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stevep
Boulder climber
Salt Lake, UT
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Feb 25, 2009 - 04:33pm PT
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While I agree with most of Matt's post, and certainly the GOP has been the bigger party of deregulation, at least some Dems should get blamed as well.
There was banking deregulation that went on during the Clinton administration, led at least in part by Rubin.
Basically a whole lot of rich folks, both GOP and Dem, got wayyy greedy.
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salad
climber
Escondido
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Feb 25, 2009 - 04:37pm PT
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dont forget the part about the racethuglicans blocking any efforts to tighten up on fannie and freddie.
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Matt
Trad climber
primordial soup
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Feb 25, 2009 - 04:38pm PT
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racethuglicans, lol
Steve-
Not every single instance of "bank deregulation" is/was responsible for the enabling of the current financial crisis.
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JuanDeFuca
Big Wall climber
Stoney Point
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Feb 25, 2009 - 05:06pm PT
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Don't worry come the great eclipse of 2017 this will all be over.
Or if you belive the Mayan 2012 the world ends.
Smoke if you got them.
Juan
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TradIsGood
Chalkless climber
the Gunks end of the country
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Feb 25, 2009 - 05:12pm PT
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Matt, selling bundled loans was started in the 70's. Selling bundled loans never caused a credit crisis until they started bundling bad loans. Even that took some time. It needed the real estate value correction to expose the error and some time to expose that error.
Selling bad loans had some limited history of failure even prior to this. Think "The Money Store", for example.
Anybody who is trying to find a single party to blame in this, is wasting gray cells - most likely because he does not have enough knowledge of the subject to understand the big picture.
The blame ultimately has to fall on the shoulders of every participant. It would not have worked with out all of them - government, lenders, borrowers, investors, wall street, ratings agencies, bond insurers, appraisers. Take just one class of out of the picture and it never happens. Everyone of the participants mentioned made at least one serious mistake.
Now the question is "will we extend the "moral hazard" even farther?" Today we heard from the administration that the banks that fail the "stress test" will have 6 months to raise capital. So clearly it has been yet further extended to the big 18. If they can't do so privately, they will have to do it at 9% from the government. Think about it. How is a bank going to earn money at a rate higher than 9%? Certainly not by jacking the interest rate on mortgages down. Certainly not be extending it to borrowers on credit cards who are already having difficulty paying. So the current government plan is to lend money to a bank that needs money, but which has no hope of re-lending at a profitable rate.
Last week we heard that it was going to be extended to some class of borrowers - it remains to be seen how big that is, and whether it will achieve anything useful. So far, loan modification has proved to be a failure, with borrowers falling behind or defaulting in very rapid order - mostly under 6 months.
Could they do anything different? Yes. Would it work? Probably not. The damage has been done. The recovery is going to take well over a year.
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Mighty Hiker
Social climber
Vancouver, B.C.
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Feb 25, 2009 - 05:19pm PT
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Matt: "that's all they (republicans) are about- making all the money they can, period."
And here I naively thought they just liked scaring people, and then manipulating them.
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the Fet
Knackered climber
A bivy sack in the secret campground
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Feb 25, 2009 - 05:24pm PT
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My house was built by a guy who had 5 acres and built houses one after the other and sold them on 1 acre parcels.
After he died his widow let one of their kids move into the house and they didn't make the payments, so the bank foreclosed.
On his way out he opened up the water heater and let it flood the house. Nice guy, huh, the house his dad built by himself he trashes.
A contractor bought the house from the bank and replaced all the sheet rock and all the plumbing.
We got a great deal on it since the hard work was done, but lots of cosemetic stuff left to do, so it didn't have the appeal it should have.
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Nefarius
Big Wall climber
Fresno
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Feb 25, 2009 - 05:24pm PT
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""I guess I'm really just trying to understand why housing prices dropped so drastcally."
I think the correct question is why did they rise so fast. "
I'd agree with that, and it happened for a number of reasons. I was honestly surprised that *anyone* was shocked or surprised when the crash happened. It was inevitable. Plain, simple logic and arithmetic showed that there was no other way for it to go but down. I've gone round and round with the CEO of the bank I work for for a few years about it. Now he's eating his words.
