The Toll of Human Suffering During the Great Depression

Thanks for this post too.

Aw c'mon, so many of your other posts make good sense.

The explosion of the housing bubble took place entirely during a GOP Presidency and Congress.

And yeah, there were a lot of Fannie and Freddie shenanigans with the Dems.

But all the White House would have needed to do in, say, early '05, was to repeatedly make it clear that housing prices were getting way out of touch with fundamentals, and that investing in mortgage backed instruments was entirely at your own risk.

Didn't do that, did they? They wanted to keep the building boom going to artificially inflate the economic stats.

Hopefully this thread will ressurect when JoRo gets through fiddling about. But I saved it to my file

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Rush Limbaugh
9/22/08

There’s a great idea at stake here, too, and the idea is that the free market measures itself and handles itself better than the government. The great idea that we’re about to throw away with this bailout is that the government can run things better. The government can take care of you, the government can insure you, the government can protect you, the government can provide for you. This is an idea which has been shown to fail around the world.

This emergency bailout friends can go either way. It can fix the underlying problem or merely represent another opportunity for another leftist hijacking. Whenever this kind of money is going to be spent by the government on something, Democrats are going to get their hands in it, and they’re going to reward people like ACORN. They’re going to try to. They’re going to try to build on their social programming and networking here with this kind of money outstanding that is supposedly aimed at shoring up the US economy.

How many times in the last six months have we read stories about the Fed adding to liquidity here or helping this institution there? We’ve already had a bunch of bailouts. We’ve already had a government stimulus package to help the US economy, and now Obama’s talking about wanting another one. These things have a history of not working. They may show short-term relief, but over the long haul, world history is replete with example after example after example that centralized economic planning does not work. The left sees this as their opportunity to change the nature and identity of this economy.

Rep. Ron Paul
9/22/08

The worst thing we can do is perpetuate the bad policies that gave us this trouble in the first place. We borrow and spend and consume and now it’s caught up to us. When the war started in Iraq, they said we’d need $50 billion...this $700 billion is just the beginning. This is Wall Street in big trouble and sucking in Main Street and dumping all the bills on Main Street. You can’t solve the problem of creating money and credit out of thin air by creating more money and credit out of thin air and not changing basic economic policy. Yes, it would be painful, but it wouldn’t last as long. What they’re doing now is propping up a failed system so that the agony lasts even longer. Yes, they’re going to be losses. But we have to live within our means. What the government is doing now is trying to prop up prices. We need a market economy and to believe in ourselves. It would be a bad year. But with this bailout, it would be a bad decade. More government. More spending. More relations. Trying to prop up a bad system. THe bubble has been blown up. It needs to deflate. This isn’t saving Main Street. This is sticking it to Main Street.

NYT
William Kristol
9/21/08

It’s not that I don’t believe the situation is dire. It’s not that I want to insist on some sort of ideological purity or free-market fastidiousness. I will stipulate that this is an emergency, and is a time for pragmatic problem-solving, perhaps even for violating some cherished economic or political principles. (What are cherished principles for but to be violated in emergencies?)

But is the administration’s proposal the right way to do this? It would enable the Treasury, without Congressionally approved guidelines as to pricing or procedure, to purchase hundreds of billions of dollars of financial assets, and hire private firms to manage and sell them, presumably at their discretion There are no provisions for — or even promises of — disclosure, accountability or transparency. Surely Congress can at least ask some hard questions about such an open-ended commitment.

And I’ve been shocked by the number of (mostly conservative) experts I’ve spoken with who aren’t at all confident that the Bush administration has even the basics right — or who think that the plan, though it looks simple on paper, will prove to be a nightmare in practice.

McCain — more of a gambler than Obama — could take a big risk. While assuring the public and the financial markets that his administration will act forcefully and swiftly to deal with the crisis, he could decide that he must oppose the bailout as the panicked product of a discredited administration, an irresponsible Congress, and a feckless financial establishment, all of which got us into this fine mess. Critics would charge that in opposing the bailout, in standing against an apparent bipartisan consensus, McCain was being irresponsible.

Or would this be an act of responsibility and courage?

