Patterico's Pontifications

9/20/2008

Why the Bailouts Don’t Bother Me (Much)

Filed under: Economics,Government — DRJ @ 5:53 pm



[Guest post by DRJ]

In our continuing effort here at Patterico.com to bring you both sides of every issue, and sometimes 3-4 sides, here is my counterpoint to Patterico’s post expressing concern about the recent Fannie Mae, Freddie Mac, AIG, and TARP bailouts. Unlike many conservative-minded bloggers, I’m not a libertarian although I used to be. Now I’m a pragmatic conservative and these are my views on the bailout:

John McCain was right when he said there are problems but the fundamentals of the economy are strong. Here’s how New York Mayor Michael Bloomberg expressed it:

“I do agree that fundamentally America has an economy that is strong,” he said. “America’s great strength is its diversity, its hard work, its good financial statements, its broad capital markets, its enormous natural resources” and its work ethic, he said at an afternoon press conference devoted to reassuring New Yorkers that the city’s finances and its economy are intact.

“I’d rather play America’s hand than any other country,” he said. “Without problems? No.”

In my view, the bailouts primarily resulted from dramatic expansions in personal and business credit since the 1980’s coupled with a housing bubble that has been building since the 1990’s, all of which were aggravated by recent weakening in business and consumer confidence. This crisis in confidence led to a system-wide “run on the bank” as investors redeemed their assets from investment funds to hold until the market stabilized.

This is not unlike bank runs from the early 1900’s that were ultimately remedied by increased banking oversight and the creation of the FDIC in 1933. These were not solutions that made libertarians happy because they involve government intervention but, as a conservative, I believe stabilizing the banking system is an appropriate and vital function by government to protect the economy. The alternative would have been a return to a limited, insular economy where people hoarded assets.

I think recent developments are a recognition that people don’t put their wealth solely in banks anymore. Fifty years ago, the average family owned a house, a car, and furniture and put its savings in banks. Few people other than the wealthy purchased stocks and bonds. Today’s families put their money in a broad range of investment vehicles. It’s no longer enough to protect business and consumer confidence in the banking system. Government oversight that brought stability and confidence to banking are now necessary for the broader investment markets.

Of course, it would have been better if Congress had addressed the economy with thoughtful and incremental adjustments over time, as opposed to the all-or-nothing approach to regulation and deregulation (on just about every topic) that it currently favors. But it’s been clear for years, perhaps even for decades, that American politicians won’t solve big problems until they become crises and, so far, Americans have been unable or unwilling to change that. See, for example, Medicare and Social Security.

So it’s not surprising that Washington politicians fiddled for decades on these issues but it’s noteworthy how quickly Treasury, the Federal Reserve, and to a lesser extent the SEC moved in recent days. This may have transpired in days but the Bush Administration was clearly prepared even if Congress was stunned. (Note: I’m not a Bush apologist. The Bush Administration asked for or allowed massive discretionary spending for 7+ years, making this bailout much harder to pay for than it should be. However, it’s also hard to overstate how unprepared the Democrats obviously were to deal with this issue. Think Ray Nagin during Hurricane Katrina.)

I want to make it clear that I agree with this Investor’s Business Daily editorial. The problem isn’t deregulation vs regulation. The problem is the need for modern oversight and regulations that keep up with what’s happening in the markets. Despite the affinity for “change” expressed by many liberal Democrats, their representatives and senators in Congress have been committed to the status quo when it comes to modern banking and investment oversight.

Do I wish this wasn’t necessary? Absolutely, but I’m not surprised that conservatives like Paulson and Bernanke would opt for a solution that values financial stability and reinforces business and consumer confidence. And, finally, I hope the Congressional legislation that results from this includes as much emphasis on transparency as it does on oversight.

— DRJ

120 Responses to “Why the Bailouts Don’t Bother Me (Much)”

  1. I don’t understand you, DRJ.

    Though you are nice decent person how can you not be bothered by the socialization of $700 billion in junk debt.

    Whilst the engineers of the debt walked away with billions.

    I guess it’s OK if you’re a republican.

    jharp (f4bed7)

  2. jharp, Democrats ran off with millions while leaving us with bad debt, but you don’t condemn that. Why? Because you are evidently not interested in integrity, just partisanship.

    SPQR (26be8b)

  3. I generally agree that Principles must be tempered by reality/practicality.

    There is plenty of blame to go around for the mess we’re in. Yet NOW that we’re in this mess, so how do we solve the problem with the least further damage?

    As an accountant, for the past number of months, in discussions with clients and friends, I have been recommending that a quasi-governmental agency take over the bad loans. My first goal is to keep people in their homes. If that takes continuing payments at a current rate for 2-4/5 years, so be it. We need to get the inventory of homes off the market to allow stability to return to the housing market. I would expect that there is a cost to the homeowners in this circumstance. Should the housing market recover and begin to appreciate, then they would share a portion of the increased value with the agency at the time of the sale of that home. In essence a whole bunch of little Chrylsers.

    Even if the market is flat or recovers very slowly, this still allows stretching out the time frame of when these homes come on the market.

    My one big fear is that, as in most things, getting the government involved means things will get screwed up. Yet, it’s time to think outside the box. Maybe something like, seting up strict guidelines on exactly how things would work, then outsource the actual day to day management of small portfolios, where these entrepreneurs have a profit motive to manage the piece of the action effeciently and effectively.

    Just a thought,

    Regards,

    the Dragon (8772e5)

  4. “jharp, Democrats ran off with millions while leaving us with bad debt, but you don’t condemn that. Why?”

    I most certainly condemn it. It’s just the $4 trillion pissed away by the GOP dwarfs millions.

    And I have grave concerns about a third George Bush term.

    jharp (f4bed7)

  5. jharp, that is another example of your dishonest technique of non sequitur. The budget deficit has nothing to do with the question of whether or not dishonest business executives predominate in one party as you falsely assert.

    SPQR (26be8b)

  6. Did the Gramm-Leach-Bliley Act cause the housing bubble?

    No. That is one common myth among the progressive left. Because it involves financial deregulation and the unpopular Phil Gramm, the Act is vilified and assumed to be part of a broader chain of evil events. Here are some of the articles which promulgate the myth that the Act caused or helped cause the housing bubble. One version of the claim originates with Robert Kuttner, but if you read his article (and the others) you’ll see there’s not much to the charge. Kuttner doesn’t do more than paint the Act as part of the general trend of allowing financial conflicts of interest.

    Most of all, the Act enabled financial diversification and thus it paved the way for a number of mergers. Citigroup became what it is today, for instance, because of the Act. Add Shearson and Primerica to the list. So far in the crisis times the diversification has done considerably more good than harm. Most importantly, GLB made it possible for JP Morgan to buy Bear Stearns and for Bank of America to buy Merrill Lynch. It’s why Wachovia can consider a bid for Morgan Stanley. Wince all you want, but the reality is that we all owe a big thanks to Phil Gramm and others for pushing this legislation. Brad DeLong recognizes this and hail to him. Megan McArdle also exonerates the repeal of Glass-Steagall

    http://www.pajamasmedia.com/instapundit/archives2/024641.php

    AMERICANS DO NOT WANT A NANNY STATE. THEY WANT ACCOUNTABILITY FOR MALFEASANCE.

    If McCain takes that tack, he will win the election. The blame is mostly Democrat but Republicans contributed some. But the solution is to make sure that we hold the guilty accountable.