Look, the houses were seriously over-valued. We'll use Fresno as an example. One of the great things about Fresno was always that you could buy a decent home here for a reasonable price. This enabled blue collar workers the opportunity to actually purchase a home here. The median family income here is around $42K. The median price on a home here, at the peak, shot up from like $80k to $325K. How long did they seriously expect that they could keep selling those houses for that amount here? And this was the case all over the place. The price of housing can't more than triple, with zero rise in earnings. It just won't work.
I managed to get lucky when my relationship fell apart right at the beginning of the thing (rather than now, or even last year)and I was able to sell for a bit more than I paid. I had a 3200sq ft home, in a great neighborhood, all the upgrades, that I paid $225K for. Had I have known that the ignorance would go on and on and on, I'd have kept it and sold that bad mutherf*#ker for around $700k at the peak and bailed. Hinsdsight, eh? Now I'm sitting, waiting. Eventually this will all end and that same house will be back down to $170K-ish, where it was to begin with, and where it belongs.
The housing boom was manufactured and a shitty thing. The worst part is that millions of sheeple bought into. Bummer.
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bluering
Trad climber
Santa Clara, Ca.
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Feb 25, 2009 - 05:40pm PT
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Boy, Matt sure is pissed off, huh?
Matt, here's what I was referring to when I mentioned pressure to give loans out to minorties who couldn't afford them. Of course, 'non-minorties' made stupid decisions too, but this is what I was referring to;
ACORN recognized very early the opportunity presented by the Community Reinvestment Act (CRA) of 1977. As Stanley Kurtz has reported, ACORN proudly touted "affirmative action" lending and pressured banks to make subprime loans. Madeline Talbott, a Chicago ACORN leader, boasted of "dragging banks kicking and screaming" into dubious loans. And, as Sol Stern reported in City Journal, ACORN also found a remunerative niche as an "advisor" to banks seeking regulatory approval. "Thus we have J.P. Morgan & Co., the legatee of the man who once symbolized for many all that was supposedly evil about American capitalism, suddenly donating hundreds of thousands of dollars to ACORN." Is this a great country or what? As conservative community activist Robert Woodson put it, "The same corporations that pay ransom to Jesse Jackson and Al Sharpton pay ransom to ACORN."
and
Now you could make the case that before 2008, well-intentioned people were simply unaware of what their agitation on behalf of non-credit-worthy borrowers could lead to. But now? With the whole financial world and possibly the world economy trembling and cracking like a cement building in an earthquake, Democrats continue to try to fund their friends at ACORN? And, unashamed, they then trot out to the TV cameras to declare "the party is over" for Wall Street (Nancy Pelosi)? The party should be over for the Democrats who brought us to this pass. If Obama wins, it means hiring an arsonist to fight a fire.
from here...
http://www.realclearpolitics.com/articles/2008/09/acorn_obama_and_the_mortgage_m.html
It's laughably naive to say the Republicans did this, but it doesn't surprise me.
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apogee
climber
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Feb 25, 2009 - 05:46pm PT
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TiG: "Anybody who is trying to find a single party to blame in this, is wasting gray cells..."
That's partially true- there is no one individual who is responsible, but there most certainly is a group of people, a 'Party' if you will, that had a tremendous influence on it. It is part and parcel of the GOP's ideology to remove regulation and oversight whereever it can, and let the market regulate itself. This is a core element of the GOP, not the Dem's, and the GOP has been running the show that started this mess, and saw it collapse.
It is funny how, when discussions of responsibility for this morass come up, members of the GOP try desperately to change the channel or try to implicate others in the process. It is what it is, guys- you voted for it, your Party created it, and now we are all living with the outcome.
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dirtbag
climber
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Feb 25, 2009 - 05:47pm PT
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I blame ACORN for everything.
