McCain's Economics 28 comments
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Don't ask me who won the debate in terms of persuading formerly undecided voters to fix an allegiance. The number of undecided voters who understand the difference between financial and fiscal is minuscule, and the number of those who think that the difference actually matters is probably zero. But from a technocratic standpoint, the fact that McCain twice referred to the financial crisis as a "fiscal crisis" is telling. It means (a) that he doesn't really understand it, and (b) that insofar as he does, he thinks that government is at least as much part of the problem as it is part of the solution.
But McCain really lost me here:
Yes, I went back to Washington, and I met with my Republicans in the House of Representatives. And they weren't part of the negotiations, and I understand that. And it was the House Republicans that decided that they would be part of the solution to this problem.
In what conceivable way, shape or form have the House Republicans decided that they would be part of the solution to this problem? By sitting on an idiotic idea until the last possible moment, not sharing it with anyone, and then declaring it the only plan they would support?
McCain, here, is allying himself with precisely these House Republicans, and that worries me. Remember, he doesn't like government takeovers: "I want to make sure we're not handing the health care system over to the federal government," he said. No one asked what he felt about handing a substantial portion of the national banking system's assets over the Federal government, but I can't imagine that he's getting on particularly well with Hank Paulson these days.
And he said that the US is the world's largest exporter; it isn't. More substantively, a spending freeze is not the first best thing to implement in a recession.
When it comes to the economy, then, I'd say that Obama lived up to reasonably high expectations, while McCain sounded, to anybody with a real grasp of the situation, as though he had very little idea what he was talking about. On the other hand, I have yet to meet a single person with a real grasp of the financial crisis who is an undecided voter. So it is quite conceivable that this will do McCain no electoral harm at all.
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This article has 28 comments:
To provide for the Punishment of counterfeiting the Securities and current Coin of the United States;
Get rid of the FED - send in the Marines and do an audit, find out who owns the privately held stock - and prosecute.
WE THE PEOPLE issue the T-Bills collect the interest, fund the government and print the currency - this task has been allocated to thieves for too long now - WAKE UP PEOPLE.
"He thinks that government is at least as much part of the problem as it is part of the solution."
I assume you disagree. How you may have come to that conclusion I can't say. The fact of the matter is the root of this crisis is in the government. More specifically its known as social engineering.
The real scoundrels who now appear to be getting off scot-free are those bumbling public servants that pursued a policy, actually an ideology, that incorporated governmental incentives and disincentives to see lower income class Americans rise up to a new middle class status. On its face it sounds wonderful, but the devil as always was in the details. In 1977, Pres. Carter signed the community reinvestment act which pushed Fannie and Freddie to aggressively lend to low income minority communities. In 1993, Pres. Clinton started feeding the CRA an ever-increasing diet of anabolic steroids. Through out his 8 years in office the Clinton Administration constantly rewrote the rules for Fannie Mae and Freddie Mac. In 1995, they made getting a satisfactory CRA rating much more difficult. A good CRA is critical for a bank that has any designs on expansion. With a good CRA rating banks received expedited approval procedures for opening new branches or banks could self-certify their compliance with the CRA and avoid routine examination. They could establish branches across state lines, or engage in new expanded powers, or enjoy a "safe harbor" from protests.Banks were given strict new numerical quotas and measures for the level of "diversity" in their loan portfolios. They actually started making loans based on race and little else. Bank examiners would use federal home-loan data, broken down by neighborhood, income group and race, to rate banks on performance. In 1997, Clinton got the Department of Housing and Urban Development to double-team the issue.
Clinton's HUD secretary, Andrew Cuomo, "made a series of decisions between 1997 and 2001 that gave birth to the country's current crisis. Specific changes made to Fannie and Freddie included extraordinary leverage, allowing them to hold just 2.5% of capital to back their investments, vs. 10% for bank. The crowning blow was allowing Fannie and Freddie to get into the sub-prime loan business in a big way. All of this set the stage for what unfolded in the last 8 years. Congress could have stopped it. They knew what was going on. Instead, Fannie and Freddie lobbied Congress to the tune of $200 million over the last 10 years. Those same Congressmen who today say the problem was the lack of regulation and point their fingers at others, just happened to be those that blocked any reform bill or even talk about it. There are plenty of newspaper quotes from years past of guys like Barney Frank saying, "''These two entities -- Fannie Mae and Freddie Mac -- are not facing any kind of financial crisis,' and "''The more people exaggerate these problems, the more pressure there is on these companies, the less we will see in terms of affordable housing.''