    Joe (8102a5)

  7. Joe, the current credit crisis was not mostly a Democrat problem in terms of blame. It was a completely bipartisan mess. You had a couple of Democrats in prominent positions early on such as Franklin Raines at Fannie Mae, but there really isn’t a partisan point of blame. Obama’s refrain about that is just more of his dishonesty coupled with Obama’s utter ignorance of economics.

    SPQR (26be8b)

  8. jharp,

    I think it’s a red herring to think that because there’s a bailout there won’t be consequences. I may be a conservative but I’m also a lawyer so I know there will be consequences. Most of those who acted or profited wrongfully (as well as a few innocent parties) will be sued and/or subject to criminal prosecution.

    In addition, many investors will lose some of the value of their investments and most of them will change how they make investment decisions in the future. For instance, I don’t think today’s investors will view real estate as a no-risk investment anymore, do you?

    DRJ (0754ed)

  9. jharp,

    what about the people that had those millions ran off with by the Democrats…When is Penny Pritzker and her family going to pay back the money lost by those that banked with Superior? How about Johnson and Raines – when will they payback or help out those that lost their homes? I’d like to see everyone of those “thieves” have to repay each individual (with interest) that lost money because of the “creative financing” or “questionable bookkeeping practices” – instead of being taxed by Obama (which won’t happen due to their movement of assets and/or hiring creative CPA’s to hide their assets), and the money be put into some newfangled “social program” run by an Obama administration.

    fmfnavydoc (0dd45c)

  10. The credit and housing bubble were partly to blame as was the prevention by politicians who were paid off by Fannie Mae. Regulation failed because of political influence. Another factor was the CRA, which pushed hard on banks to expand credit to uncreditworthy borrowers. Trees do not grow to the sky and housing values do not rise forever.

    If this is done right, and that is not assured, the assets taken over by the federal agency will turn out to be worth far more than the mark-to-market values they have at present. One thing that has to be assured is the value of assets must be distributed fairly. We cannot have a situation where the feds get all the dogs and the companies keep the good assets.

    Mike K (b74f82)

  11. When the start selling off some of those marginal mortagages at dimes on the dollar,
    will they offer me the opportunity to buy back my mortgage (a “performing” one, I might add) on the same terms????

    Just asking.

    Another Drew (0d32b9)

  12. Mike K,

    Good point. If it works out like the Resolution Trust Corporation, there will be some good recoveries for taxpayers and some not-so-good.

    DRJ (0754ed)

  13. AD,

    Surely not. There’s a lesson there somewhere …

    DRJ (0754ed)

  14. DRJ – That was a good IBD piece on Gramm-Leach-Bliley. Perhaps if jharp reads it he will stop bleating about that act causing this crisis, mindlessly repeating a talking point someone on the left vomited up without actually understanding it.

    daleyrocks (d9ec17)

  15. What the bailout boils out to is this: instead of letting 700 billion which was not really there dissipate under the pressure of market forces, the government is promising to make good on that 700 billion, even though private homeowners and institutions could (collectively) not do so.

    It’s just added 700 billion to the money supply, and depreciated the value of the dollar yet again. I think the long term effects of that will be worse than any long term effects of a hypothetical non bail out would be.

    Not to mention the fact that an enormous portion of the US real estate market, the US insurance market (through AIG), and most important of all the sponsorship of Manchester United, have now passed into the direct control of the US government.

    kishnevi (48b514)

  16. While taxpayers are being put at risk, these mortgages are backed by real property that does have some value and may well increase over time.
    What I think is incredible is that no one even considers that maybe our 22.4 million person local, state and fed government might want to contribute to the solution by cutting their budgets,maybe a couple of redundant positions and waste. Did you know that there is only 6.5 civilian workers for every government employee? Did you know the average annual salary of a local or state employee is over $45k, and a fed employee is over $65k?
    Biden feels that hard working people should be “patriotic” and let him “take” more of our money. Why then don’t these extremely patriotic men and women in Washington prove it by taking a pay cut, no more earmarks or pet projects and cut the fiscal budget by 10%, now that would be patriotic!

    Chris X. Pat (4ee2bf)

  17. yep, kishnevi, that’s what has me unhappy. But we have to see what kind of pork laden abortion Congress pukes up to really piss us both off.

    SPQR (26be8b)

  18. Chris, I’d like to give Slow Joe Biden a swift kick in his patriotism.

    SPQR (26be8b)

  19. This weeks plan for the US Treasury to guarantee money market accounts, however risky, is the most asinine policy in the history of any civilization in any solar system.

    These money market managers get to invest in ANYTHING, even bogus no-income mortgages, and giraffe sperm futures. And the US government guarantees these 100% ?!?! What The Fuck.

    I’m as fiscally conservative as they come. But come on. President Bush is the most incompetent person in any job anywhere, ever.

    Wesson (f6c982)

  20. Wesson, I’m unhappy with some of the measures being taken, but your whining about George Bush is just juvenile.

    SPQR (26be8b)

  21. submitted for your consideration
    http://mochassid.blogspot.com/2008/09/thoughts-from-crisis-1.html

    This gentleman is a lawyer who works for a Wall Street company (he doesn’t give any clues to which one it is, but from how he writes it’s apparently not one of the ones making news).

    In particular, I direct your attention to his final point:
    4. It is appalling, no, beyond appalling, to realize how unprepared both Obama and McCain are to deal with the financial crisis. They are both making jackasses out of themselves on the campaign trail. They should just both shut up. One can only hope that whoever wins will delegate authority for handling the situation to someone who knows what a credit default swap is.

    kishnevi (630deb)

  22. bloody Gehenna, I think I’m caught in the spam filter.

    [I found it. It’s now #21. — DRJ @ 9:05 PM PST]

    kishnevi (630deb)

  23. Wesson
    Pres. Bush is responsible for lets see; Global warming, hurricanes,economy,stock market, housing bubble, 9/11 and erectile disfunction, boy he sure is busy screwing up the universe!

    Chris X. Pat (4ee2bf)

  24. While taxpayers are being put at risk, these mortgages are backed by real property that does have some value and may well increase over time.

    Take the ratio of 700 billion to the prebailout money supply (whatever that is), and that’s how much the value of everything will be dropping once the bailout goes through. Will real estate values increase by that much? Or any other investment, for that matter.

    Also, real estate values have a serious amount of climbing to do before they can gain the levels they had at the height of the real estate market. I live in an area that was especially overtaken by the bubble (South Florida); around here, devaluations of 25-33 percent are fairly certain, and may get worse if we haven’t yet hit the bottom. (Concrete example: market value of my townhouse went up to approximately 240k but now seems to be in the neighborhood of 150-160k.)

    kishnevi (630deb)

  25. Manchester United???

    Now, there’s an “asset” that should be liquidated!

    Another Drew (4692ec)

  26. jharp et al – and I mean this with all due respect

    Where is the 700 billion?