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Matt
Trad climber
primordial soup
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Feb 25, 2009 - 05:50pm PT
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just so i am clear, the *AUTHORITY* you want to cite is a no more than a conservative comentator?
and one who wrote extensively on obama/ayres and obama/wright during the 2008 elections?
http://en.wikipedia.org/wiki/Stanley_Kurtz
hahaha
ha ha ha
HA HA HA
HA HA HA HA HA HA HA...
so you have a conservative blaming, get this, ACORN, for the sub-prime debacle, and you just accept that?
(ok wait, did they invent voter fraud, or did they destroy the economy?)
come on blueguy, at least try.
what did hannity have to say? or oriely?
edit-
it's just unfathomable to me that you would consider that to be an actual argument in favor of the idea that borrowers were to blame and ACORN was the catalyst. what about george soros? sean penn? can jimmy carter get in there for some blame? what about all those fags getting married? surely that destroyed the moral fiber that supported housing prices, no?
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bluering
Trad climber
Santa Clara, Ca.
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Feb 25, 2009 - 05:56pm PT
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Stanley Kurtz didn't write that....
Also, I'm not blaming ACORN entirely, they were PART of the problem in the lending fiasco.
dirt,
I blame ACORN for everything. don't forget Jimmy Carter.
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Matt
Trad climber
primordial soup
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Feb 25, 2009 - 06:05pm PT
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edit-
hey no foolin, is he really "an economy professor"?
[/]edit
yer sharp as a tack blueguy!
kurtz didn't write that-
the author only relied on kurtz to make his bullshit case against ACORN
from YOUR post above:
"As Stanley Kurtz has reported, ACORN proudly touted "affirmative action" lending and pressured banks to make subprime loans.
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bluering
Trad climber
Santa Clara, Ca.
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Feb 25, 2009 - 06:16pm PT
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Matt, he's only mentioned once in the whole article to make one point.
Must mean that he's a liar and the whole thing is made up. Definately covering for those money-grubbing Repubs.
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Matt
Trad climber
primordial soup
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Feb 25, 2009 - 06:17pm PT
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uhhhhh- it was just the part that you quoted...
as for this:
http://www.lewrockwell.com/dilorenzo/dilorenzo125.html
HAHAHA!!!!!!!!!!!
blueguy you are THE BEST!
that dude actually blames carter and "hard core leftists"!
that's awesome man, just awesome!
this has got to be the best troll of all time!
you fooled me man, i really believed that you believed all that silly sh#t you spew, you are something else...
btw-
that author that you linked to, here's his book (as advertised on that very page you linked to):
http://www.huffingtonpost.com/william-k-black/the-two-documents-everyon_b_169813.html
apparently abraham lincoln was a demon of sorts, and his relentless drive to centralize federal power and create revenue via income tax was the true cause of the civil war! who knew...
hey, do you have wesley snipes' tax guy's # for me bro?
thanks!
(you are just embarrassing yourself dood- i am embarrassed for you now, seriously. so what else came up when you googled "ACORN subprime" ?)
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dirtbag
climber
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Feb 25, 2009 - 06:22pm PT
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Yeah, I looked up that economist too. He's pretty fringe, arguing that Abe Lincoln was a SOB and the North should've let the south go.
Interesting that a guy who is pro-secessionist writes an article blasting ACORN.
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Matt
Trad climber
primordial soup
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Feb 25, 2009 - 06:27pm PT
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in all honesty, this is why i stopped hanging around here.
what a waste of time.
who are all these right wing idealogues that couldn't tell an opinion from a reasoned conclusion or from a statement of fact if their very life depended upon it?
it's just not my job to go back to 8th grade and teach people to think critically.
(and btw- you cannot teach that skill out of one side of your mouth and then, for example, deny that the theory of evolution has withstood decades of scientific scrutiny quite well out of the other, or that the book of mormon was delivered on golden plates to joseph smith in upstate new york via an angel, who then subsequently took the plates back, leaving joseph to spread "the true word of god". so no, you cannot say that all american children are taught to think critically)
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bluering
Trad climber
Santa Clara, Ca.
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Feb 25, 2009 - 06:29pm PT
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Matt, so are you stating that the claims put forth are false?
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