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The Big Obama Administration Thread

Discussion in 'Alley of Lingering Sighs' started by Death Rabbit, Mar 2, 2009.

  1. Ragusa

    Ragusa Eternal Halfling Paladin Veteran

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    NOG,
    I wrote that it's maybe time to re-examine whether the traditional R dogmas on tax, military spending and the economy hold up to scrutiny. I want to elaborate on that.

    The US are now in an undeniable economic crisis, that started to manifest itself during the last months of Bush's second term, after nearly eight years of GOP rule and the application of orthodox GOP economic recipes, characterised mainly by deference to the businesses and a firm faith in the beatifying powers of the holy market.

    I see R's pointing out Democratic complicity in the root causes of the current mess, after all Clinton repealed the Glass-Steagall Act (with bi-partisan support). That is indeed correct, but a more constructive Republican posture would be to ask if that alone accounts for the causes of the current mess, and whether, and if so to which extent, Republican recipes have failed, or to which extent they didn't work.

    That some of the recipes applied by Bush's Republican administration must have failed is an inescapable observation if one doesn't want to dismiss the current economic crisis as a freak accident, or Clinton's and the Democrat's fault. The record of the last eight years casts some doubt on the wether the orthodox Republican receipes work as promised. Considering that, it ought to be of vital interest, if not for the sake of the party then for the sake of the nation, to find out more about it. Beyond the paleo-conservative wing I don't see R's doing that. It is easy to say that Obama does all the wrong things and get very vocal about it. But do the R's have a working solution?
     
  2. NOG (No Other Gods)

    NOG (No Other Gods) Going to church doesn't make you a Christian

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    Ragusa, we hashed out the economic crisis pretty well earlier (I think in another thread), and I think the conclusion we seemed to come to was pretty solid. That conclusion was that the roots of this crisis are long and deep, some of them tracing back as far as Carter, mayber farther, and end in the hands of Republicans and Democrats alike, most of them meaning well, but not really understanding what they were doing. Yes, the free market failed, but so did regulation, both in absence and presence.

    I agree that there is a lot to learn from the making of this crisis, and I agree that deep questions need to be asked at some very high levels. Realistically, though, I don't think anyone will ask those questions at the right levels, and I don't think anything will be learned. I think both parties will blame each other until this happens again, and I think it will happen again. I just hope it's a long time away and in a much less crucial sector.

    What I mean by criticising how Obama is spending money is that, personally, my belief is that the best way to fix a recession is to create jobs, and that should be done by the government when possible. We should not be buying out companies, we should not be giving companies money, we should be creating jobs ourselves, on the federal and state levels.

    I heard a recent review of the money given to states so far. The people reviewing it were largely blasting the states for balancing their budgets and paying off debts rather than creating jobs with new projects. It seems to me that they've kind of missed the point. Debt, by and large, is what created this crisis in the first place, and that foundation must be fixed before the crisis can really be practically addressed. I believe the states did the right thing by clearing the slate before taking on more debt (not to mention choosing to keep current jobs rather than make new ones at the cost of old ones). What worries me now is that it seems more money won't be coming to the states for quite some time, months at least, because of Congress at least in part. I put this at Obama's feet only because I believe, if he really put pressure on them, he could cause Congress to move in just about any way he wants right now.

    Yes, Bush does deserve some of the blame for the way money was spent, and yes, he does deserve some of the blame for the formation of this crisis to begin with, but Bush can't fix anything now. Obama can, if he does it right. I don't think he's doing so.
     
  3. Chandos the Red

    Chandos the Red This Wheel's on Fire

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    It may be that you guys hashed out, but I'm sticking with the more popular notion, at least among economists, that it started with 9/11 and Greenspan's plan to keep the economy from crashing as a result of the destruction of the major financial center in the US. Greenspan used interest rates and the housing market to stablize the economy, which led to the housing bubble that went bust. Greenspan has even admitted (before Congress) that a large part of it was his fault.

