Skip to comments.How the Democrats Nearly Destroyed the Economy
Posted on 06/24/2011 5:16:26 AM PDT by Kaslin
History will be kind to me for I intend to write it. -- Winston Churchill
There is history -- a chronicle of human events -- and then there is perceived history. So often, the two are wildly at odds.
In 1963, a popular Democratic president was assassinated by a Marxist named Oswald, who had actually defected to the Soviet Union and returned to the U.S. with a Soviet wife, was an active member of the Fair Play for Cuba Committee, and had attempted to assassinate a right-wing general named Edwin Walker earlier in the year.
Yet those who write history found these facts inconvenient. They created a different history in which the "atmosphere of hate" in the southern city of Dallas, Texas, led to the terrible political violence. In other words, it was political conservatism that led to John F. Kennedy's assassination. This perceived history was recycled as recently as the shooting of Rep. Gabrielle Giffords. ABC's Christiane Amanpour, interviewing Jean Kennedy Smith, noted that the Kennedy assassination was "eerily relevant" and asked Kennedy to evaluate the "political atmosphere" in the country today.
Starting just a few years after the Kennedy assassination, American liberals began to consider anti-communism a kind of mental disorder. Hostility to communism was akin to racism, sexism and other character flaws. Reagan's description of the Soviet Union as an "evil empire" cemented liberal suspicions that Reagan was a dangerous buffoon. Yet starting in 1989, when the Berlin Wall fell, liberals began to find their anti-anti-communism embarrassing. And so they created a perceived history -- one in which the Cold War was a time of consensus, a time when, as former Sen. Bill Bradley put it, "We knew where we stood on foreign policy."
More recently we've witnessed the creation of new historical narrative about the financial crisis of 2008. The perceived history, eagerly peddled by liberals and Democrats, is that the crash of 2008 was the result of Wall Street greed. It was unregulated capitalism that brought us to the brink of financial meltdown, the Democrats insisted. And they codified their manufactured history in a law, the Dodd-Frank Act, that completely avoided the true problem.
It's both surprising and gratifying, therefore, to report that a great revisionist history has just been published by none other than a New York Times reporter, Gretchen Morgenson, and a financial analyst, Joshua Rosner.
In "Reckless Endangerment," Morgenson and Rosner offer considerable censure for reckless bankers, lax rating agencies, captured regulators and unscrupulous businessmen. But the greatest responsibility for the collapse of the housing market and the near "Armageddon" of the American economy belongs to Fannie Mae and Freddie Mac and to the politicians who created and protected them. With a couple of prominent exceptions, the politicians were Democrats claiming to do good for the poor. Along the way, they enriched themselves and their friends, stuffed their campaign coffers, and resisted all attempts to enforce market discipline. When the inevitable collapse arrived, the entire economy suffered, but no one more than the poor.
Jim Johnson, adviser to Walter Mondale and John Kerry, amassed a personal fortune estimated at $100 million during his nine years as CEO of Fannie Mae. "Under Johnson," Morgenson and Rosner write, "Fannie Mae led the way in encouraging loose lending practices among the banks whose loans the company bought. A Pied Piper of the financial sector, Johnson led both the private and public sectors down a path that led directly to the credit crisis of 2008."
Fannie Mae lied about its profits, intimidated adversaries, bought off members of Congress with lavish contributions, hired (and thereby co-opted) academics, purchased political ads (through its foundation) and stacked congressional hearings with friendly bankers, community activists and advocacy groups (including ACORN). Fannie Mae also hired the friends and relations of key members of Congress (including Rep. Barney Frank's partner).
"Reckless Endangerment" includes the Clinton administration's contribution to the home-ownership catastrophe. Clinton had claimed that dramatically increasing homeownership would boost the economy, instead "in just a few short years, all of the venerable rules governing the relationship between borrower and lender went out the window, starting with ... the requirement that a borrower put down a substantial amount of cash in a property, verify his income, and demonstrate an ability to service his debts."
"Reckless Endangerment" utterly deflates the perceived history of the 2008 crash. Yes, there was greed -- when is there not? But it was government distortions of markets -- not "unregulated capitalism" -- that led the economy to disaster.
It’s still twitching.
but, their mission is not yet accomplished...
the economy is resembling a giant whale, thrashing and groaning in bloody water as the democrats stand on deck and continue to harpoon it, and the GOP tries to get them to agree to gentlemen’s rules on placement of the deck chairs
Right. I believe Boehner will raise debt ceiling then all h will break loose.