    Its in homes with value where the borrower is behind on their mortgage

    There’s a marked difference between behind and default

    the govt taking over the risk has AVOIDED MAKING PAYMENTS ON BEHALF OF HOMEOWNERS by refinancing their mortgages so maybe only 3.5% is collected rather than 6% big freakin woo

    True the loans will be paid off over a greater period of time

    Until the economy and taxation make it possible for people to pay off their loans

    However no checks have been written and I would make a sure bet that many of those fat cats would still be making money regardless of our opinions or the market situation

    The weaker investment banks fail just like the weaker companies in any industry – fail

    the panic and misinformation has people running iin the streets to thier brokers dumping money – money that is needed to reinvest in America – ie jobs

    EricPWJohnson (c00a5d)

  27. SPQR – I disagree. We’ve all talked about this mortgage mess in lunchtime conversation for YEARS. The tone we get from Bush is: “haha. yeah. we can’t do anything. Countrywide still rocks. Home ownership. Lehman has lots of buddies.” Look – this stuff was not rocket science. It was detachment and absolute stupidity. The Goldman Sachs head pulled out half a billion in compensation in the past 5 years. Does pointing that out make me a democrat?

    This mess really pisses me off. The California Republicans are totally inept. My conservative neighborhood is gerrymandered into one of the most liberal assembly districts in California. My President is totally retarded. What the hell is going on!? Incompetence.

    Wesson (f6c982)

  28. As this financial meltdown has proceeded in stages, the chicken-littles of the blogoshpere have proclaimed Gloom & Doom over just about everything – none of which has come about.

    Our instant-gratification society seems to be incapable of dealing with anything that might take more than 6 episodes to resolve.

    I fear what will happen if the world actually turns to shit, what will all of you do then?

    Why do I ask, for I care not!

    Another Drew (4692ec)

  29. This is pretty much the stuff that was done to clean up the S&L Crisis a couple of decades ago. Why can’t the markets learn from their mistakes? Why do we have to constantly invent new and ever more exotic investment instruments? They all turn to junk and we the people wind up buying them. I do think that they need to come up with something that actually STOPS the hemorage of forclosures. I know that bailing out individuals who made bad choices seems wrong, but we need to get a floor under the housing market NOW or its all going down the toilet. That means your house and my house too…

    J Chastain (df71f2)

  30. “No, but you . . . you . . . you’re thinking of this place all wrong. As if I had the money back in a safe. The money’s not here. Your money’s in Joe’s house right next to yours. And in the Kennedy house, and Mrs. Macklin’s house, and a hundred others. Why, you’re lending them the money to build, and then, they’re going to pay it back to you as best they can. Now what are you going to do? Foreclose on them?” It’s A Wonderful
    Life.

    Sorry, but I couldn’t resist, that is the reality of the situation. The problem is that thanks to the shenanigans of Obama, Biden, Dodd, et al; one can’t tell the difference between those who are conscientous about making payments, and those who were never able to meet those obligations.

    narciso (c36902)

  31. The US now owns AIG and its vast majority of the solar system’s insurance policies. The US also controls the 50% of the US mortgages owned by Fannie Mae and Freddie Mac.

    Imagine what political pressure could possibly be put on advisors who administer the loans of political enemies or political friends.

    What a sad week for the country. The Republicans saw this coming and did NOTHING… because they were weak because they were weak. You know, this stuff is not that hard if you aren’t dumb.

    Wesson (f6c982)

  32. Wesson

    I guess you may be embarassed – the govt always owned 100% Fannie May and Freddie Mac

    Still own it and the bailout was automatic since the govt was responsible

    And still no checks have been written – nor probably will be

    EricPWJohnson (c00a5d)

  33. So the Republicans saw this coming…
    They asked Congress to deal with it. A Congress controlled by Democrats the past two years. And the Congress did nothing.
    This is not a GOP or DEM problem, it is a societal problem, a problem of greed (Gordon Gecko, please call home), a problem of people thinking they were invincable/untouchable.

    HUBRIS!

    Another Drew (4692ec)

  34. “What the bailout boils out to is this: instead of letting 700 billion which was not really there”

    Kish – The $700 billion is presumably the “market” price the Treasury will pay for assets, not some mythical financial statement value, so I’m not sure how you arrive at your conclusion.

    daleyrocks (d9ec17)

  35. Numbers can be tossed around like frisbees, but I believe we can safely estimate that just the interest payment alone on current national debt is running at roughly 2 bil per day. Adding in this recent ‘nationalizing’ of private debt will pile on to that figure significantly. The concept of this being handed off to taxpayers is laughable considering the taxpayers are already in arrears. This idea that we’re running a sound economy is rather ludicrous when the nation is running a negative current account. Is your personal finances in good shape if you are making less than you spend, and find it necessary to borrow to keep living the way you are accustomed to?

    And then consider this perspective presented by Wm. Bonner:

    But this week reminds us that the war isn’t over. The feds still have some ammunition left. The Fed has 200 basis points left to zero; it can cut rates further. The government can intervene directly in markets; it can seize companies; it can lend to anyone at half the rate of inflation; it can send out checks… In fact, judging on recent evidence, it can do anything…

    …but the one thing it cannot do is create real money. Every intervention costs money. And money is the one thing the feds don’t have. Not real money. They only have phony money. And when investors finally realize the difference – between real money and funny money – that’s when things will get very, very interesting.

    So far, only one major asset class has escaped Mr. Market’s correction: bonds. U.S. Treasury bonds have gone up (meaning, yields have gone down) as investors sought the safety of what used to be, and should be, the surest credit on earth. But bonds depend on not only on the ability of the issuer to repay…but also the value of the money in which they are calibrated. And if that money starts to sink in value, bonds take a hit.

    U.S. Treasury bonds are unique. They depend on the value of the dollar…which the issuer itself controls. But as the war between Mr. Market and the feds continues, the U.S. Treasury will have a harder and harder time maintaining the value of the dollar. Because wars are costly. The feds will have to stretch the dollar farther and farther in order to meet the expense. Eventually, the elastic dollar will snap…and bonds investors will have their turn. Bonds will crumple over too…

    I don’t see any politics in all this. This is all about the socialization of finance. Maybe it is the pragmatic thing to do, but it’s still the debasement of the private capitalist system. Perhaps that is the only way these things can ever go when the mistakes get bigger and the fixes require overwhelming borrowing and taxing. But it is sad to see it happen. Capitalism ‘could have been a contendah’. Now it’s looking more like a facelift gone bad. Not the end of the world, just another version coming around.

    allan (734fa1)

  36. “You know, this stuff is not that hard if you aren’t dumb.”

    Particularly if you talk about it all the time over lunch and solve all the problems of the universe that way.

    Wesson – Why didn’t Bush call you? We could have avoided all these problems. He is a stupid, stupid man.

    Putz.

    daleyrocks (d9ec17)

  37. “When the start selling off some of those marginal mortagages at dimes on the dollar, will they offer me the opportunity to buy back my mortgage (a “performing” one, I might add) on the same terms????”

    As long as ‘they’ have the option of taking your house at the same reduction, I don’t see why not.

    Right now the valuations on the paper which the government is going to buy are running from 20% to 65% of face value. The $700 billion could buy between $1.075 and $3.5 trillion face value of mortgages. Most of the paper is now seasoned and there is enough data available concerning foreclosure sales in most areas of the country so that residual values can be calculated.

    So – are you up for a deal where you can buy in your mortgage at 20 – 65 cents on the dollar if you give the mortgage owner the opportunity to buy your house at the same markdown?

    Rick Ballard (14757e)

  38. jharp,

    “I think it’s a red herring to think that because there’s a bailout there won’t be consequences. I may be a conservative but I’m also a lawyer so I know there will be consequences. Most of those who acted or profited wrongfully (as well as a few innocent parties) will be sued and/or subject to criminal prosecution.”