Washington Post
Sebastian Mallaby
9/23/08

With truly extraordinary speed, opinion has swung behind the radical idea that the government should commit hundreds of billions in taxpayer money to purchasing dud loans from banks that aren’t actually insolvent. As recently as a week ago, no public official had even mentioned this option. Now the Treasury, the Fed and congressional leaders are promising its enactment within days. The scheme has gone from invisibility to inevitability in the blink of an eye. This is extremely dangerous.

The plan is being marketed under false pretenses. Supporters have invoked the shining success of the Resolution Trust Corporation as justification and precedent. But the RTC, which was created in 1989 to clean up the wreckage of the savings-and-loan crisis, bears little resemblance to what is being contemplated now. The RTC collected and eventually sold off loans made by thrifts that had gone bust. The administration proposes to buy up bad loans before the lenders go bust. This difference raises several questions.

Congress and the administration may not like the sound of these ideas. Taking bad loans off the shoulders of the banks seems like a merciful rescue; ordering banks to raise capital or buying equity stakes in them sounds like big-government meddling. But we are in the midst of a crisis, and it shouldn’t matter how things sound. The Treasury plan outlined on Friday involves vast risks to taxpayers, huge complexity and no guarantee of success. There are better ways forward.

Newt Gingrich
9/21/08

We are being reassured that we can trust Secretary Paulson “because he knows what he is doing”. Congress had better ask a lot of questions before it shifts this much burden to the taxpayer and shifts this much power to a Washington bureaucracy.

Imagine that the political balance of power in Washington were different. If this were a Democratic administration the Republicans in the House and Senate would be demanding answers and would be organizing for a “no” vote. If a Democratic administration were proposing this plan, Republicans would realize that having Connecticut Democratic senator Chris Dodd (the largest recipient of political funds from Fannie Mae and Freddie Mac) as chairman of the Banking Committee guarantees that the Obama-Reid-Pelosi-Paulson plan that will emerge will be much worse as legislation than it started out as the Paulson proposal. If this were a Democratic proposal, Republicans would remember that the Democrats wrote a grotesque housing bailout bill this summer that paid off their left-wing allies with taxpayer money, which despite its price tag of $300 billion has apparently failed as of last week, and could expect even more damage in this bill.

But because this gigantic power shift to Washington and this avalanche of taxpayer money is being proposed by a Republican administration, the normal conservative voices have been silent or confused. It’s time to end the silence and clear up the confusion. Congress has an obligation to protect the taxpayer. Congress has an obligation to limit the executive branch to the rule of law. Congress has an obligation to perform oversight. Congress was designed by the Founding Fathers to move slowly, precisely to avoid the sudden panic of a one-week solution that becomes a 20-year mess.

Question One: Is the current financial crisis the only crisis affecting the economy? Answer: There are actually multiple crises hurting the economy. There is an immediate crisis of liquidity on Wall Street. There is a longer time crisis of a bad energy policy transferring $700 billion a year to foreign countries (so foreign sovereign capital funds are now using our energy payments to buy our companies). There is a long term crisis of a high corporate tax rate driving business out of the United States. No solution to the immediate liquidity crisis should further cripple the American economy for the long run. Instead, the liquidity solution should be designed to strengthen the economy for competition in the world market...match our competitors in China and Singapore by going to a zero capital gains tax. Private capital will flood into Wall Street with zero capital gains and it will come at no cost to the taxpayer...immediately pass an “all of the above” energy plan designed to bring home $500 billion of the $700 billion a year we are sending overseas. With that much energy income the American economy would boom.

George Will
ABC’s This Week
9/21/08

When the British Labour Party was socialist, it defined socialism as government control of the commanding heights of the economy. And in Britain, at that time, it was coal, steel, and railroads. The commanding heights of the American economy are financial services, and they are now controlled by the government.

Rep. Mike Pence (R-Ind)
9/22/08

Nationalizing every bad mortgage in America is not the answer. The Administration’s request amounts to the largest corporate bailout in American history. Congress should act, but should act in a way that protects the integrity of our free market and protects the American taxpayer from more debt and higher taxes. Congress must not hastily embrace a cure that may do more harm to our economy than the disease of bad debt. And the stakes for our free market could not be higher.

