RedRiver

Former Fed Governor Mishkin Slams 'Paul Bill': Are We in Wonderland?

I found it extremely revealing today listening to Bernanke's answer when asked, "so, how do you see us getting out of this?". He said there are only two ways, one - raise taxes, two - reduce the level of entitlements (of the elderly). Shouldn't one answer have been to grow the economy? Oh, that's right, the Fed's job is only to protect the banks (Goldman Sack's US) regardless of the expense to the people. End the Fed. It's the only way to be sure.

Washington's Dilemma: This Isn't a Recession, It's a Collapse

Great response, thanks.

This is all new, by our hands of course. At the time of the Great Depression we did not have a "global economy". And it is precisely this that will strip away the benefits that our middle class assumes is a birth right and depress them to standards they are ill prepared to deal with. In order for us to compete through our middle class "engine" we need to produce goods and services cheaper and superior to those produced by India/China etc. If India is making chip sets @ $6/hour then we will need to make them at $5 and of equal or greater quality in order to regain that market share. The same goes for all industries, which we of course gave away in exchange for our new industry of fraudulent monetary "vehicles". The liability portion of our product has yet to be played out.

We also were not constrained by our current suicidal bundle of Rules, Regulations and Stupidity that seems to me to be Washington's greatest creations. Every over built item that occupies our country is just a symbol of our abject waste and self mutilation. One of the greatest housing stories yet untold is the City/Municipality responsibility for increasing the cost of an average home by $6,000-$8,000 with ginger bread add ons, porches and socialistic style land use regulations. A much greater % than any commodity explosion ever caused. There are many other stories I know.

And finally for me there is the simple and yet overwhelming fact that we wage earners do not earn enough (because we now produce so much less) to pay for all the non-productive people. Most of these people are and will be found on the government payrolls. People need to realize that no government employee creates any productive revenue. They are not a contribution to our society they are the virus that will eat us from the inside out. When Calvin Collidge left office in 1928 the government was 3% of GDP I believe. Now its going to 40%! There is not a viable economic system that can withstand that much insane pressure. It has been and will always be one of the greatest society killers of all time.

Regrettably it now seems its our societies time, its our turn. We the people, we got lazy and didn't watch or care what was going on as long as we were "happy". Print and Plummet. Good luck to all.


On Jul 14 05:57 AM User 353732 wrote:

> 1. The Govt can and is making things worse; it has no affirmative
> capacity in July 2009 to make things better . Intellectual fraud,
> moral bankruptcy, the criminal misallocation and waste of national
> resources, the deliberate expansion of the parasitic class and serial
> deceits by the political bosses are not the basis for increasing
> consumer and business confidence. Without an increase in confidence
> , no economy, anywhere, esp. not one as complex and large as the
> US can possibly revive.
> 2. When fantasy money, worthless credit and extravangantly false
> promises intersect they create a vapor economy that starts to dissipate
> and blow away as soon as a sufficently large number of investors,
> households and businesses perceive and painfully experience the chasm
> between " our policies are working; we know what we are doing; things
> are getting better" and their daily reality of falling income, compressing
> profits, increasing tax and regulatory oppression and evaporating
> net worth.
> Savings are rising , not because people and businesses are becoming
> more prosperous but because they are becoming more frightened by
> the day. The only way for savings to rise when income is declining
> is for consumption and long term risk investment in wealth creating
> activities to fall sharply. Consequently production falls and jobs
> disappear.
> 3.In July 2009, America finds itself with a shrinking and pessimistic
> new world middle class, a callous and self obsessed old world upper
> class and a third world Govt in Wash DC and in California, New York,
> New Jersey, Michigan, Illinois among other states.
> The old world and the third world have coalesced among our elites
> to assault the new world. Under these circumstances it is inevitable
> that we get a steadily worsening economy and a steadily compressing
> middle class. It is not the States that are collapsing but the Middle
> Class.
> 4. It is a deep error to think that the State Govts are the units
> and motors of economic activity and wealth creation in the US: they
> are engines of destruction. It is the Middle Class that is the source
> of innovation, job creation and wealth expansion. It is now the manifest
> policy of our Govt at the Federal and State(eg California, Michigan,
> New York) level to fanatically fuel the engines of destruction
> while sabotaging the engines of creation.