    The further frenzy to sell subprime mortgages, which were bundled into structured investments by banks, brokerage houses and insurance companies caused many of these institutions to fail once the subprime loans went bust. You can argue that allowing these institutions to merge their operations into the drafting of CDOs set the stage for their failures, but had these institutions been more ethical and responsible, the meltdown would never have happened, despite the deregulation. The fact now remains that the regulations are needed because we can no longer trust these institutions.

    Notice that those institutions with less exposure to the faill out from toxic loans are already starting to recover. And we still don't have any new regulations. It's unbelievable that the system still has not been repaired after almost an entire year.

    Carter had nothing to do with it.
     
    Last edited: Jul 9, 2009
  4. T2Bruno

    T2Bruno The only source of knowledge is experience Distinguished Member ★ SPS Account Holder Adored Veteran New Server Contributor [2012] (for helping Sorcerer's Place lease a new, more powerful server!) Torment: Tides of Numenera SP Immortalizer (for helping immortalize Sorcerer's Place in the game!)

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    Greenspan has also stated the deregulation of the banking industry was a mistake. The entire mantra of deregulation was taken to the absurd extreme.

    I agree Carter had very little to do with this, but you can certainly argue that every administration since then has added to the mess. I don't think 9/11 was a major factor as much as the war in Iraq.
     
  5. Chandos the Red

    Chandos the Red This Wheel's on Fire

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    The economy tanked after 9/11. I still remember GWB telling everyone to "go out and shop" and not let the "terrorists stop our business." The market fell over 2000 points in just a few weeks. Greenspan's strategy was to cut interest rates and push mortgages as a way to keep the economy from completely tanking. Mortgage rates fell to their lowest levels since the early 1970's. It's true that it was not his intention to start a housing bubble, but he certainly pushed the housing market, even suggesting that people take advantage of a new mortgage product: the adjustable interest rate.
     
  6. Drew

    Drew Arrogant, contemptible, and obnoxious Adored Veteran

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    The ARM is nothing new, Chandos. It has been around for almost 30 years, thanks to the Garn-St Germain Depository Institutions Act of 1982 -- the Act of Congress that deregulated the Savings and Loan industry. We all know how well that turned out... :o

    That said, while ARMs are nothing new, sub-prime mortgage lending is quite a bit newer, having gotten its start in 1993 and beginning in earnest after 911. Securitizing sub-prime mortgages and marketing them as low-risk real estate investment vehicles, however, is quite new -- but even that's a pretty old idea. Even my 1994 copy of Personal Finance for Dummies warns against investing in real-estate securities, although the type of real estate securities Eric Tyson warned against aren't the quite the same as the (arguably fraudulent) sub-prime bundles -- those didn't exist at the time. Real estate trusts have always, well, sucked.
     
    Last edited: Jul 9, 2009
  7. Chandos the Red

    Chandos the Red This Wheel's on Fire

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    I was really basing it on these comments he made in 2004. But it appears you are correct, Drew. Thank you, sir. :)


    We know how that worked out.
     
  8. Drew

    Drew Arrogant, contemptible, and obnoxious Adored Veteran

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    Yes we do. I still find myself shocked that other people are shocked when de-regulation back-fires. Not all de-regulation is bad, of course, but the banking regulations we had in place were there for a reason. At the very least, we should have learned our lesson the first time de-regulation backfired. To see the inevitable result of excessive banking de-regulation, we didn't even need to look all that far back. The S&L crisis happened in the late 80's and early 90's, not some long-forgotten era remembered only by God and Larry King.
     
    Last edited: Jul 9, 2009
  9. The Shaman Gems: 28/31
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    In this case, I guess it is a matter of which is more effective and at lower cost - spending money to open new positions or spending money to protect existing ones. It is further complicated by the availability of these positions to the people in need - i.e. a position for a computer programmer will probably not do that much good to a 50-year old who spent 26 years as a road worker. Personally, I am inclined to side with you, but I can definitely see why Obama's team might think that spending to preserve large companies might (if done right, of course, but that should go without saying) be better value for money.
     