Alternatives to a massive federal bailout must be fully considered and debated before Congress acts. Finally, any new expenditure of taxpayer dollars should be paid for with fiscal discipline and reform. If Congress decides to spend nearly 1 trillion dollars on a corporate bailout, it must find budget savings to prevent that cost from being passed along to the American people...We should demand consideration of free market alternatives to massive government spending and we should fight to pay for the solution through budget cuts and reform instead of more debt or taxes.

Now’s the time for us to be dealing with the root causes of this economic downturn and not simply opening the cash window at the federal reserve and writing one bailout check after another.

USNWR
9/22/08

House Democrat Peter DeFazio of Oregon had harsh words for the rescue plan...DeFazio took a shot at Treasury Secretary Henry Paulson, the former chairman and CEO of Goldman Sachs. “He is of, by, for, and about Wall Street,” the lawmaker said. DeFazio said in a single year, Wall Street bonuses exceeded $60 billion and added: “These people are out of control. They don’t understand the real world. For them to talk about Main Street, and that they care about Main Street and student loans and homeowners’ equity, is a bunch of B.S.”

“We are the last bulwark here, the House of Representatives and the Senate,” he concluded. “If this bill were to pass as proposed, we’ll do an incredible disservice to the American people.”

Scoop
9/23/08

Constituents have been blowing up the phone lines on Capitol Hill, calling House of Representatives members, Republicans and Democrats, objecting to the no-strings-attached bailout, and the representatives have responded.

Representative Dennis Kucinich (D-Ohio), spoke out against a bailout, calling the current proposal “cash for trash.” [never thought I’d quote that man]

9/17/08
Reuters
Gov. Sarah Palin

Earlier Wednesday in Cleveland, Palin said she was disappointed that the government needed to bail out another financial institution.

“Disappointed that taxpayers are called upon to bail out another one...it’s understandable but very, very disappointing that taxpayers are called upon for another one,” she said.

Reuters
9/23/08

“In my judgment, it would be foolish to waste massive sums of taxpayer funds testing an idea that has been hastily crafted and may actually cause the government to revert to an inadequate strategy of ad hoc bailouts,” Shelby said. Lawmakers on both extremes of the political spectrum assailed the plan as a massive, poorly conceived bailout.

In an expansion of its original proposal, the Bush administration is asking for broad power to buy up virtually any kind of bad asset — including credit card debt or car loans — from any financial institution in the U.S. or abroad in order to stabilize markets..There still were divisions on which tottering financial firms would be helped and what kind of assets the government could buy as part of the bailout.

MSNBC
9/22/08

Steve Ebels, who owns a heating business, said he already lost much of his life savings when a general contractor he was doing work for went belly up, leaving Ebels with a pile of bills for materials and labor he had already invested in the project...And that is perhaps the biggest reason why Ebels, 51, would like to see the failed Wall Street titans pay for the actions that have led to this crisis. If he has to start over because of a soured business deal, he figures, so should they.

“I would just like to see some way that these people are held personally accountable,” he said. “We’ve got to do more of that in this country: personal responsibility and accountability...All (the bailout) does is transfer all the indiscretions of all these people onto the shoulders of the taxpayers,” he said.

Michele Malkin
9/22/08

Both parties in Washington are about to screw us over on an unprecedented scale. They are threatening us with fiscal apocalypse if we don’t fork over $700 billion to Treasury Secretary Henry Paulson and allow him to dole it out to whomever he chooses in whatever amount he chooses — without public input or recourse. They are rushing like mad to cram this Mother of All Bailouts down our throats in the next 72-96 hours. And right there in the text of the proposal is this naked power grab: “Decisions by the Secretary pursuant to the authority of this Act are non-reviewable and committed to agency discretion, and may not be reviewed by any court of law or any administrative agency.”

http://www.freerepublic.com/focus/f-news/2088497/posts

“But all the White House would have needed to do in, say, early ‘05, was to repeatedly make it clear that housing prices were getting way out of touch with fundamentals, and that investing in mortgage backed instruments was entirely at your own risk.”