During another of the 17 different attempts from the Bush administration to get reform, Barney Frank called the president's suggestion for a strong, independent regulator of Fannie and Freddie as being "inane." Barney isn't the only guilty party. There's plenty of players both Democrat and Republican with members of the banking committee for both the Senate and the House at the top of the list.
Certainly, the credit default swaps have contributed a lot to the extent of our crisis, but if government hadn't decided to screw with the mortgage market, this would probably have never happened.
You also said,"By sitting on an idiotic idea until the last possible moment, not sharing it with anyone, and then declaring it the only plan they would support?"
Wrong! It isn't that they were sitting on it. Hank Paulson was the first to bring in an overview of where he wanted to go. The Democrats were way over their head and didn't have a clue as to what to do. They bought into Paulson's general idea more out of a lack of their own plan. The Republicans in the house worked behind the scenes in coming up with their own plan. It wasn't even considered by the Democratic controlled banking committees. The Republican plan only came to light once it was clear that Pelosi's design to have Republicans and Democrats hold hands and jump off the cliff together was in doubt. This isn't to say that I think the Republican plan is workable. I would be happy to yank off the many extra bells and whistles Congressional Democrats have added, including that 20% of any profit goes to ACORN which is a far left voter fraud machine for Obama. You just don't have your facts straight.
As for your take on Obama living up to high expectations on economics, that's an opinion and incredibly misguided. Obama has already outlined adding programs to our already bloated bureaucracy that will cost close to a trillion now. Considering his record of profligate spending of other's money and his many nuanced speeches, he's not going to reveal his full plans till in office.
Let just point out a few things about the current situation and my persoanal experience. I moved from Houston Texas to Fairfield county, CT in 2002. I was floored by the cost of housing, bidding wars, etc.....I thought I'd buy a nice house for my family, but that was impossible even with almost 200k for a down payment. Why, because I would not get sucked into an ARM , int only loan, or any of the teaser type products being floated out there. As a result I rented a small house for 3 years and saved an additional 150k by saving hard and living tightly. I then purched my house in Feb 2006 using a 30 year fixed mortgage locked in at 6.125% and put down 35%. I chose this fixed rate loan because i did not want market risk to rates rising, as they should with the federal deficit exploding.
Today, Thanks to 80 hour work weeks, I am now one of the 5% of Americans that Obama wants to raise taxes on. Here is my beef with Him, and any Federal official looking for a bailout of homeowners. I acted not smartly, but responsibly when I bought my over priced Home(which i knew I was doing but i had little choice). I put down a significant amount of cash to get my monthly payment to something I could afford in good times and bad. I was a victim of the bubble market which was inflated by individuals levering up to buy bigger houses with risky loan products. It was these people that put me in a rental house for 3 years which my I might add my wife hated!
So hear I am today listening to all the b.s. out there about "the little guy" suffering on mainstreet, wahhh, wahhh, wahhh.... These people took risk which was disclosed and was simple to understand. Payments would rise and reset in 6,13,36 months, etc....There were no secrets! Lets face the fact that people made bad choices, speculated on home prices, supersized, and then withdrew fake equity via home lines of credit. Lets stop blaming W.S. and start facing the fact that is INDIVIDUALS did not use risky loans there would have been far less AltA tpe loans to securitze, rates AAA by Moody's, and pitch out to AIG and various state and gov't pension plans. So now I, the guy that made personal/family sacrafices to save money, work 80 hours a week, act in a "fically" prudent manner have to pay more taxes to bail out the gluttonous. Is that right?
I think we need massive reforms and they should start with such things as term limits. Washington needs change from the ground up and regualtory rollback especially concerning Glass Steagell which was ditched thanks to Phil Graham, Sandy Weil, Nancy Pelosi(crossed party lines to vote Yeah and helped make the bill pass by 2/3rds veto proofing it), Larry Summers, Robert Rubin, etc.....