  10. NOG (No Other Gods)

    NOG (No Other Gods) Going to church doesn't make you a Christian

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    Chandos, the real core of the crisis was the idiots who decided to give loans to people they knew couldn't pay for them. That was Congress, mostly the democrats. It was their plan to get poor people into houses, which is a wonderful idea, except that someone has to pay for the houses. They relied on the housing bubble to pay for the houses. That worked for a while, but not forever That's what started the whole instability. That was the blasting cap for these explosives. Everything else just tied more and more massive and delicate cores of our economy to it. If those loans had been payable, though, I don't think anything would have collapsed in the first place.

    Basically, what I'm saying is that the Sub-Prime mortgages were like a single lit stick of dynamite. It packed a punch, and was not good for anything nearby, but alone wouldn't have done much more than shake up our economy. Everything else was like conveniently stacking dynamite, TNT, NOX, alcohol, and paint thinner all around that single stick in massive tons. By themselves, they're perfectly harmless, just sitting there. And then the single stick goes BOOM.

    Any time you give the money to someone else, there's going to be uncertainty as to how it's being spent. More than that, nationwide, the US is facing an infrastructure crisis. Bridges, roads, water mains, sewer mains, power grids, all need massive overhauls. Probably a couple hundred billion dollars worth, and perfect employment for that road worker you were talking about. That's how I think the money should have been spent, instead of proping up companies that hadn't managed to keep themselves afloat.
     
  11. Aldeth the Foppish Idiot

    Aldeth the Foppish Idiot Armed with My Mallet O' Thinking Veteran

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    With you 100%!

    In 2004? That's when the housing bubble started. The Dems didn't take over Congress until January 2007. Even if ALL the Dems did as you said (and not all of them did), the minority party cannot pass anything on their own. Their HAD TO BE bi-partizan support.

    That's also true. If you got your loan before 2003 or 2004 and still live in that same home today, you saw a huge increase in your home value, followed by a huge decrease, but it was largely only a theoretical increase or decrease, because you don't realize a gain or loss on your property unless you actually sell it. Even if you bought at the peak of the housing bubble and you're now underwater on your mortgage, if you're still employed and making your payments, you can be reasonably sure that you're house will be worth more than the borrowed amount by the time you pay it off.

    Approximately 23% of the $787 billion stimulus package IS for instrastructure projects, or about $181 billion. But I do agree completely that I think there could have been even more than this spent on infrastructure. However, it's incorrect to say we aren't doing anything in that sector. When you give money to banks and companies it's just gone with nothing tangible to show for it. At least with infrastructure you get a road, or a bridge, or a levee - you see something for what you spent.
     
  12. T2Bruno

    T2Bruno The only source of knowledge is experience Distinguished Member ★ SPS Account Holder Adored Veteran New Server Contributor [2012] (for helping Sorcerer's Place lease a new, more powerful server!) Torment: Tides of Numenera SP Immortalizer (for helping immortalize Sorcerer's Place in the game!)

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    I say it started in the Reagan years and you don't believe me. Drew says it started during the Reagan years and you thank him for the valuable information.

    Chandos are you my ex? Or perhaps one of my children? :)
     
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  13. LKD Gems: 31/31
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    All I know is that Obama inherited a really piss poor situation. He also has to deal with 100 Senators, I don't know how many bloody Representatives, an enormous civil service, an independent judiciary (that arguably has a taste for dabbling in the demesne of the legislative and executive branches of government), massively powerful special interest groups, a truly vicious media machine, and enemies all around the world who hate America (some with cause, some without.)

    Did I miss anyone?

    What does he bring to the table? The Audacity of Hope (the idea, not the book), high CHA, INT and possibly WIS scores, the love of a pretty good chunk of the populace, and a pretty good team (Hillary Clinton being a notable exception to that statement.)

