Obama: "Subprime Mortgages were originally a good idea"

[Soul Crusher]

6:23 on. 

Read it and weep you idiots. 

[headhuntersix]

Yeah......why is it that nobody believed anything said about him during the election. Its like its a shock that he's worthless.

[Soul Crusher]

Yeah......why is it that nobody believed anything said about him during the election. Its like its a shock that he's worthless.

I did a ton of research on Obama before the election and knew from Day 1 he would be a catastrophe for this nation.   If people wanted a black president so badly - there were plenty of far more qualified, non-communist, choices to pick from which would have been fine by me. 


But no - the obamabots had to go find the most radical, most economically illiterate, empty suit, pofs they could find and annoint him their king.       

[headhuntersix]

Yep.....nobody listened...we were racist..we hated black people...blah blah blah...no douchbags I hate liberal commie nuts with zero experience, sit in white hate churches...pal around with domestic terrorists etc etc etc...

[Soul Crusher]

Yep.....nobody listened...we were racist..we hated black people...blah blah blah...no douchbags I hate liberal commie nuts with zero experience, sit in white hate churches...pal around with domestic terrorists etc etc etc...

The worst part in retrospect is that if Rand Paul or Rubio ran for president that leftist communists who supported obama would be screaming about lack of experience, no qualifications, etc.


They don't see the irony of selecting who was perhaps the most economically illiterate, empty suit, record of failure, pofsa on the radar as their king.       

[headhuntersix]

At the very least...Obama had a record of NOTHING when he did have a job. Doesn't that tell you something...kinda like RP....he's actually done nothing as regards legislation.

[Soul Crusher]

At the very least...Obama had a record of NOTHING when he did have a job. Doesn't that tell you something...kinda like RP....he's actually done nothing as regards legislation.

At least with Ron Paul there are endless youtube clips from the 1980's on knowing where he stands.   

with obama - we got a few clips which in of itself were instructive as to his beliefs. 

1.  Wanted to skyrocket energy prices.
2.  Thought he US const was fatally flawed
3.  Wanted to bankrupt the coal companies 
4.  Wanted a national police force
5.  Praised Rev, Wright
6.  Thought the Warren Court was not radical enough. 





Yeah - real presidential material right there!!!!   

[headhuntersix]

I agree..which is sort of RP's problem currently..Barry on the other hand, all you had to do is see who his pals where.

[Soul Crusher]

[Soul Crusher]

[Straw Man]

subprime and Alt A loans served and when they  first came out they required a large down payment 30-40%.    That worked fine for years.   It was the fraudulent collateralization of these loans that caused them to explode

the whole thing is explained very well here: http://www.thisamericanlife.org/radio-archives/episode/355/the-giant-pool-of-money

if you want to continue to  believe that the government forced banks to make CRA loans made to unqualified minorities and that caused the asset bubble and subsequent meltdown then feel free

[Soul Crusher]

subprime and Alt A loans served and when they  first came out they required a large down payment 30-40%.    That worked fine for years.   It was the fraudulent collateralization of these loans that caused them to explode

the whole thing is explained very well here: http://www.thisamericanlife.org/radio-archives/episode/355/the-giant-pool-of-money

if you want to continue to  believe that the government forced banks to make CRA loans made to unqualified minorities and that caused the asset bubble and subsequent meltdown then feel free

  


And why did anny and Freddy but them up knowing that?   

[Straw Man]

 
And why did anny and Freddy but them up knowing that?   

I assume you mean "buy"

everyone drank the Kool Aid

many of the investment banks who created this shit also bought and sold it back and forth.

They all thought their magic formula had some how eliminated the risk

[howardroark]

subprime and Alt A loans served and when they  first came out they required a large down payment 30-40%.    That worked fine for years.   It was the fraudulent collateralization of these loans that caused them to explode

the whole thing is explained very well here: http://www.thisamericanlife.org/radio-archives/episode/355/the-giant-pool-of-money

if you want to continue to  believe that the government forced banks to make CRA loans made to unqualified minorities and that caused the asset bubble and subsequent meltdown then feel free

There wouldn't have been a bubble either way had the  market not been flooded by cheap credit created by the Fed. Had demand for housing risen like it did then interest rates would have risen consequently due to higher demand for loanable funds. The higher interest rates would have nipped any bubble in the bud before it got out of hand. So really, blaming the CRA or "collateralization" (which is actually a very sound financial innovation) or Fannie/Freddie is all extremely misplaced. Don't get me wrong, Fannie/Freddie and the CRA ought to be opposed for other reasons but they did not create the bubble. That said, you can blame those government programs for channeling the bubble into the housing sector.

[Straw Man]

There wouldn't have been a bubble either way had the  market not been flooded by cheap credit created by the Fed. Had demand for housing risen like it did then interest rates would have risen consequently due to higher demand for loanable funds. The higher interest rates would have nipped any bubble in the bud before it got out of hand. So really, blaming the CRA or "collateralization" (which is actually a very sound financial innovation) or Fannie/Freddie is all extremely misplaced. Don't get me wrong, Fannie/Freddie and the CRA ought to be opposed for other reasons but they did not create the bubble. That said, you can blame those government programs for channeling the bubble into the housing sector.

