Romneymania keeps sweeping America.

[WhyteRain]

I am supporting.  OBAMA 2012 

Does your all-caps declaration of your support of a failed Presidency have anything to do with enthusiam issues among the Republicans?

We have two visions on a failed presidency. I think this president came into office with a mess

Obama didn't "inherit" the mess.  As a well-bribed Fannie Mae senator in the ruling Congressional majority after 2006, he voted for every bit of it.

The crash was caused by the collapse of the housing bubble.  The housing bubble was caused by the government (yes, including some liberal Republicans like Bush) forcing lenders to make politically-correct loans to "eliminate the racial gap in housing".

[WhyteRain]

The crash was caused by the collapse of the housing bubble.  The housing bubble was caused by the government (yes, including some liberal Republicans like Bush) forcing lenders to make politically-correct loans to "eliminate the racial gap in housing".

No, that isn't what caused the crash, White.

Someone wants an intellectual spanking.

Ok, what caused the crash if not the collapse of the housing bubble?

[WhyteRain]

Ok, what caused the crash if not the collapse of the housing bubble?

Capitalism, buddy - it always crashes.  That is simply what it does - its a failed system.  Time to move on.

The only time it is is time to admit your ignorance of the causes of the 2008 financial crisis.

But you're lucky:  I will have to defer your paddling 'til another time; Mrs. Rain just reminded me that I have to do some legal briefs for her.

[WhyteRain]

The crash was caused by the collapse of the housing bubble.  The housing bubble was caused by the government (yes, including some liberal Republicans like Bush) forcing lenders to make politically-correct loans to "eliminate the racial gap in housing".

I know you don't actually believe what you just typed, so I won't dignify it with much of a response.

What did I say exactly (quote me please) that you think is "impossible to believe"?

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Don't get hung up on the CRA.  It was only one of the tools in the toolbox of the people trying to use government sticks and carrots to "close the racial gap in housing".  There were lots of tools.

[quoteHere's the remarks of Randall Kroszner, who was one of the Governors on the Federal Reserve board. And, since you'll undoubtedly dismiss this, a member of the Bush administration and notable Chicago school economist - not exactly a bleeding-heart socialist. [/quote]

OK.  I looked at it.  I see what look like a lot of "weasel words" which he uses to shape his statistics the way he wants.  But no matter.  As I said, the CRA was only one -- but also one of the best known -- of the government interventions for "close the racial gap in housing". 

I didn't want to start naming them all, but look at the Housing Act of 1992 and see what it did to Fannie Mae in terms of quotas for loans.  (Fannie Mae wasn't a "CRA-covered institution", to use Kroszner's term.)

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I'm told I'm a great listener.  And research is pretty much what I do all day long.  Go ahead, make my day.

[WhyteRain]

Ok, what caused the crash if not the collapse of the housing bubble?

Capitalism, buddy - it always crashes.  That is simply what it does - its a failed system.  Time to move on.

How can something we do not have in this country, "The Bad Place", have caused the crash? (See signature if confused)

Excellent "Five Steps to Corporatism".

[WhyteRain]

The crash was caused by the collapse of the housing bubble.  The housing bubble was caused by the government (yes, including some liberal Republicans like Bush) forcing lenders to make politically-correct loans to "eliminate the racial gap in housing".

Oh, come on. You can't honestly believe that the banks weren't happy to make those loans. Housing prices were always going up. It was win-win.

Housing prices rose because of artificially high demand created by "closetheracialgap" loan requirements of the federal government.

It was indeed a "win-win" for the borrowers and lenders because the bad loans were guaranteed by the taxpayers.  For the taxpayers, it was "lose-lose-lose-lose-lose-lose-lose-lose-lose".

I've seen a lot of people say that "the credit ratings agencies were at fault for overrating the mortgage-backed securities (MBS)".  But by ignoring the taxpaper guarantees, these people mistake what the ratings meant.  The credit rating agents were not saying, "These securities are full of great, sound mortgages!"; what they were saying was, "These securities are full of crappy mortgages, but they're guaranteed by the taxpayers, so they're golden!"

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It's not that complex.  The government had a policy:  "Close the racial gap in home ownership".  In pursuit of this policy the government had a stick:  Quotas on mortages.  See the Housing Act of 1992 that imposed progressively higher quotas on non-CRA lenders like Fannie Mae.  More importantly, it had a carrot:  Taxpayer guarantees for bad mortgages.  The lenders said, "Hmmm, these are horrible loans but they're no skin off our noses; if the borrowers can't pay us back, then the taxpayers will!"