    Will he win? Probably in the long term he will. But it will take time, and it will take compromises. He will have to play the game from time to time, and I know that ticks off many of his supporters, but that's the way the cookie crumbles. He'll make some deals that'll really piss them off. But ever so slowly, he'll bring about some good changes to the US.

    Plus, he's in a great spot because one of the enemies that I didn't mention earlier that really isn't causing him trouble but could is the Republicans. IMHO they are shattered ATM, and because of that he has one less monkey on his back than would be normal.
     
    dmc and Death Rabbit like this.
  14. Death Rabbit

    Death Rabbit Straight, no chaser Adored Veteran Torment: Tides of Numenera SP Immortalizer (for helping immortalize Sorcerer's Place in the game!)

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    Well said.

    I don't expect everyone to like everything the Obama administration does. In fact, I don't think there is anyone - even his most die-hard supporter - who isn't disappointed by one aspect or another so far. What frustrates me is, I think people are being a little unrealistic. Obama promised change in the way Washington works, and I think he's really doing that. But I never expected this change to be instantaneous. I didn't expect much if any noticeable change in the first year, and I think anyone who did (and who are now criticizing him for it) are setting this administration up for failure and themselves for disappointment.

    Give him some time. If by this time next year the economy is worse, the debt is bigger, unemployment is still high, etc., or even all those metrics remain level, you'd be justified in your disappointment. But keep in mind this administration is only 6 months old, and facing immense challenges. A little patience and understanding would go a long way, I think.
     
    Last edited: Jul 9, 2009
  15. Chandos the Red

    Chandos the Red This Wheel's on Fire

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    NOG - You have absolutely no idea what you are talking about. Congress had almost nothing to do with the subprime loans that were bundled into structured investments starting in 2001. You really need to do some research into this topic, or at least show something to prove such an unfounded statement before you make it. I believe that if you took the time to research the subprime market and companies like Quick Loan or Countrywide, it may open your eyes a bit. To blame congress, more specifically Democrats, for what happened between companies like Quick Loan or Countrywide and Wall Street - companies like Bear Sterns or AIG, is not only wrong, but nothing more than blantant partisanship.

    This is a thumbnial look at the subprime crisis

    http://www.stock-market-investors.c...k/the-subprime-mortgage-crisis-explained.html
     
    Last edited: Jul 9, 2009
  16. The Great Snook Gems: 31/31
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    I never know if I should put things in this thread, the global warming thread, or start a new one :D

    Here is a good start at stopping the cap and trade fiasco

     
    Last edited: Jul 9, 2009
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  17. LKD Gems: 31/31
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    I'm not educated about the details of this sup-prime crisis of which you speak, but I do have an opinion about when things started to go to poop in the financial sector. Actually, it would be more accurate to say I have an opinion on one of the factors. It all comes from left wing meddling with the financial system. It comes from' the left's blindered obsession with individual rights -- particularily the individual rights of vocal or pathetic looking minorities.

    An example to illustrate -- Harry is a landlord. For years, he owned an apartment building and rented out suites to all sorts of people. If someone came to him who obviously couldn't afford to pay the $800 rent that he charges, he turned them away on that basis (the basis of being unable to pay.) Now, I kid you not, I have heard people in Canada say "that's not fair, he should rent the apartment to poor people even if they can't pay -- it's discrimination (:tobattle:) to deny them an apartment just because they can't pay"

    Now that is so bloody, effing stupid a comment as to be beyond belief. I can't think of a better reason to deny services than the inability of the customer to pay for it. Harry can't cover his expenses, let alone turn a profit, if his customers only pay him when they feel like it. Enough of that stupidity and he'll be out of business. Yet such mindsets continue to exist (IMHO usually among the humanistic left). It looks to me like the same thing happened with these "sub-prime mortgages" -- loans were made to people who were obviously unqualified. Now perhaps unscrupulous people were hoping to cash in when the houses got foreclosed, and such people can be from all points on the political spectrum, but dangit, the bottom line principle is on its face ridiculous. You cannot force people to provide services without allowing them to receive adequate compensation* in return -- if you do, they'll do what they have to to make a living.