    I will anxiously await to hear any good news on this front. (I ain’t holding my breath) And I am not aware of any laws that were broken. (Please let me know if any have)

    “In addition, many investors will lose some of the value of their investments and most of them will change how they make investment decisions in the future.”

    I think this is a real stretch. Between lehman, bear stearns, coutrywide, indymac, and too many to list Americans have lost hundreds of billions of their retiremnat savings. To say people are going to more cautious amounts to nothing.

    “For instance, I don’t think today’s investors will view real estate as a no-risk investment anymore, do you?”

    And this makes things better how?

    Wait to the REITS start falling apart and trust me it is coming.

    We’re only in the 2nd or 3rd inning.

    jharp (f4bed7)

  39. jharp

    ummm what to REIT have to do with the mortgage market?

    Those are mainly commericial and rental property not home mgt

    EricPWJohnson (c00a5d)

  40. “This idea that we’re running a sound economy is rather ludicrous when the nation is running a negative current account.”

    Fix that current account deficit – Drill Here – Drill Now.

    daleyrocks (d9ec17)

  41. daleyrocks,

    Please.

    “Kish – The $700 billion is presumably the “market” price the Treasury will pay for assets”

    There were no longer any buyers. No one knows what they are worth. To say there is a “market” shows a complete lack of understanding of the problem.

    jharp (f4bed7)

  42. “The tone we get from Bush is: ‘haha. yeah. we can’t do anything. Countrywide still rocks. Home ownership. Lehman has lots of buddies’.”

    Wrong. The Bush administration was at the forefront in trying to reform Fannie and Freddie (see 2003 and 2005). Ultimately, it was congress that failed in its oversight. Anyone trying to make this partisan is just a fool. I can hear the cries from the left right now about an out of touch administration content to watch millions thrown onto the streets as institution after institution collapsed. It’s what the left does. Heads we win, tails you lose.

    DRJ made a great point about the RTC. The government either lost a couple of bucks or turned a profit, depending on who you believe. Doesn’t matter, unless you want to return to 1933.

    The US is a 15 trillion dollar economy. Stepping up to guarantee up to one trillion in bad loans isn’t the end times. They’re buying at a discount and might even turn a profit, or lose a couple of bucks. My only hesitation would be if the government stepped in after this bloodletting to help out a failed financial. One shot, one time should be the attitude from here forward.

    Chris (cefe13)

  43. kishnevi,

    I don’t think it’s fair to say all $700B “was not really there.” By definition, a mortgage is a debt secured by real property and many of the problem debts are mortgages. The problem is the collateral is not liquid but that doesn’t mean they are worthless.

    And while I understand your area may have seen significant devaluations, that’s not universally true and – in a sense – what you are experiencing is the market at work. You live in an overvalued area. Maybe it’s time to seek out other, non-real estate investments.

    This was the same problem we saw during the S&L crisis in the 1980’s that was remedied by the Resolution Trust Corporation. The RTC was a classically inefficient government solution but it did what it was designed to do: Restore confidence and enable people and businesses to get on with their commercial lives, knowing that their credit and banking relationships were safe.

    I’m sure there are a lot of people burning the midnight oil over the
    creation, politics, and policies of the RTC. One goal of the RTC was to realize a reasonable return on assets but it also had other goals, including maximizing the sale of performing assets to minority thrifts.

    DRJ (0754ed)

  44. We see these same debates in the law review articles over bankruptcy law. When do we tell people to be responsible for their debts and when do we give them the bailout of bankruptcy?

    It’s not solely a function of promoting adult behavior and responsibility. The existence of bankruptcy laws encourages people to take risks because they have a backstop when things go wrong. A certain amount of risk is good for the economy and society but people won’t take those risks if the penalties are too harsh. On the other hand, we don’t want people to feel so bullet-proof that everyone takes limitless risks.

    Somewhere in between is a middle ground and I think the same is true in the financial markets.

    DRJ (0754ed)

  45. “We see these same debates in the law review articles over bankruptcy law. When do we tell people to be responsible for their debts and when do we give them the bailout of bankruptcy?”

    I’d say we allow bankruptcy to discharge debts incurred as a result of catastrophic health issues.

    But that is not the case since the reign of King George and the GOP Congress.

    We’ll teach those folks who dare to get sick and can’t pay for it.

    jharp (f4bed7)

  46. “Wrong. The Bush administration was at the forefront in trying to reform Fannie and Freddie (see 2003 and 2005).”

    Please try to keep it honest.

    The Bush administration had a GOP dominated Congress and didn’t do a dam thing.

    2003? They were selling the WMD’s lie about Iraq.

    jharp (f4bed7)

  47. As a casual observation, it seems the Gov’t saw an opportunity to buy a lot of distressed property at a large discount, and have put themselves into a “buy and hold” scenario.

    By just holding all of these securities, and letting the market work its’ magic, they’ll end up with a pretty nice portfolio.

    The one’s who get into trouble are the churners, always looking for the deal that gives an edge.

    In the long run (and gov’t is nothing if not the long run), “buy and hold” has always been a winner in the market. Why should this situation be any different?

    Another Drew (4692ec)

  48. “There were no longer any buyers. No one knows what they are worth. To say there is a “market” shows a complete lack of understanding of the problem.”

    jharp – So says the Whiner of Wall Street from Indiana, or so he claims. For you to say someone else lacks an understanding of the problem is the most ridiculous thing I’ve read on this blog all month. You are a clueless clown.

    daleyrocks (d9ec17)

  49. jharp:

    I’d say we allow bankruptcy to discharge debts incurred as a result of catastrophic health issues.

    But that is not the case since the reign of King George and the GOP Congress.

    Healthcare-related debts are now and always have been completely dischargeable as unsecured debts. Furthermore, everyone who could have filed bankruptcy 5 years ago can still do so today. The primary change in the 2005 amendments was that some debtors have to repay their creditors under Chapter 13 — but only to the extent they can afford to — instead of walking away from all their unsecured debts under Chapter 7.

    DRJ (0754ed)

  50. “They’re buying at a discount and might even turn a profit, or lose a couple of bucks.”

    Get real. Buying at a discount? There are no other bidders. Don’t you get it?

    Might turn a profit or lose a couple of bucks?

    Put the bong away. $700 billion? A couple of bucks?

    The taxpayers are on the hook because there were no other bidders. And you’re saying the federal government knows better than the guys who actually deal with these things every day and wouldn’t touch them.

    jharp (f4bed7)

  51. 2003? They were selling the WMD’s lie about Iraq.

    jharp – It was the dems who were selling the WMD lies. The administration sisn’t lie, as has been proven by commission after commission and hearing after hearing. It was the democrats who were spending all their efforts creating the big lie that the administration had lied.

    Please correct your facts or present evidence of the lies.

    daleyrocks (d9ec17)

  52. jharp…
    FYI, RE sales in CA have gone to highs in numbers of properties sold.
    When prices drop, people step into the market to scoop up value.
    Not everyone allows their bitterness to overcome their better business judgement.

    Another Drew (4692ec)

  53. jharp – You’re as dishonest as Obama.

    daleyrocks (d9ec17)

  54. Harpie,
    You are so out to lunch on this and so out gunned, I feel bad for even having to do this. try this from the NYT’s, ca. Sept 11,2003:

    “The Bush administration today recommended the most significant regulatory overhaul in the housing finance industry since the savings and loan crisis a decade ago.