Long story short, Neither canidate layed out a solution and neither can solve the problem. They are part of the problem! The bottom line is that individuals need to suffer and feel the pain. They are the the ones that are at the root of the problem. I will say that currently we blame W.S. for the mortgage problems. Before it was big tobacco for cancer, mc'donalds for obesity, big oil for for high gas prices.
Maybe we should sell the Mc'Mansion, put down the Cigs, cut back on the fries and drive the suv a bit less, Or is that not the cause of our promblems.
p.s. i think the solution to the current problems is not going to come from a new president, but from within!
There is a lot of blame to go around. Clinton signed the repeal of Glass Steagall, but the bill was written by Phil Gramm. The penchant for deregulation is a common conservative philosophy. But even prominant conservatives are starting to talk about the necessity of regulation.
Asset backed securities started in the 70's and now you are talking about trillions and trillions. The problem is leverage which had reached unsustainable heights. Undoing all that leverage might create a financial freefall. At least Bernanke and Paulson are trying to do something about it.
Those who say that we should just let the market correct, must think that nothing can be done to cushion the blow. Sorry, but that is not how things work. We need to use our brains and chart a course out of this morrass. Of course many think that charting the course is liberalism. Sorry but we need to chart the course and plan the future. It is the only intelligent thing to do.
www.youtube.com/watch?...
Level 1 Politician: SAT score 1800. IQ 130. University
degree. Can be certified to do municipal politics only.
Level 2 Politician: Level 1 Politician, plus: SAT score 2,000. IQ 140. Master Degree. Can work in the State Assembly.
Level 3 Politician: Level 2, plus: SAT score 2,100 or Ph.D
IQ 150+. can work in Congress or Senate. Hey -
can even be our President.
How many current Politicos would certify? I do not see many....
It was clearly not a party line vote. Clearly, they could have overrode any veto attempt, but Clinton didn't sign it because they could override it anyway. He was onboard, Republicans were onboard, Democrats were onboard. So much for finger pointing at political parties. The big banks that took advantage of its provisions include Citigroup, UBS, and Deutsche Bank. While they all took hits, they will all survive. Bear Stearns, Lehman brothers, Morgan Stanley, and Goldman Sachs and Merrill Lynch weren't taking deposits. They didn't become banks, yet they were all hurt to differing extents. In other words, if repealing glass steagall act did anything, it made Citigroup, UBS and Deutsche able to withstand this crisis than those that didn't get into the consumer banking business.
My family and I live within our means, we bought a house we could afford, buy used cars, have no outstanding credit card debt at the end of each month and haven't used the equity in my house as an ATM. Why should we pay for the those who have been reckless and irresponsible?
He is often praised for being so wise on the military stuff, the guy is in fact a war hero. I will not attack McCain on that Vietnam detail, he showed leadership while he was a POW.
But the recent surge in Iraq was only 40 thousand more US military folks, McCain always asked fore a large multiple of that what was realistic in applied boots on the ground.
Even the chiefs of staff were against a horrible 40 thousand increase because 'that leaves all military emergencies naked'.
In the end Dubya got his way, 40 thousand extra troops were deployed and for reasons the Americans do not fully understand, some kind of peace was there in Iraq.
In short: McCain never understood what numbers deployed were inside the realm of reality and now he is constantly portrayed as the 'big military wizard'.
He isn't, this is no endorsment of Obama but on the military stuff McCain was a fool for a long time in the Iraqi equation.
In times of crisis and panic (e.g. NOW), PEOPLE want to point fingers at someone. Main Street points to Wall Street and Wall Street points to Main Street, but regardless, we're here, right now, in this situation, and we must get out.
I also agree with PhilC that neither candidate showed that they had a plan to get us out! I was left thinking that regardless of who wins, we're all still lacking a true PLAN by these guys.
I'm with you - hard work, no debt, just a small mortgage - which is on a small home. The responsible ones are out there, but as always, the greedy few have brought down the house.
John McCain does not need to be an expert on the economy; He has Phil Graham, Larry Kudlow and Mark Perry plus over 500 experts in the House and Senate.