The Fed kept rates low but which certainly exacerbated the bubble but I don't think it created it. 
Even after they raised rates (after keeping them low way too long) there was still a market for the CDO's

The Fed also didn't regulate CDO's and CDS's without which most of these pools could also not have been created because in the end these pools were designed to fail in order to get a payoff from the Credit Default Swaps

If the rating agencies hadn't given these securitized pools of debt Triple A rating there would have been no way to sell them to governments, pensions, etc.. (though it's likely the investment banks would have continued to buy and sell them among themselves)

[howardroark]

The Fed kept rates low but which certainly exacerbated the bubble but I don't think it created it. 
Even after they raised rates (after keeping them low way too long) there was still a market for the CDO's

The Fed also didn't regulate CDO's and CDS's without which most of these pools could also not have been created because in the end these pools were designed to fail in order to get a payoff from the Credit Default Swaps

If the rating agencies hadn't given these securitized pools of debt Triple A rating there would have been no way to sell them to governments, pensions, etc.. (though it's likely the investment banks would have continued to buy and sell them among themselves)

Even with CDO's and the whole shabang, if there were no credit creation by the Fed there would not have been any bubble. The fact of the matter is that even after the Fed raised interest rates it was still injecting the economy with credit. The interest rates were still far too low.

In a free market, such bubbles cannot occur. As soon as people start borrowing in order to feed any potential bubble, interest rates must rise in order to reflect higher demand and limited supply, thereby choking off the bubble before it ever starts. However, in this case the Fed kept interest rates low and printed the difference, thereby feeding the bubble when an otherwise free market would not have done so.

[Soul Crusher]

Even with CDO's and the whole shabang, if there were no credit creation by the Fed there would not have been any bubble. The fact of the matter is that even after the Fed raised interest rates it was still injecting the economy with credit. The interest rates were still far too low.

In a free market, such bubbles cannot occur. As soon as people start borrowing in order to feed any potential bubble, interest rates must rise in order to reflect higher demand and limited supply, thereby choking off the bubble before it ever starts. However, in this case the Fed kept interest rates low and printed the difference, thereby feeding the bubble when an otherwise free market would not have done so.

The Govt wanted the bubble.    Both parties loved the Re bubble and make cazillions off of it from the Fed govt to the local city govts who jacked spending and taxes to boot. 

[Straw Man]

Even with CDO's and the whole shabang, if there were no credit creation by the Fed there would not have been any bubble. The fact of the matter is that even after the Fed raised interest rates it was still injecting the economy with credit. The interest rates were still far too low.

In a free market, such bubbles cannot occur. As soon as people start borrowing in order to feed any potential bubble, interest rates must rise in order to reflect higher demand and limited supply, thereby choking off the bubble before it ever starts. However, in this case the Fed kept interest rates low and printed the difference, thereby feeding the bubble when an otherwise free market would not have done so.

credit extension from the Fed via.....discount window?

I don't believe the Fed was purchasing assets at that time other than tweaking reserve requirements and keeping the discount rate low how were they injecting the economy with credit?

Do you agree that without CDO's and CDS's these subprime loans could not have been packaged and sold or the market for them would have been much much smaller ?

[Straw Man]

The Govt wanted the bubble.    Both parties loved the Re bubble and make cazillions off of it from the Fed govt to the local city govts who jacked spending and taxes to boot. 

I've seen nothing to support that claim

[Soul Crusher]

I've seen nothing to support that claim

LOL.   Are you kidding?   The local govts used the bubble to jack up spending and taxes to oblivion.   Most of these cities gave away massive amounts to the public sector unions during this time and killed the homeowner w property tax increases based on higher appraisals.   


Now that the appraisals and values are crashing - these pofs thugs you love so much refusae to cut taxes or spending, hence the battles we see in Ohio, Wis, NJ, etc.     

[howardroark]

credit extension from the Fed via.....discount window?

I don't believe the Fed was purchasing assets at that time other than tweaking reserve requirements and keeping the discount rate low how were they injecting the economy with credit?

Do you agree that without CDO's and CDS's these subprime loans could not have been packaged and sold or the market for them would have been much much smaller ?

Credit expansion was alive and well:


AFAIK, the discount window was more or less obsolete in the 2000's till the financial crisis hit.

Sure, the market would have been smaller without CDO's and all of the other financial instruments that arose in the 2000's and before. But that isn't a bad thing. You want an efficient financial system that gets credit to where it's most direly wanted. The problem was that there was an oversupply of credit fueling an unsustainable expansion in the housing market.

[howardroark]

The Govt wanted the bubble.    Both parties loved the Re bubble and make cazillions off of it from the Fed govt to the local city govts who jacked spending and taxes to boot. 

That assumes that the people in government are intelligent. They most certainly are not.

[Soul Crusher]

That assumes that the people in government are intelligent. They most certainly are not.

Most of these cities saw revenues skyrocket from mortgage fees, transfer taxes, recording fees, etc and spent the money and made promised based upon those revenues to the public sector madoffs.

Very few of them saved the money and most pissed it away on the public sector goons. 

 

[Straw Man]

Credit expansion was alive and well:


AFAIK, the discount window was more or less obsolete in the 2000's till the financial crisis hit.

Sure, the market would have been smaller without CDO's and all of the other financial instruments that arose in the 2000's and before. But that isn't a bad thing. You want an efficient financial system that gets credit to where it's most direly wanted. The problem was that there was an oversupply of credit fueling an unsustainable expansion in the housing market.

ok but based on M2 doesn't explain why investment banks suddenly started to fund risky loans

M2 will grow as there is more money in the economy.  As RE prices rose it the asset bubble grew it drives up M2

investment banks were not regulated by the Federal Reserve at that time ( to the best of my knowledge)

Lehman, Bear Stearns etc.. could never have created and sold these risky loans without having the triple A bond rate or the CDO's (collateralization) or CDS (insurance against default)

AIG was of course a big part of this too as they were selling insurance without having the necessary reserves (which I why they became insolvent in one day as soon as their rating was downgraded which immediately required more reserves which they did not have)

I certainly believe the Fed played a role but I don't think they were the cause

[Soul Crusher]

They funded them because they never had any intention of holding them!