    Under the plan, disclosed at a Congressional hearing today, a new agency would be created within the Treasury Department to assume supervision of Fannie Mae and Freddie Mac, the government-sponsored companies that are the two largest players in the mortgage lending industry.”

    The entire NYT article can be accessed by clicking on my name. You are a partisan fool, Harpie. Who might have nixed this oversight, oh deluded one? I’ll give you two guesses and spot you Barney and Christopher. Get a clue.

    Chris (cefe13)

  55. daley…
    Is that a racist comment?

    I denounce you!

    Another Drew (4692ec)

  56. “Harpie. Who might have nixed this oversight, oh deluded one? I’ll give you two guesses and spot you Barney and Christopher. Get a clue.”

    I had no idea that two representatives of the minority party had such power.

    But thanks for pointing out another GOP failure. Here I thought it was mostly Bush but it turns out that the Republican party in general is the problem.

    jharp (f4bed7)

  57. More from the same NYT article, Harpsichord:

    Significant details must still be worked out before Congress can approve a bill. Among the groups denouncing the proposal today were the National Association of Home Builders and Congressional Democrats who fear that tighter regulation of the companies could sharply reduce their commitment to financing low-income and affordable housing.

    ”These two entities — Fannie Mae and Freddie Mac — are not facing any kind of financial crisis,” said Representative Barney Frank of Massachusetts, the ranking Democrat on the Financial Services Committee. ”The more people exaggerate these problems, the more pressure there is on these companies, the less we will see in terms of affordable housing.”

    Representative Melvin L. Watt, Democrat of North Carolina, agreed.

    ”I don’t see much other than a shell game going on here, moving something from one agency to another and in the process weakening the bargaining power of poorer families and their ability to get affordable housing,” Mr. Watt said.

    Chris (cefe13)

  58. “I had no idea that two representatives of the minority party had such power.”

    Well then, you’re as big of a fool as I’d taken you for.

    Chris (cefe13)

  59. “FYI, RE sales in CA have gone to highs in numbers of properties sold.”

    Highs in the number of properties sold, huh?

    Could it have something to do with a record number of foreclosures?

    We’re talking about dollars. Not the number of units.

    jharp (f4bed7)

  60. I am not an attorney, nor am I a CPA, mortgage banker or even someone who follows the stock market closely (except for what I personally own).
    But here is how I see it:

    this crisis has been looming for over 30 years with the advent of a little known, to most Americans, bill called the Community Reinvestment Act. Now, not much happened there until Bill Clinton got in office and he injected the CRA with steroids. Banks were required to provide a certain percentage of their loans to minorities. They were even rated, not on the risk of the loan, but how many minority loans they gave. This was done to prevent a system called “red lining” that was claimed in one study to severely affect minorities and their ability to purchase a home. Groups like ACORN were guaranteed billions in mortgage money by major groups like Bank of America and Fannie Mae/Freddie Mac. These groups, like ACORN, did all the financial screening and even had the right to approve mortgages which the lender had to provide funding for. The only problem was that the study was faulty, and was disproved. But the wheels had already been put into motion and people, who would have never qualified under standard banking rules, were given mortgages.
    It was estimated that less that 2% of mortgages were defaulted, but that 5+% of the mortgages awarded by ACORN, et al, would be defaulted on. The banks, in order to keep their ratings, built these defaults into the cost of doing business.

    Loans like no money down, NINJA (no income, no job or assets) loans were designed to fit with the new requirements. Loans that gave a artifically low interest rate for the first few years, or loans that were interest only, were given to people who, once they had to start paying on the principal, saw they interest rate go to normal rates, saw increased value which increased their taxes and insurance costs rise and the amount of the monthly cost of an increased tax/insurance escrow rise, found out they could not afford the home they bought. ACORN was approving loans of $150-200K on people who had incomes of $35K/yr. Affordable if you are paying an low introductory interest rate and nothing toward the pricipal, but not affordable when you have had the home for a couple of year and now were required to pay standard interest rates along with the pricipal and increase in taxes and insurance. These loans were, from the very git-go, designed for failure. I call this the Wimpy Plan; pay tomorrow for the hamburger you ate today. Only when tomorrow came, Wimpy had no money.

    The result of all this financial social engineering was a massive construction boom. New homes were going up faster than McDonald’s were making hamburgers. As huge new subdivisions were being created, the builders had sales offices on site and these people were tuned into the “no money down, first time buyer, low introductory interest rate” mortgages. I am not sure, but I believe in my own state of Texas, a realtor’s licence was not required to work the sales office of a new home development. And consequently, you had two people at fault; the person selling the home and the person buying the home who failed to read the fine print in their mortgage contract. We cannot exclude the personal responsibility of the buyer in this factor.

    My own daugher, much against my advise, got into one of these homes. No money down, low interest rate for the first two years. After two years, her home had increased in value, her home purchased at $114,000 had increased in value by 21%. Her tax/insurance escrow account increased to reflect the almost $24,000 increase in value and her interest rate increased to the normal rate. Her payments started out around $950/mo and in two years was $1,400/month. Of course, she and her husband were then in debt for new furniture, refigerator and an extra kid. They could not afford the increase in payment with additional day care to pay for, and the new Nissan Extera sitting in their driveway didn’t help matters. After 8 months of not paying the mortgage, they filed bankruptcy and lost everything. This is just an example of why these loans were designed to fail.

    Also, with the new construction came new residents to my state, costing us plenty in education, social services and incarceration expenses; the illegals. Homes here remained fairly low in cost (compared to the national average) due to the low cost of labor that place burdens on the taxpayer through the social services they required.

    So, in my financially uneducated mind, I see a positive aspect to all of this housing failure.

    New homes are not being built with the rapidity they were. That means that existing homes will become more appealing to buyers, as they ususally are already landscaped, have patios or decks, and changing the paint colors is a small matter. The appeal for an existing home will become greater.

    Reports of the exodus of illegals who have traditionally worked the construction trades are being reported in papers from Oklahoma, Texas, Arizona and New Mexico and all points east and west. With no way to support themselves and to be able to send money back to their native lands, the Mexican Counsel in Dallas is overloaded with requests for offical transfer back to Mexico by people who have been living, and working here, illegally. The drain that these illegals have been placing on communities with their demands for services, will be a net savings for those communities. No more “English as a Second Language” teachers in every grade, no more drain on our emergency rooms, police departments, jail systems and court.

    We can fix this. But the system of lending money to people who can’t possibly repay must end. The mortgage industry must, once again, be required to have guidelines such as 20% down, payments that cannot exceed one weeks take home pay, and stabilized interest rates. No more low introductory rates to set the hook.

    Have I lost money this past week? You betcha. But if a few thousand dollars is what it will cost me in lost investments to get the government to stop their financial social engineering programs that will only come back to bite us in the end, I will gladly suffer those loses. Because, when all is said and done, I will come out ahead financially.

    retire05 (d103c7)

  61. When you have an inkling of wtf you are talking about, Harpie, come back. Until such time I’d suggest you run back to HuffKos (or any other moron blog where facts are irrelevant) and stop showing your ass here.

    Chris (cefe13)

  62. As a casual observation, it seems the Gov’t saw an opportunity to buy a lot of distressed property at a large discount, and have put themselves into a “buy and hold” scenario.

    By just holding all of these securities, and letting the market work its’ magic, they’ll end up with a pretty nice portfolio.

    The one’s who get into trouble are the churners, always looking for the deal that gives an edge.