When Lending Standards Really Changed

Barry has that Obama glaze which allows him to overlook the very beginning of this mess (the socialist theory) because its impossible to ignore once its brought into plain site again:


“Here is the article from the New York Times that was calling for Fannie Mae
to open up the subprime market by order of the Clinton Administration.
Maybe, all the Democrats that have had power of the congress and have been
led around by the nose by the lobbyist from Credit Suisse and UBS should stop
saying that the Republican trickle down theory created this mess and take
some ownership”.

Here is the article:
By STEVEN A. HOLMES

Published: September 30, 1999 !!!!!!!!!!!!!!!!

In a move that could help increase home ownership rates among minorities
and low-income consumers, the Fannie Mae Corporation is easing the
credit requirements on loans that it will purchase from banks and other
lenders.

The action, which will begin as a pilot program involving 24 banks in 15
markets -- including the New York metropolitan region -- will encourage
those banks to extend home mortgages to individuals whose credit is
generally not good enough to qualify for conventional loans. Fannie Mae
officials say they hope to make it a nationwide program by next spring.

Fannie Mae, the nation's biggest underwriter of home mortgages, has been
under increasing pressure from the Clinton Administration to expand
mortgage loans among low and moderate income people and felt pressure
from stock holders to maintain its phenomenal growth in profits.

In addition, banks, thrift institutions and mortgage companies have been
pressing Fannie Mae to help them make more loans to so-called subprime
borrowers. These borrowers whose incomes, credit ratings and savings are
not good enough to qualify for conventional loans, can only get loans
from finance companies that charge much higher interest rates --
anywhere from three to four percentage points higher than conventional
loans.

''Fannie Mae has expanded home ownership for millions of families in the
1990's by reducing down payment requirements,'' said Franklin D. Raines,
Fannie Mae's chairman and chief executive officer. ''Yet there remain
too many borrowers whose credit is just a notch below what our
underwriting has required who have been relegated to paying
significantly higher mortgage rates in the so-called subprime market.''

Demographic information on these borrowers is sketchy. But at least one
study indicates that 18 percent of the loans in the subprime market went
to black borrowers, compared to 5 per cent of loans in the conventional
loan market.

In moving, even tentatively, into this new area of lending, Fannie Mae
is taking on significantly more risk, which may not pose any
difficulties during flush economic times. But the government-subsidized
corporation may run into trouble in an economic downturn, prompting a
government rescue similar to that of the savings and loan industry in
the 1980's.

''From the perspective of many people, including me, this is another
thrift industry growing up around us,'' said Peter Wallison a resident
fellow at the American Enterprise Institute. ''If they fail, the
government will have to step up and bail them out the way it stepped up
and bailed out the thrift industry.''

Under Fannie Mae's pilot program, consumers who qualify can secure a
mortgage with an interest rate one percentage point above that of a
conventional, 30-year fixed rate mortgage of less than $240,000 -- a
rate that currently averages about 7.76 per cent. If the borrower makes
his or her monthly payments on time for two years, the one percentage
point premium is dropped.

Fannie Mae, the nation's biggest underwriter of home mortgages, does not
lend money directly to consumers. Instead, it purchases loans that banks
make on what is called the secondary market. By expanding the type of
loans that it will buy, Fannie Mae is hoping to spur banks to make more
loans to people with less-than-stellar credit ratings.

Fannie Mae officials stress that the new mortgages will be extended to
all potential borrowers who can qualify for a mortgage. But they add
that the move is intended in part to increase the number of minority and
low income home owners who tend to have worse credit ratings than
non-Hispanic whites.

Home ownership has, in fact, exploded among minorities during the
economic boom of the 1990's. The number of mortgages extended to
Hispanic applicants jumped by 87.2 per cent from 1993 to 1998, according
to Harvard University's Joint Center for Housing Studies. During that
same period the number of African Americans who got mortgages to buy a
home increased by 71.9 per cent and the number of Asian Americans by
46.3 per cent.

In contrast, the number of non-Hispanic whites who received loans for
homes increased by 31.2 per cent.