Please sir...you show your ignorance when you claim McCain has no grip on the economy...and moreso when you claim Obama does. McCain has a record of fighting pork...as he noted last night...and Obama is the traditional Democratic big-spender -- no "Hope" or "Change" there.
Nice try.
At issue is Question 1, which would eliminate the state income tax. It would save the average taxpayer about $3,600 a year. Annual revenue from the tax is about $12.5 billion, roughly 45 percent of the state’s budget of about $28 billion.
They are now discussions going on that Palin would parade her daughter's wedding out before the Election... with McCain in the front row.
Have these people No Shame ?
London Sunday Times... Front Page. http:/times.co.uk
Dave
I nearly fell out of my chair when he said that. Grumpy only seemed alive when he was talking about weapon systems or the history of the Cold War.
Rojas is dead on about taxes; you gotta pay the piper somehow. Maybe we should have zero taxes and watch all our bridges fall down and levees break? No thanks.
As for the bailout: I haven't perused the final plan, but I suspect it may be superior to inaction. Somewhat. The string of big bank failures is looking too much like 1929 to me.
BY TERRY JONES
INVESTOR'S BUSINESS DAILY
In the past couple of weeks, as the financial crisis has intensified, a new talking point has emerged from the Democrats in Congress: This is all a "crisis of capitalism," in socialist financier George Soros' phrase, and a failure to regulate our markets sufficiently.
Well, those critics may be right — it is a crisis of capitalism. A crisis of politically driven crony capitalism, to be precise.
Indeed, Democrats have so effectively mastered crony capitalism as a governing strategy that they've convinced many in the media and the public that they had nothing whatsoever to do with our current financial woes.
Barack Obama has repeatedly blasted "Bush-McCain" economic policies as the cause, as if the two were joined at the hip.
Funny, because over the past 8 years, those who tried to fix Fannie Mae (FNM) and Freddie Mac (FRE) — the trigger for today's widespread global financial meltdown — were stymied repeatedly by congressional Democrats.
This wasn't an accident. Though some key Republicans deserve blame as well, it was a concerted Democratic effort that made reform of Fannie and Freddie impossible.
The reason for this is simple: Fannie and Freddie became massive providers both of reliable votes among grateful low-income homeowners, and of massive giving to the Democratic Party by grateful investment bankers, both at the two government-sponsored enterprises and on Wall Street.
The result: A huge taxpayer rescue that at last estimate is approaching $700 billion but may go even higher.
It all started, innocently enough, in 1994 with President Clinton's rewrite of the Carter-era Community Reinvestment Act.
Ostensibly intended to help deserving minority families afford homes — a noble idea — it instead led to a reckless surge in mortgage lending that has pushed our financial system to the brink of chaos.
Fannie and Freddie, the main vehicle for Clinton's multicultural housing policy, drove the explosion of the subprime housing market by buying up literally hundreds of billions of dollars in substandard loans — funding loans that ordinarily wouldn't have been made based on such time-honored notions as putting money down, having sufficient income, and maintaining a payment record indicating creditworthiness.
With all the old rules out the window, Fannie and Freddie gobbled up the market. Using extraordinary leverage, they eventually controlled 90% of the secondary market mortgages. Their total portfolio of loans topped $5.4 trillion — half of all U.S. mortgage lending. They borrowed $1.5 trillion from U.S. capital markets with — wink, wink — an "implicit" government guarantee of the debts.
This created the problem we are having today.
As we noted a week ago, subprime lending surged from around $35 billion in 1994 to nearly $1 trillion last year — for total growth of 2,757% as of last year.
No real market grows that fast for that long without being fixed.
And that's just what Fannie and Freddie were — fixed. They became a government-run, privately owned home finance monopoly.
Fannie and Freddie became huge contributors to Congress, spending millions to influence votes. As we've noted here before, the bulk of the money went to Democrats.
Meanwhile, Fannie and Freddie also became a kind of jobs program for out-of-work Democrats.
Franklin Raines and Jim Johnson, the CEOs under whom the worst excesses took place in the late 1990s to mid-2000s, were both high-placed Democratic operatives and advisers to presidential candidate Barack Obama.
Clinton administration official Jamie Gorelick also got taken care of by the Fannie-Freddie circle. So did top Clinton aide Rahm Emanuel, among others.