    *laws against usurous interest rates on loans are of course necessary, but that's about where regulation should end, although I would go so far as to say that the government should also prohibit the making of a loan to anyone who obviously cannot pay it back.
     
  18. The Great Snook Gems: 31/31
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    LKD nailed it on the head. The fact that some Gee Whiz geniuses turned these bad loans into investment vehicles was a secondary problem. I have always thought that the government should have done nothing. The people who would have ended up losing their homes probably shouldn't have been in them in the first place. The thing that everyone keeps forgetting is that if you lose your home, you aren't sentenced to death. Yes, it may be a little embarrassing, but the end result is you either purchase a home you can afford or you end up moving to an apartment. Neither of them are that terrible of fates. Yes, there would have been investment houses and banks that would have gone under, but there were plenty that didn't get involved in these types of crazy investments and they would have picked up the slack. The government shouldn't be there to help out people whose investments lost money. If you can't afford to lose the investment then don't invest. It really is a simple principle.
     
  19. NOG (No Other Gods)

    NOG (No Other Gods) Going to church doesn't make you a Christian

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    Actually, I think the original law to that effect was in or around Reagan's years, not sure exactly. This problem was a lot more than 4 years in the making, though.

    I didn't say there was nothing being done, but I've seen reports (not media, but professional) saying we could easily spend $1 trillion on infrastructure in the US and still be behind. Also, how much of that $181 billion has been released? One of the complaint I've heard so far is that the money is only trickling out where it needs to be gushing out.

    Quite true but, except for the debt, just about every president in US history has had to face a similar situation, and many of them with much more hostile groups in control than Obama is facing at the moment. He's got a Democratic house, a Supermajority in the Senate, until recently the media has mostly loved him (with or without cause), and he's probably still got the popular vote on his side. I'm not saying Obama has an easy job, but he's got a lot of factors in his favor right now, and past presidents have definitely faced harder challenges.

    Chandos, I'm not talking about that timeline, I'm talking about the background that set it up. It's like saying that the problems around WWI stared with the Austrians and the Serbs. If you only look that far back, you only get half the picture. The set-up of this problem is much more complicated than the collapse. Also, I'm not blaming Congress, or the Democrats, for anything other than the legislation they passed.

    TGS, I think that quote of yours may well belong in both threads, as it is pertinant to both. It doesn't surprise me in the least, though. Well, except for the one guy who disagreed with it.
     
  20. Chandos the Red

    Chandos the Red This Wheel's on Fire

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    Yes, yes, you keep saying. Where is your evidence? I gave you a perfectly good link that explained the subprime mortgage crisis in very simple language. It explained how loan qualifictions changed during the last decade and it expalined how loans were bundled into CDOs and sold off to foreign investors.

    Did you buy a house in the 1990s NOG? Cuz I did - my first house. I can tell you it took almost a month to do the financing. Once I bought my new house in 2006 they did my loan over the phone - that was Countrywide. I did not accept their offer because I went with the same people who did the loan on my first house and that required a vist to their office and a REAL approval, and the same people are still holding my loan. My mortgage was not bundled into a CDO. I know where my mortgage is.

    Explain your reasoning, or perhaps supply a timeline of events that lead to the subprime problem as you see it. Some evidence would be nice.

    Ah, yes. You didn't read the link I provided? The government had almost nothing to do with it. Here, since no one read it, I'll post some of it for you:

    So, you see, TGS. You are right. Those people never should have gotten the loans. The people who gave the loans didn't give a crap, because THEY SOLD THE LOANS OFF TO SOMEONE ELSE. That was basically -- FRAUD.

    EDIT - Sorry, this is a minor point, but I bought my first house in 1991. IT's stiil hard to believe it's been that long ago.
     
    Last edited: Jul 10, 2009
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