Paraphrasing JFK, "Success has a thousand fathers; failure is an orphan."  All the "fathers" of the 2008 Financial Crash want to claim that it's an orphan.

[WhyteRain]

Making irresponsible sub-prime loans was hugely profitable for companies.

You're right, but think about this:  In a free market, doesn't this sound crazy?

"Making irresponsible sub-prime loans was hugely profitable for companies."

We all know the REASON why the "irresponsible sub-prime loans were HUGELY PROFITABLE", but it seems we can't face it:  The irresponsible government guarantees.

[WhyteRain]

Making irresponsible sub-prime loans was hugely profitable for companies.

You're right, but think about this:  In a free market, doesn't this sound crazy?

"Making irresponsible sub-prime loans was hugely profitable for companies."

We all know the REASON why the "irresponsible sub-prime loans were HUGELY PROFITABLE", but it seems we can't face it:  The irresponsible government guarantees.

I said it sounded crazy without acknowledging the role of government guarantees and then King went and proved it -- by trying to explain how it worked without acknowledging the role of government guarantees.

King, I have a few questions based on your explanation:

First, why would Countrywide loan $750 mil on $50 mil worth of assets?
Second, why would Goldman Sachs pay $1,000 mil for $50 mil worth of assets?
Third, why would AIG insure for $2,000 mil assets that were worth only $50 mil?

King, let me ask something else.  Let's say you're a banker and I come to you for a car loan.  I tell you I want to buy a Toyota Camry for $140,000 and I want you to lend me the money.  Are you going to do it?  After all, there's a lottttt of money you as the banker can make if I pay all the payments, right?  But let's say not only am I wanting to borrow $140,000 for a $35,000 car, you also learn that I'm unemployed and basically have no collateral -- other than the car -- for the loan.  Are you going to give me the money?  You could probably make $700 easy every month on the interest I'll pay you, so think hard!

I really need an answer on this loan question soon.

[WhyteRain]

WhyteRain: In a roundabout way, it sounds a bit like you're trying to blame irresponsible blacks. I don't like it.

I try not to let my emotions cloud my judgment.

I think there were a LOT of irresponible people who caused the financial collapse, and damned few of them were black.  (Franklin Delano Raines is the worst of the black offenders.  He's the reason why there have been no legal repercussions against the bankers:  Because he'd have to be the first one to go to prison.)

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That's actually one of the saddest parts of the whole debacle:  The people who the policy was designed to "help" were precisely the ones who it hurt the most.  I just heard on the radio today that while the net worth of the AVERAGE American sank 40% because of the Financial Crash, for BLACK Americans it was 53%.   (On average, blacks and other minorities were later getting "into the game" than whites were and therefore did not participate in the gains of the market, only the crash.)

[WhyteRain]

Making irresponsible sub-prime loans was hugely profitable for companies.

You're right, but think about this:  In a free market, doesn't this sound crazy?

"Making irresponsible sub-prime loans was hugely profitable for companies."

We all know the REASON why the "irresponsible sub-prime loans were HUGELY PROFITABLE", but it seems we can't face it:  The irresponsible government guarantees.

Tell us more how that works, with specifics as to the guarantees.

Here you go -- 22,300,000 hits:  http://www.google.com/#hl=en&sclient=psy-ab&q=how+do+federal+home+loan+mortgage+guarantees+work%3F

[WhyteRain]

 It's true that in the financial industry, the players tend to focus on how to make a lot of money in the short term, and if it all later collapses, no problem, they have several million in their bank account, and can just lie on the beach until it blows over, and the next cycle begins.

True, and don't you wonder why?  Why in 1929 were the bankers leaping out of windows and going "SPLAT!" on Wall Street while in 2008 they scheduled their next yacht trip to the Caymans?

[WhyteRain]

Making irresponsible sub-prime loans was hugely profitable for companies.

You're right, but think about this:  In a free market, doesn't this sound crazy?

"Making irresponsible sub-prime loans was hugely profitable for companies."

We all know the REASON why the "irresponsible sub-prime loans were HUGELY PROFITABLE", but it seems we can't face it:  The irresponsible government guarantees.

Tell us more how that works, with specifics as to the guarantees.

If the government guaranteed everything, it would have been the government which failed, rather than all the financial institutions (and yes, almost all of them effectively did - all of them). 

I'm not sure what you're saying.

But a government never "fails" until people start refusing to accept the paper it prints and calls "money".  If banks or any other institution or person could do that, they'd almost never fail either.

[WhyteRain]

Making irresponsible sub-prime loans was hugely profitable for companies.