    In the long run (and gov’t is nothing if not the long run), “buy and hold” has always been a winner in the market. Why should this situation be any different?

    Comment by Another Drew — 9/20/2008 @ 9:11 pm

    A stupid idiotic post even from wingnut standards.

    jharp (f4bed7)

  63. Commander McBragg, back from golfing, stock speculation, and brokering international deals with the Chinese to make cheap imitation Elton John sunglasses writes, about someone else:

    “…A stupid idiotic post even from wingnut standards….”

    Now that is the spirit of reasoned debate, experience, and deep intellectual acumen.

    I recommend a rather famous song by The Red Hot Chili Peppers, to describe how you are behaving.

    Icy Truth will know the appropriate title, given how you interact here.

    Eric Blair (81e599)

  64. Chris,

    “The entire NYT article can be accessed by clicking on my name. You are a partisan fool, Harpie. Who might have nixed this oversight, oh deluded one? I’ll give you two guesses and spot you Barney and Christopher. Get a clue.”

    You are quite the funny man tonight.

    You claim two minority representatives nixed a reform bill.

    And have the nerve to posit that I don’t have a clue.

    Good one.

    jharp (f4bed7)

  65. “…A stupid idiotic post even from wingnut standards….”

    Now that is the spirit of reasoned debate, experience, and deep intellectual acumen.

    Comment by Eric Blair — 9/20/2008 @ 9:43 pm

    I try to remain civil. I really really try.

    But every once in a while I resort to the wingnut tactics. Go count the childish insults throw by me as opposed to at me.

    jharp (f4bed7)

  66. And have the nerve to posit that I don’t have a clue.

    Because you don’t. One senator has the power to nix virtuallt anything that isn’t high profile. That would be one from the minority or the majority.

    Chris (cefe13)

  67. retire05,

    I think the vivid portrait you paint of your daughter’s case is a good example of the problems afforded by easy credit, especially in the mortgage market. She’s not alone, and I hope she and her family have been able to rebuild their credit and restart their lives. As the saying goes, I’m sure she’s older but wiser.

    DRJ (0754ed)

  68. “Commander McBragg, back from golfing, stock speculation, and brokering international deals”

    For the record I am not a stock speculator.

    But I also am a fisherman and an amateur tree expert. And good looking.

    jharp (f4bed7)

  69. Heh! That’s good because we need all the good looking people we can get.

    DRJ (0754ed)

  70. Because you don’t. One senator has the power to nix virtuallt anything that isn’t high profile. That would be one from the minority or the majority.

    Comment by Chris — 9/20/2008 @ 9:48 pm

    So Representatives Frank and Watt were Senators in 2003?

    jharp (f4bed7)

  71. Yep. It’s someone else’s fault that the Harpster acts like the troll he so often acts. That’s the ticket.

    Where else have I heard that reprehensible behavior, like hacking e-mails, is someone else’s fault?

    Heck of a lesson to teach your children, sir. Heck of a lesson. It’s one reason I seriously doubt you are a father.

    If you are so evolved and cool and knowledgeable, why not rise above it, and show you are better than your opponents?

    Except that doesn’t fit the whole Troll Mode, which is your genuine identity. And it is also your only interest in posting here—to fight with people instead of enter into civil disagreements.

    Eric Blair (81e599)

  72. DRJ, you know the saying about beauty being in the eye of the beholder, I’m sure. And many people seem to own funhouse mirrors, if you catch my drift.

    There is a great deal about Mr. Harp that I would only accept as truth cum magno granum salis.

    Eric Blair (81e599)

  73. jharp…
    I was talking about units.
    Yes, foreclosures are a factor; but, the banks/etc have to get those properties off of their books. They mark them to market, or hold auctions, and they are selling them.
    And, nobody is getting liar-loans, nobody is getting 100+% financing.
    These are legitimate sales at market
    (you know what that is don’t you: The price negotiated between a willing buyer and a willing seller).

    Now is a terrific time to buy a house if you can. With prices down up to 35% from their highs, there is a lot of value in the market.
    Just as we were always advised re the NYSE to buy low, and sell high, same goes for housing, or gas-guzzling SUV’s (soft market, good values if you need one, or just want one and can afford it).

    Another Drew (4692ec)

  74. Why am I thinking we will short receive a statement from Mr. Harp that he has bought and sold many houses, and therefore much, much more knowledgeable than anyone else on this blog on the subject.

    But don’t forget the killing he made in the faux-Elton John sunglasses with the Chinese.

    Like I said, I don’t believe most of this fellow’s claims. They smell too “under the bridge” and altogether overly convenient, I think.

    Eric Blair (81e599)

  75. Eric,

    I don’t lie and if I choose to do so it sure as hell ain’t gonna be on some obscure message board.

    I don’t speculate on real estate. And I didn’t claim make a “killing” on the heart shaped sunglasses (though I did make money on them).

    I’m pretty much an ordinary, college educated, middle class father of two who makes his living in the trading business.

    And to be honest it’s a pretty dam good career. I work when I want, golf when I want, fish when I want, and have had the pleasure of traveling throughout the world.

    jharp (f4bed7)

  76. DRJ (#67) well, she had rebuilt somewhat. It will take a long time before she can buy another home. But that doesn’t really bother me. Some people are not really cut out to own their own home. They are not ready for the responsibility of a home or is home ownership always a wise move. She quickly learned that when her kid shoved a toy down the toilet, there was no landlord to call to come and fix it. And plumbers do not come cheap. There is something to be said for paying rent and having repairs done for you and someone else spending their weekends cutting the grass.

    I lay a lot of the blame on people like my daughter who thought that they should have now what I have worked my whole life to acquire. It was not only the lack of financial investment in these forclosed homes (due to no money down) but the emotional investment that should come with saving and planning for a home purchase.

    There was a very good article written 8 years ago dealing with the very things I have been talking about.

    http://www.city-journal.org/html/10_1_the_trillion_dollar.html

    If it doesn’t make you angry, nothing will, but it will explain how the CRA affected the current crisis.

    Let me know what you think of it.

    retire05 (d103c7)

  77. Right. You bet. The key indicator? That mature, fatherly attitude I see you post here often.

    And most of all, your consistent blaming of other people for your own actions, and a lack of willingness to admit fault.

    But hey, maybe I am wrong. But you and I know better.

    Eric Blair (81e599)

  78. Oh, I forgot: the very adult bragging you seem to do an awful lot for a fellow in your position.

    Eric Blair (81e599)

  79. So Representatives Frank and Watt were Senators in 2003?

    Obtuse? Much?

    How about Dodd? Why weren’t the Dem’s, in the majority, no less, able to scuttle the Iraq War either last year or this year? That’s a rhetorical so save the bytes.

    Chris (cefe13)

  80. retire05,

    I agree. The real value of acquiring possessions isn’t having them, but what you learn as you work to acquire them.

    And thank you for the City Journal link. I’ve been impressed with many of the essays I’ve read there and I look forward to reading this one.

    DRJ (0754ed)

  81. “And most of all, your consistent blaming of other people for your own actions”

    Care to cite just one example?

    jharp (f4bed7)

  82. I work when I want, golf when I want, fish when I want, and have had the pleasure of traveling throughout the world.

    And, jharp posts from a SOLID GOLD Mac G5!