On the surface, this sounds innocent. Someone has to head the highly political Fannie and Freddie, right?
But this is why crony capitalism is so dangerous. Those in power at Fannie and Freddie, as the sirens began to wail about some of their more egregious practices, began to bully those who opposed them.
That included journalists, like the Wall Street Journal's Paul Gigot, and GOP congressmen, like Wisconsin Rep. Paul Ryan, whom Fannie and Freddie actively lobbied against in his own district. Rep. Cliff Stearns, R-Fla., who tried to hold hearings on Fannie's and Freddie's questionable accounting practices in 2004, found himself stripped of responsibility for their oversight by House Speaker Dennis Hastert — a Republican.
Where, you ask, were the regulators?
Congress created a weak regulator to oversee Freddie and Fannie — the Office of Federal Housing Enterprise Oversight — which had to go hat in hand each year to Capitol Hill for its budget, unlike other major regulators.
With lax oversight, Fannie and Freddie had a green light to expand their operations at breakneck speed.
Fannie and Freddie had a reliable coterie of supporters in the Senate, especially among Democrats.
"We now know that many of the senators who protected Fannie and Freddie, including Barack Obama, Hillary Clinton and Christopher Dodd, have received mind-boggling levels of financial support from them over the years," wrote economist Kevin Hassett on Bloomberg.com this week.
Over the span of his career, Obama ranks No. 2 in campaign donations from Fannie and Freddie, taking over $125,000. Dodd, head of the Senate Banking panel, is tops at $165,000. Clinton, ranked 12th, has collected $75,000.
Meanwhile, Freddie and Fannie opened what were euphemistically called "Partnership Offices" in the districts of key members of Congress to channel millions of dollars in funding and patronage to their supporters.
In the space of a little more than a decade, Fannie and Freddie spent close to $150 million on lobbying efforts. So pervasive were their efforts, they seemed unassailable, even during a Republican administration.
Yet, by 2004, the crony capitalism had gone too far. Even OFHEO issued a report essentially criticizing Fannie and Freddie for Enron-style accounting that let them boost profits in order to pay their politically well-connected executives hefty bonuses.
It emerged that Clinton aide Raines, who took Fannie Mae's helm as CEO in 1999, took in nearly $100 million by the time he left in 2005. Others, including former Clinton Justice Department official Gorelick, took $75 million from the Fannie-Freddie piggy bank.
Even so, Fannie and Freddie were forced to restate their earnings by some $3.5 billion, due to the accounting shenanigans.
As we noted, those who tried to halt this frenzy of activity found themselves hit by a political buzz saw.
President Bush, reviled and criticized by Democrats, tried no fewer than 17 times, by White House count, to raise the issue of Fannie-Freddie reform. A bill cleared the Senate Banking panel in 2005, but stalled due to implacable opposition from Democrats and a critical core of GOP abettors. Rep. Barney Frank, who now runs the powerful House Financial Services Committee, helped spearhead that fight.
Now, with the taxpayer tab approaching $1 trillion or more, we're learning the costs of crony capitalism.
You aren't making any sense at all. Read the article. Look at the facts. The banking committees of both the Senate and Congress have blocked every attempt to reform Fannie Mae and Freddie Mac. Even while the Repubs were in power in both houses, the committees are split pretty evenly with the majority holding a one seat margin. The Democrats voted 100%, usually with a couple of Republicans to not let anything come to the floor in reforming fannie and freddie. Look up the facts and report on them, not your emotions. Check out this link for who received the most from Fannie and Freddie
www.opensecrets.org/ne...
Check out this link to see how far back the administration was pushing for reform along with comments from the banking committee chairman, Barney Frank on the second page.
query.nytimes.com/gst/...
Check out this link for John McCain's speech to Bush back in 2005 about the reform bill of 2005
mcauleysworld.wordpres.../
Check out this link for the 2005 reform bill that never made it to the floor of the Senate. It was block on a party line vote in committee.
www.govtrack.us/congre...
Check out this link for on the Washington Post's take on outraged Christopher Dodd. BTW he's the guy at the top of the list for the Fannie cash to Congressmen program.
www.washingtonpost.com...