You're right, but think about this:  In a free market, doesn't this sound crazy?

"Making irresponsible sub-prime loans was hugely profitable for companies."

We all know the REASON why the "irresponsible sub-prime loans were HUGELY PROFITABLE", but it seems we can't face it:  The irresponsible government guarantees.

I said it sounded crazy without acknowledging the role of government guarantees and then King went and proved it -- by trying to explain how it worked without acknowledging the role of government guarantees.

King, I have a few questions based on your explanation:

First, why would Countrywide loan $750 mil on $50 mil worth of assets?  Because they could turn around sell it for $1,000 mil.
Second, why would Goldman Sachs pay $1,000 mil for $50 mil worth of assets?  Because they would make $2,000 mil if it failed.
Third, why would AIG insure for $2,000 mil assets that were worth only $50 mil? Because the premiums on the assets that don't fail or haven't failed yet would more than cover the cost.  See life insurance plans.  This was the equivalent of a life insurance company seeing all its clients die in the same year and owing more policies than it has assets.

King, let me ask something else.  Let's say you're a banker and I come to you for a car loan.  I tell you I want to buy a Toyota Camry for $140,000 and I want you to lend me the money.  Are you going to do it?  After all, there's a lottttt of money you as the banker can make if I pay all the payments, right?  But let's say not only am I wanting to borrow $140,000 for a $35,000 car, you also learn that I'm unemployed and basically have no collateral -- other than the car -- for the loan.  Are you going to give me the money? Yes, if I was told by higher ups to say yes, which is what Countrywide told it's reps, what Goldman told Countrywide, and AIG told Goldman  You could probably make $700 easy every month on the interest I'll pay you, so think hard!  The income on interest in this system pales in comparison to the income earned on selling the debt.

I really need an answer on this loan question soon.

Also, it seems like you misunderstood what I mean by $750 mil on $50 mil.  It's $750 mil on $750 worth of homes, but about $700 mil worth of those risky mortgages end in foreclosure so it ends up only being worth $50 mil in payments from the borrowers.

Point is, it's a system that ran completely without a government involved and, in fact, thrived because there was no government intervention involved.

OK, let's go through this, because you're HALF-right:  There was definitely some "upside" to holding the crappy loans -- the value of the underlying assets (the houses) were rising and so even if the borrowers defaulted the loan-holders might -- MIGHT -- be able to get their money back easily.  But keep in mind that they would get only THEIR money BACK; any "profit" would have to be given to the original borrower. 

So, you're right about the upside.  But you 100% ignore the downside. 

Maybe it would help if we talked about some OTHER real estate investments instead of homes.  How about farm land and commercial real estate and apartment complexes?  They, like houses, were increasing in value.  Why were there no "bubbles" in those in the 1990s and 2000s?  Why weren't there "liar loans" and "no money down loans" for those?  From a lender's POV what was the most important thing that distinguished a HOME loan from any OTHER kind of real estate loan in the 1990s and 2000s?

That's right:  Thanks to taxpayer guarantees, there was no downside!  It was "heads-the-lender-wins -- he gets all that interest income or he gets to sell the loan, tails-the-taxpayer-loses". 

If you're really a Republican, I'm surprised you hadn't already noticed this.  Don't Republicans know that "whatever you subsidize (through things such as loan guarantees) you get more of"?

[WhyteRain]

Ok, what caused the crash if not the collapse of the housing bubble?

Capitalism, buddy - it always crashes.  That is simply what it does - its a failed system.  Time to move on.

How can something we do not have in this country, "The Bad Place", have caused the crash? (See signature if confused)

LOL, I swear diehard capitalists remind me of unreformed Marxists. "No, it's never properly been tried!"

I'm pretty much a "diehard capitalist", but you're right.  Anyway, there never has been or will be a perfectly free market under the rule of law, I tell my capitalist friends.  But some of them are, as you say, as utopian as the Marxists they hate.

[WhyteRain]

WhyteRain, there's an old saying in politics that goes like this: "If you're explaining, you're losing."

This usually hurts Democrats, but this year, Romney can talk until he's blue in the face about how the financial collapse if the fault of liberal and Democratic policies. But in the end, most people are still going to blame Bush and the Republicans more than Obama.

Thanks, cope, and you're right but I never suggested that any candidate try to "explain" the 2008 Financial Crisis.

The MSM and other far-left societal megaphones have already convinced most people that it was due to "deregulation" or "greed" or something.  No one can undo that programming in a campaign.

But it is important that we among the "illuminati" know the truth, so that if and when the time comes, we can provide the real reform necessary.