They did; they did even more than that and they submitted a plan to end the accumulation of the virus in Freddie and Fannie, which, with their institutional size were the enablers of the real estate bubble. The plan made it out of committee in the Senate and lost in a full Senate vote - all the GOP for it and all the Dims voted against it. That was just one of a set of similar efforts that began in 2000 and again in 2003; when Greenspan told everyone that the continued growth of Freddie and Fannie and the continued spread between their assets and liabilities (taking on fundamentally unsound mortgages) was going to create a systemic failure. Twelve times Bush emissaries met with Congressional reps with Freddie and Fannie oversight, between 2000 and 2005, seeking to reign-in Freddie and Fannie and each time Freddie and Fannie’s enablers, led by FranknDodd obstructed the reforms.

Read my post again.

“But all the White House would have needed to do in, say, early ‘05, was to repeatedly make it clear that housing prices were getting way out of touch with fundamentals, and that investing in mortgage backed instruments was entirely at your own risk.”

If they said this, was there some sort of secret "Hey guys, this is just for the press, we really don't mean it" translation for the party-hearty traders?

“that investing in mortgage backed instruments was entirely at your own risk.”

first, there is (1) NO LEGAL OR MORAL basis to say such a thing, because the general idea of “mortgage back securities” or any other “securities” are invested at your own risk

and so what they did try to do was to end the excess in the growth of Freddie and Fannie (the government), which created and most of the securitized mortgage packages and then sold them into the system, and they tried to end Freddie and Fannie soaking up Sub-prime and Alt-A debt.

2nd: saying so would have been a fiction, in terms of stuff that came from Freddie and Fannie because the law that created them places the U.S. government backing behind them; which everyone knew was, and would be the case.

The second part of the GOP attempts to reign-in Freddie and Fannie, once they were tamed, would have come later in a full privatization plan - debt and capital broken up and sent out as 6 to a dozen completely private companies.

My parents and grandparents lived through the Great Depression and I grew up hearing all the stories, in addition to reading about the Great Depression. I don’t know if an economic collapse will happen or not, but if it does, then your bleak predictions are possible, and we’ll be less able to deal with it than in the past. Our country and the people are not as tough, independent and moral as they were in 1929. A much greater percentage of people either lived on a farm or knew someone that did — those could grow their own food or get it from people that did. People weren’t as mobile as we are and didn’t depend on energy to the extent we do. More people went to church back then and had a moral foundation in their lives — people were more civil then. There are now a number of racial subclasses that think society “owes” them and they have little to lose taking it. Remember the anarchy in New Orleans, the roving thugs? Most people today don’t have the financial resources to buy a remote property and built a castle to fend off their hungry neighbors and the opportunistic hoards that will flee the cities. Civilization is a thin veneer indeed.

You misunderstand. The only point of my exchange with that Freeper mysterio was to illustrate I at this time support the bailout on its merits and NOT on who is on watch.

Getting to your post, BOTH parties are completely, entirely to blame for this entire episode. Both are to blame up to their necks. Both complicit. Both embraced every new debt bubble they could find to fill budgetary coffer and campaign contribution war chests.

Is Bush to blame for this. Not alone, no way. Is Clinton? He has some. 20 years of politicians loosening the reigns on Wall Street greeed? All of these bastards are complicit. Every stinking one of them.

I laugh at every post saying, “the Democrats own this crisis” or “the Republicans caused this crisis” or “Greenspan caused this.”

Yes, ALL OF THE ABOVE. Not exclusive. Most all of these greedy pigs in government and on Wall Street caused this and even worse, they embraced it. And many probably knew they were buildling a house of cards, but figured they could duck out before the crash and leave some other dumb bastard holding the back and taking the fall for it.

So when I answered mysterio that this is happening on the Democrats watch, it most certainly sure as shine is! AND the Republicans. They are both in this crisis up to their necks, and if there was ever a situation in modern American life I would address with the label “quagmire”, this Gordian Knot is it!

THEY ARE ALL TO BLAME.

Well and accurately put.

Thx.

bmp

Joya, thanks for the alert to Quix’s diet plan......skinny but enough to stay alive on.

Thank you for the links, interesting to know.

Thanks for your posting, granny.

Some of us were beginning to get concerned about you.

God be with you.