Despite these gains, home ownership rates for minorities continue to lag
behind non-Hispanic whites, in part because blacks and Hispanics in
particular tend to have on average worse credit ratings.

In July, the Department of Housing and Urban Development proposed that
by the year 2001, 50 percent of Fannie Mae's and Freddie Mac's portfolio
be made up of loans to low and moderate-income borrowers. Last year, 44
percent of the loans Fannie Mae purchased were from these groups.

The change in policy also comes at the same time that HUD is
investigating allegations of racial discrimination in the automated
underwriting systems used by Fannie Mae and Freddie Mac to determine the
credit-worthiness of credit applicants. (End Article)

Just google: Steven Holmes 1999 NY Times article.

An Absence of Leadership

From this day forward you and I will never believe in anything coming out of washington. We just bailed out wall street and screwed main street to the wall.

All this to protect financials!? The normal investor has had a year to get out of financials and they did, hence the drops. The only "people" in the financials are greedy little investors/hedge funds looking for a quick fit. And they just got it by us gambling with your children's future.

How is anyone in american government supposed to go over to a second and third world country and tell them to receive our funding you have to do as we have in creating our great nation. Free markets, joke. Limited government intervention, lie. Power to the individual versus the government, shame. Well at least we will be able to finally "fit" into the United Nations family. We are of them now.

What country are we now? Not America. Shame on us all. Shame indeed.

Oh by the way, did any of your representatives listen to anything you had to say on this matter? We are Fools. Looking forward to that Carter era inflation.

We will never find leaders if we the people do not deserve them.

Good luck.

New Attack Plan: Bring Back RTC on a Grand Scale

I believe that good research will show that the RTC actually made money for the US Taxpayers as bizarre and unbelievable as that may seem.

There is only one way out of this mess and that's to spend our way out regardless of inflationary woes. Not that I am for any of this but when we allow ourselves through our representatives to get boxed into a corner, it is what it is. Spend a couple of Trillion on creating a new RTC or, on an infrastructure improvement plan........ either way its going to really really hurt. We got exactly what we deserved. The "Big Brain" concept highlighted by Greenspan and Ben has always been a joke. This economy is just too complicated for anyone person to understand, plan and guide.

Hope the Chinese, Japanese and the Saudi's keep buying our paper because if they stop, its over.

As for the really rich,there is nothing preventing them from dumping their citizenship to protect their assets from us poor suckers.

Residential Real Estate: How Much More Pain?

2007 - 2012 Renter Nation?

Residential Real Estate: How Much More Pain?

2007 - 2012 Renter Nation?

Forget $100 a Barrel - Oil Will Plummet to $30

Thank you so much for this article. It's Monday and boy did I need a good laugh!!

These kids are so funny. I especially like the psuedo crazed brainwashed stare in his picture. Combined with the scam artist pusher it sure was funny. Look for him on an infomercial soon.

I guess this is one more example of what the audacity of hope breeds.

Why Visa Should Thrive

Mastercard = The World
Visa Inc. = US consumers hmmmmmm.

So as Visa grows internationally let's say in Europe, the only benefit Visa Inc. gets is some small fee percentage vs. the overall profit stream. Whereas MC when it grows its numbers worldwide, the stock benefits to a much greater degree. If I have this right, it looks like its MC. Agree that Discover and Amex will be very competitive as well.

Oil Price Targets

When the Olympics are over we should be able to stand on the beach in La Jolla and see the plume of smoke coming from China as every major industry starts up at once. Good way to test their grid too. Demand Reconstruction.

Fannie and Freddie: Let’s Call the Whole Thing Off

I don't like George Bush. I didn't vote for George Bush.
But, "Its George Bush's Fault!!!!?????????" God that's so old.

