobi
Ok, we all know he's an unparalleled scholar. I was asking about leadership?

Why don't you call Powell and ask him? Or is he too black to have a valid opinion?

Since none of you really answered my question, I would assume someone who leads their girl scout troop has more leadership experience then Obama.

I'm a bit surprised Zkribbler, if you are trying to convince someone, it would be better to actually listen to their argument.

No one needs to read your "arguments". In fact they'd be better off ignoring them. Remember: DON'T FEED THE TROLL.

[Ben Kenobi]

Why don't you call Powell and ask him? Or is he too black to have a valid opinion?

You have his number? I'd be glad to.

[Naked Gents Rut]

The housing-mortage bubble is like the TNT which sets off an atomic bomb. It's a trigger; it's not the main explosion.

Seriously Zkrib, you need to read up on this. The collapse of the sub-prime mortgage market was the "atomic bomb" that brought down the financial industry. The derivatives you're claiming are the real cause have only played a predominant role in the collapse of one firm, AIG.

The bundling and the distribution came later, which is why it's everybody's problem.

BS. Securitization began in the late-'70s. It grew dramatically along with the boom in the housing market, but it's been going on for a long time.

[Naked Gents Rut]

The WaPo gets it...

IS THIS the end of American capitalism? As financial panic spread across the globe and governments scrambled to contain the damage, reality seemed to announce the doom of U.S.-style free markets and President Bush's ideology. But this is wrong in two ways. The deregulation of U.S. financial markets did not reflect only the narrow ideology of a particular party or administration. And the problem with the U.S. economy, more than lack of regulation, has been government's failure to control systemic risks that government itself helped to create. We are not witnessing a crisis of the free market but a crisis of distorted markets.

It's true that the Bush administration has stood for light regulation of capital markets. But it did not invent this approach. By the middle of the last decade, experts across the spectrum believed that U.S. financial institutions faced outmoded restraints on their ability to innovate. Thus, the Clinton administration, supported by then-Federal Reserve Chairman Alan Greenspan, refused to tighten regulations on financial derivatives, memorably dubbed "financial weapons of mass destruction" by Warren Buffett. The 1999 repeal of the Glass-Steagall Act, a Depression-era law separating commercial banking and investment banking, passed with overwhelming bipartisan support in Congress and was signed into law by President Bill Clinton.

We'll never know how this newly liberated financial sector might have performed on a playing field designed by Adam Smith. That's because government interventions of all kinds, from the defense budget to farm supports, shaped the business environment. No subsidy would prove more fateful than the massive federal commitment to residential real estate -- from the mortgage interest tax deduction to Fannie Mae and Freddie Mac to the Federal Reserve's low interest rates under Mr. Greenspan. Unregulated derivatives known as credit-default swaps did accentuate the boom in mortgage-based investments, by allowing investors to transfer risk rather than setting aside cash reserves. But government helped make mortgages a purportedly sure thing in the first place. Home prices seemed to stand on a solid floor built by Washington.

Government support for housing was well-intentioned: Homeownership is a worthy goal. But when government favors a particular economic activity, however validly, it must seek countervailing control to ensure the sustainable use of public resources. This is why banks must meet capital requirements in return for federal deposit insurance. Congress did not apply this sound principle to Fannie Mae and Freddie Mac; they were allowed to engage in profitable but increasingly risky activities with an implicit government guarantee. The result was that taxpayers had to assume more than $5 trillion of their obligations. Contrast U.S. experience with that of Canada, where there is no mortgage interest deduction and the law requires insurance on any mortgage over 80 percent of a home's purchase price. Delinquency rates at Canada's seven largest banks are near historic lows.

The new capitalist model that emerges from this crisis must operate according to more consistent principles. The Fed should set interest rates with the long-run value of the dollar in mind. Government must be more selective about manipulating markets; over the long term, business works best when it is subject to market discipline alone. In those cases -- and there will and should be some -- in which government intervenes on behalf of social goals, its support must be counterbalanced with taxpayer protections and regulation. Government-sponsored, upside-only capitalism is the kind that's in crisis today, and we say: Good riddance.

http://www.washingtonpost.com/wp-dyn/content/article/2008/10/19/AR2008101901416.html

[Zkribbler]

Originally posted by Naked Gents Rut
Seriously Zkrib, you need to read up on this. The collapse of the sub-prime mortgage market was the "atomic bomb" that brought down the financial industry. The derivatives you're claiming are the real cause have only played a predominant role in the collapse of one firm, AIG...

...and of course, froze up the financial markets leading to a $700 billion bail out (plus pork )