    Plus his wife is Morgan Fairchild.

    qdpsteve (dc65ab)

  83. The tone we get from Bush is: “haha. yeah. we can’t do anything. Countrywide still rocks. Home ownership. Lehman has lots of buddies.” Look – this stuff was not rocket science. It was detachment and absolute stupidity. The Goldman Sachs head pulled out half a billion in compensation in the past 5 years. Does pointing that out make me a democrat?

    Yes.

    Bush could have done more but Fannie Mae was buying Congressmen and Senators for the past 15 years. McCain has been warning about this since at least 2002. He even sponsored a bill with Gephardt (yes, a Democrat) to try to stop the corporate welfare that was puffing up FM2. Obama set a record by taking the second highest total of cash from FM2 even though he has only been there three years. Even Dodd couldn’t pocket cash that fast.

    Why don’t you look at who got Countrywide sweetheart mortgages ?

    Mike K (b74f82)

  84. …plus in his spare time, NASA hires jharp to split atoms for them. WITH HIS MIND.

    qdpsteve (dc65ab)

  85. Comment by retire05 — 9/20/2008 @ 10:15 pm

    Thank you for the link. I too, look forward to reading this.

    It’s too bad that one’s who should, probably won’t.

    Another Drew (4692ec)

  86. “Oh, I forgot: the very adult bragging you seem to do an awful lot for a fellow in your position.”

    Oh, and I forgot. I just tell it like it is.

    And I am quite flattered that you consider it bragging. Thank you.

    jharp (f4bed7)

  87. So you don’t know anything about economics, or much about Wall Street or financial regulations.

    Wouldn’t that suggest you might have better things to blog about?

    PrestoPundit (ff5e16)

  88. Just as the sun rises in the East and sets in the West, I opine and you critique. It’s a great internet, isn’t it?

    DRJ (0754ed)

  89. Ah, the under-examined life, and lack of self-awareness. Another mature aspect.

    So when I wrote:

    “And most of all, your consistent blaming of other people for your own actions”

    The gentleman in question thoughtlessly replied (without considering his earlier posts):

    “Care to cite just one example”

    Because, you see, a little while earlier, he had written:


    “…But every once in a while I resort to the wingnut tactics. Go count the childish insults throw by me as opposed to at me….”

    It is funny, in a way. Leaving aside the “…every once in a while..” statement which boggles the mind of anyone who reads this blog.

    I will also leave alone the “…telling like it is…” business, which only underscores of the immature boastfulness of the classic trollish type. I teach undergraduates every semester, and this style of thought is very, very familiar to me. It’s not very common in middle aged fathers of two sons. World traveler, tree expert, fisherman, or Elton John glass manufacturer or not.

    Eric Blair (81e599)

  90. Actually, Q, this guy owns a G7 Mac.

    Eric Blair (81e599)

  91. Chris – Most people would think twice about commenting authoritatively upon matters on which they know nothing.

    Not our HARPIE! No boundaries, no shame, no embarrassment. Instant authority! Full meme ahead.

    A big problems for him is that he merely regurgitates talking points he read elsewhere and doesn’t understand himself. His fixation on Gramm-Leach-Bliley has been one of those. He read it was about deregulation and that it involved Phol Gramm who was advising McCain, so bingo bango, for the left it was bad. He can’t explain the specifics. It was just bad, don’t ask why or for any details. Trust him.

    He was spouting debinked Michael Moore talking points about the U.S. healthcare system relative to the U.K. and Canada on another thread earlier. He couldn’t provide any support for his assertions and when pressed, he suddenly had to run. He’s back posting on other threads, but hasn’t returned there.

    He didn’t know the function of Fannie and Freddie in the U.S. housing system, how they functioned and about their implicit government guarantee when that crisis popped up. He throws around terms like credit default swaps but doesn’t really understand what they are or what they are based upon. He didn’t know what a run on the bank is and doubts on could even exist today in terms of a liquidity crunch.

    He complains about executive compensation, but doesn’t understand the mechanics by which it is awarded, the mechanics of options and the mechanics by which it is disclosed.

    The above is just a long way of saying he is a dolt, but he blames others for his deficiencies. We don’t understand, of course, when it’s easy to document his ignorance.

    Am I going too fast harpie?

    daleyrocks (d9ec17)

  92. Daley,
    Nice synopsis of the human talking point, jharp. You could just say, “He’s a partisan, liberal hack” and be done with it.

    Chris (cefe13)

  93. Oh, I forgot. But harpie’s humility is very much to be admired.

    /sarc/

    daleyrocks (d9ec17)

  94. daley…

    Is “humility” a code-word?

    Another Drew (12f8f2)

  95. AD – Look for the /sarc/ tag.

    daleyrocks (d9ec17)

  96. I don’t understand you, DRJ.
    — I denounce myself for even thinking of a Mars-Venus joke here (but not the “Is it because she writes coherently?” line).

    I guess it’s OK if you’re a republican.
    — Are you EVER going to properly capitalize that?

    I have grave concerns about a third George Bush term.
    — I have grave concerns about you parroting the lamest talking point in the playbook.

    I ain’t holding my breath
    — I promise to be impressed if you want to take a shot at David Blaine’s record.

    I’d say we allow bankruptcy to discharge debts incurred as a result of catastrophic health issues.
    — You want to encourage people to risk not buying insurance? Well, that’s not the same as Obama’s plan; I’ll give you that much.

    Please try to keep it honest.
    — We ALL asked you first.

    Put the bong away.
    Put the rubber schlong away … Denounce meself.

    U-No-Hu wrote: A stupid idiotic post even from wingnut standards.
    Eric Blair wrote: I recommend a rather famous song by The Red Hot Chili Peppers, to describe how you are behaving. Icy Truth will know the appropriate title, given how you interact here.

    if you see me getting mighty
    if you see me getting high
    knock me down
    i’m not bigger than life
    it’s so lonely when you don’t even know yourself

    — “Knock Me Down” was a BIG College Radio/Alternative Rock hit.

    And have the nerve to posit that I don’t have a clue.
    — No, you do have a clue . . . or is that “glue”? Hey! Put that down. Pretend that you’re Slick Willie and DON’T inhale.

    I try to remain civil. I really really try.
    — Wisdom of Yoda: Do or Do Not; there is no “try”.

    For the record I am not a stock speculator.
    — No, you are a Spock jackulator. And that’s just sick.

    But I also am a fisherman and an amateur tree expert.
    — When fishing for trouser trout, “casting your rod” and “dangling your line” have completely different meanings . . . ya tree-hugging hippie!

    I don’t lie and if I choose to do so it sure as hell ain’t gonna be on some obscure message board.
    — Is that like “I wasn’t talking about Gov Palin; but if I were to do so, she would be the lipstick, not the pig”?

    And to be honest it’s a pretty dam good career. I work when I want, golf when I want, fish when I want, and have had the pleasure of traveling throughout the world.
    — So, like Michael Medved says: your personal situation is fine, yet you proclaim doom and gloom for everyone else. You have proved your liberal “promote and exploit lower-class suffering for political gain” bona fides.

    Icy Truth (7a9e8b)

  97. Icy – Very nicely done.

    I don’t care what he says, someone fundamentally as dishonest as harpie absolutely has to cheat at golf.

    daleyrocks (d9ec17)

  98. What? You think that maybe the expert at saying “Hey, look over there,” might have a track record of conveniently ‘finding’ his ball in a good lie [there’s a good pun] and with a clear shot at the green?