So for a dose of the truth here's " Taking you back to school", again:

Fannie Mae was created in 1938 as part of DEMOCRATIC PRESIDENT Franklin Delano Roosevelt's SOCIALIST New Deal. (Read, The Forgotten Man) The collapse of the national housing market in the wake of the Great Depression discouraged private lenders from investing in home loans. Fannie Mae was established in order to provide local banks with federal money to finance home mortgages in an attempt to raise levels of home ownership and the availability of affordable housing.(Sounds familiar, Socialists drooling now)

Initially, Fannie Mae operated like a national savings and loan, allowing local banks to charge low interest rates on mortgages for the benefit of the home buyer. This lead to the development of what is now known as the secondary mortgage market. Within the secondary mortgage market, companies such as Fannie Mae are able to borrow money from foreign investors at low interest rates because of the financial support that they receive from the U.S. Government. It is this ability to borrow at low rates that allows Fannie Mae to provide fixed interest rate mortgages with low down payments to home buyers. Fannie Mae makes a profit from the difference between the interest rates homeowners pay and foreign lenders charge.

For the first thirty years following its inception, Fannie Mae held a veritable monopoly over the secondary mortgage market. In 1968, due to fiscal pressures created by the Vietnam War, DEMOCRATIC PRESIDENT Lyndon B. Johnson privatized Fannie Mae in order to remove it from the national budget. At this point, Fannie Mae began operating as a GSE, generating profits for stock holders while enjoying the benefits of exemption from taxation and oversight as well as implied government backing. In order to prevent any further monopolization of the market, a second GSE known as Freddie Mac was created in 1970. Currently, Fannie Mae and Freddie Mac control about 90 percent of the nation's secondary mortgage market.

GSEs such as Fannie Mae and Freddie Mae, with their combination of private enterprise and public backing have experienced a period of unprecedented financial growth over the past few decades. The current assets of these two companies combine for a total that is 45 percent greater than that of the nation's largest bank.

On the other hand, their combined debt is equal to 46 percent of the current national debt. It is this combination of rapid growth and over leveraging that has lead to the current concerns of Congress, the Justice Department and the SEC with regards to the financial practices of these GSEs.

Fannie Mae and Freddie Mac are the only two Fortune 500 companies that are not required to inform the public about any financial difficulties that they may be having. In the event that there was some sort of financial collapse within either of these companies, U.S. taxpayers could be held responsible for hundreds of billions of dollars in outstanding debts. A recent investigation by the Justice Department and the SEC into the accounting practices at Freddie Mac revealed accounting errors in the amount of 4.5 to 4.7 billion dollars and resulted in the termination of three of the company's top executives. Ongoing investigations by DEMOCRATIC CONTROLLED Congress, particular the DEMOCRATIC CONTROLLED House Finance Services subcommittee that oversees the activity of GSEs, will determine the future role of Fannie Mae and Freddie Mac and the secondary mortgage market that they dominate.

Just the facts.

The Obama camp can now formulate a response.

U.S. Housing Market Forecast: 2008-2010

Combine the inflationary impact with the continuation of mortgage rate escalation through 2010 and its quite a one two punch. I won't be looking for a buy signal for quite some time.

Nationalizing Oil: Well-Intentioned, But Wrong

The group who makes the most money off of each gallon of gas is the US Government (15%) whereas the oil companies make an average of 4%. At $4.15/gallon thats .62 cents of "profit" per gallon. Tax free of course ;-). Seems like we've already done it. Then again, considering our "nationalized" success stories like education, if we do go farther with this concept (she is a complete idiot) 15% "profit" will become 6% and the quality and availability will plummet.

Can't wait to see that Chinese oil rig being built off the Florida coast (first of six I am told), flying the Chinese flag half way into our "protected zone".

Hoping the Housing Crisis Is Over

Hope is more dangerous than all the world's evil combined because it prolongs man's torment.

Zeus

The WSJ Is Wrong on the Housing Crisis

In the past only 6% of retirees will have moved more than 50 miles away from where they raised their children. I am sure that the coming baby boomer retirement wave will increase that percentage but not by the implied amount I constantly see in these types of articles (both bull and bear stances). Also, 85% of baby boomers will need their social security benefits to make "retirement" possible. Combine that with the fact that most then will have to sell their current homes in order to purchase a new one in a different location leads me to believe that the baby boomer rescue concept is about as well conceived or thought through as the housing bailout plan. All written as if Peter Pan was the intended reader. Less is indeed the new More and they'll be sure to make it as hip as possible so that they can stomach the taste.