    Icy Truth (4fe729)

  99. What is interesting, but unacknowledged by the lefty trolls who post here, is that they are treated fairly and allowed to post if they are reasonably polite. On left wing blogs like Washington Monthly and Mother Jones, any comments I post are deleted or never even appear. If I include a link to make a point, it is even more quickly deleted. I used to see (before I gave up) comments attacking a comment of mine that had already been deleted. What these trolls don’t understand it that we will tolerate disagreement but their side will not. They live in a bubble and, from what I see here, they rarely let any contrary opinion intrude. They post talking points but don’t listen to other opinions.

    Sometimes, that leads to nasty surprises.

    Mike K (b74f82)

  100. any comments I post are deleted or never even appear.

    — Your friendly neighborhood Internet “stick with your own kind” Fairness Doctrine at work.

    Icy Truth (feba14)

  101. Comment by Mike K — 9/21/2008 @ 9:29 am

    Welcome to the rarified stratosphere of Academe!

    Another Drew (551fef)

  102. DRJ

    Here’s a better solution.

    http://gregmankiw.blogspot.com/2008/09/is-paulson-wrong.html

    Peter W (d63e2b)

  103. I also agree with this IBD editorial.

    Will someone in McCain’s campaign please listen? Or is the threat of being called a racist that great?

    Patricia (ee5c9d)

  104. Here’s a very good piece by Paul Gigot from this summer that describes Fannie’s thuggery on the lobbying front for background on the crisis. It dovetails nicely with Patricia’s link and the comments regarding lack of oversight as opposed to deregulation being the major issue in this crisis.

    daleyrocks (d9ec17)

  105. Comment by Patricia — 9/21/2008 @ 12:01 pm

    That is a devestating editorial for anyone in Congress who pushed expanding the provisions of CRA, and refused to put limits on the securitizations of mortgage debt.

    Now, we are finally getting a handle on what “community organizer” Barack Obama was doing:
    He was facilitating the looting of the Treasury by ACORN.
    Will BHO be the first Presidential Candidate under investigation by the FBI? Will he be indicted before or after taking office (if he wins)?

    On a related note, a question for the commentariat here at PP:
    Is there a website that lists all those congresskritters who received funds from FM2, and the amounts?

    Another Drew (551fef)

  106. Get out of here, Spambot.

    Dmac (e639cc)

  107. Is it worth to risk your health just because of implementing stunt trick? Or maybe it’s all fake, like many people think about Blaine and all his “magic”? Has he got a talent, or is he just desperately trying to retrieve his 15 minutes of fame? http://www.votetheday.com/polls/david-blaines-tricks-278

    votetheday.com (4f79c7)

  108. Congress critters on the FMs payroll are listed right here. Note who is #2 even though he has been in Congress less than four years.

    A problem with the IBD editorial and some of the other comments is that we have to decide what to do NOW.

    In the S&L crisis, the RTC bought (or seized is more accurate) bankrupt S&Ls , by paying off depositors, and sold off the assets like a receiver. Now, we have the choice of a loan to a company to bail it out of the cash crisis, really a run on the bank, or to buy the company, which is what was done with AIG.

    Some of these MBS assets will be bought but we have to see that the feds don’t get suckered. I would think that shareholders in these companies that went into insolvency through reckless investments should take a close haircut. The officers should lose their bonuses, like a couple I can think off. I’d like to see Raines and Johnson sued by shareholders to cough up those millions.

    We’ll see what happens but first we have to stop the bank runs.

    Mike K (2cf494)

  109. For example, we’ve got a bunch of lawyers here, why wasn’t the FM2 securitization of liar loans fraud ?

    Mike K (2cf494)

  110. Mike K…
    Thanks for the info.
    I’m kind of disappointed. My congresskitter only got $9800. I guess they didn’t think she was worth very much.
    I am disappointed that John McCain is down for $21,500.
    It is really shocking that the Southern Populist, Richard Shelby got $80K; but, as “Big Daddy” used to say, the art of politics is to take their money, and then vote against them (not quite in those words IIRC).

    Another Drew (551fef)

  111. I am still amused by how jharp ignores the fact that his every single bit of “knowledge” of the world and how it works turns out to be wrong. Time after time. Without fail.

    Every time he opines upon the world.

    SPQR (26be8b)

  112. Comment by SPQR — 9/21/2008 @ 4:39 pm

    It must be the “Looking Glass” effect.

    Another Drew (551fef)

  113. Isn’t it hilarious, Another Drew? Can you remember the last time jharp made a factual claim, key to one of his insipid opinions, that was correct?

    SPQR (26be8b)

  114. I’ve been reading so much of his BS, that I thought I was coming down with palsy due to the chronic head-shake.

    Another Drew (551fef)

  115. I’ve been reading so much of his BS, that I thought I was coming down with palsy due to the chronic head-shaking.

    Another Drew (551fef)

  116. Sorry about the double post, I thought the first one was lost, and I re-typed and entered.

    Another Drew (551fef)

  117. A few little details about these bailouts that few if any seem to have noticed: (1) millions of home buyers bought housing for far more than it was worth, meaning the money was lost back in 2003, 2004, or whenever the bad loan was made. We’re just seeing them surface now. (2) If Fannie and Freddie’s combined $5.4 trillion of mortgages guaranteed is “nearly half” of the mortgage market, that puts the size of the entire mortgage market at about $11 trillion, only a small fraction of which is the true value of the underlying real estate. (3) The federal government, if it is going to bail out Freddie and Fannie, is first going to have to borrow the money from the Chinese, Japanese, or other Asians who HAVE money. Even the Asians don’t have the $9 trillion or $10 trillion it would take to bail out the housing market, and probably would not want to lend it to cover losses even if they did. Something about wanting to get their money back. These points, taken together, tell me the government CAN’T bail out the market, though they may want to. The numbers are way too big, even without another $800 trillion of derivatives wiping out, and continuing to create losses.

    Robert (69b4f5)

  118. As your average, middle of the road citizen, I am finding the partisan rantings and finger pointing expressed on this blog proof that this problem has been caused by both sides and by a constituency that practised unsafe borrowing. I have always been the type of person who explores solutions from both sides but as each new fact is unfolded I am humbled by the arrogance of the people that take this as a political fight. My question to my father as to how we let the Great Depression happen is now playing out before my eyes. Go McCain! Go Obama! Go pundits! Too bad for middle class America.

    sue (a1061b)

  119. Why dont the taxpayers get bailed out. Let Americans pay off debt. The banks end up with a portion of the money anyway. How much of a cut are the leaders and of our country taking in pay. They have given theirselves raises every time the issue comes up. My fuel exspense and my grocery bill has doubled but my pay has not. I can not vote to raise my own pay. I would vote against raising theirs. 85 billion for aig, let them fail, they should have noticed this and did something along time before now. Do not give our money to these people that have put us in this spot. How much money would we be saving if we were not in Iraq. Those people have been fighting since the beginning of time. Jesus Christ didn,t stop them what make GW Bush think he can! That is a waist of money. If the kill themselves so be it. We are focused on foreign things other than home. 9.4 million out of work, all time unemployment high, and we are concerned with giving money to the banks! Idiots!

    danny (b0171e)

  120. Mccain and Bush are hijacking us and our economy. There is no “economic crisis.” Remember, this “is all in our heads,” and “the fundaments of our economy are sound.” The Republicans will do anything it takes to remain in power and make Mccain look like a Maverick. Too bad it’s all at our expense.

    Daniel (910f86)


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