[ the GOP tries to get them to agree to gentlemens rules on placement of the deck chairs ]
BUT the TpCaucus is throwing some harpooners overboard..
AND a few deck chair manipulators as well..
And Bush bragged about his home ownership programs for poor minorities with bad credit making it easier for the banks to make risky loans eventually leading to massive forclosures in poor hispanic areas Arizona and Nevada and Florida as well as flipping in those areas. Republicans hands are not clean in this either although neither party gets it right.
It was : Low interest rates by the Fed for an extended period, removal of the down payment requirement, change in capital gains taxes on homes law (encouraging flipping), home ownership promotion for the poor by BOTH(yes) parties, and yes a blind eye by everyone because everyone loves a housing prices bubble party, they just hate the resulting hangover, and then try to fix it with more drinking in the morning.
Don’t forget Jimmy Carter’s law that was passed where banks had to have a certain amount of high risk housing loans !
Interesting imagery you two have used. I guess that would extend to Obama as Ahab, with a burning desire/drive to take down the whale?
JFK wasn’t that popular by the end of November of 1963. The Camelot myth was created after his assassination and he went to Dallas to try to build support for his policies in anticipation of his re-election bid in 1964. Dems HAVE destroyed the economy. Barney Frank and Chris Dodd were largely behind the market crash in 2008. The market was manipulated with the backing of the media to get 0bama elected. It worked and since he was inaugurated in 2009, (we should go back to when the House was overtaken by Dems in 2007), the policies of this regime have been set to destroy the economy.
the white whale, at that
Spend now cut later save government jobs. Boner Plan A.
It is fairly easy to see, now that the talks have collapsed, what the progressive Marxists in government game plan is. They intend to do nothing and then blame republicans. The debt will be serviced, no default will occur, but SS checks will stop, military pay will stop and the entire US media will be calling for Boehner head. If the GOP is smart they will raise the ceiling no strings and move on to the 2012 election. In this PR battle they do not stand a chance.
As Mona said:
In "Reckless Endangerment," Morgenson and Rosner offer considerable censure for reckless bankers, lax rating agencies, captured regulators and unscrupulous businessmen. But the greatest responsibility for the collapse of the housing market and the near "Armageddon" of the American economy belongs to Fannie Mae and Freddie Mac and to the politicians who created and protected them. With a couple of prominent exceptions, the politicians were Democrats claiming to do good for the poor
Once the Democrats had the policies in place, do you think the GOP had anywhere near the power to reverse it?
Literary interpretation can be fun, despite the drudgery my junior-year English teacher in HS tried to make it...:-)
Yeah, whatever happened to Pelosi’ ‘pay-go’ scam anyway?
Fight of the Century
The article is lacking two key points.
Why did they open up the lending to low income, dogs and cats?
The answer to this question is still the problem.
Demographics! The housing market is driven at the base by first time home buyers. Due to our population shifts, abortion, birth control, and student loans the flow into home ownership slowed. To increase the demand the loose lending policies were implemented. We still have a very big demographics problem as the boomers are moved into nursing homes.
The other strategic problem not mentioned is energy prices.
When gas prices peaked those on the bubble had to choose between filling up the car to get to work or making the mortgage payment. We still have the gas price problem and now it has grown into food prices and is causing inflation.
[How the Democrats Nearly Destroyed the Economy]
What do you mean “nearly”?
Interesting. I'm guessing this is because of the Kennedy's... specifically Teddy. John & Robert were both Cold Warriors. They bungled some stuff, but they both believed in opposing the Russians. It is now coming to light that Ted was either acting on behalf of the Russians or was just a fool in thinking he could manipulate the Russians to his own advantage. The Kennedy-clan created "Camelot" after-the-fact. Re-writing the history of the Cold War goes hand-in-hand. Same tools, same motivations.
You mean the Republican party that had the WH and both houses of congress? Bush was too busy doing this with his presidency:
Compassionate conservative was proved to be a huge failure under Bush as all those minorities voted Democrat by 2008 after they lost all those homes promoted above.
Yes I know what the Republican-Bush-Apologist talking points are about this, that is the main reason I have trouble listening to talk radio.
The most glaring example of leftist projection is their claim that the socialist Hitler was right wing. Leftists display their failings daily by what they project as far as they can onto the right.
I guess you missed how the MSM/Dem axis slung mud daily at Bush, flinging lie after lie on an hourly basis about the WOT and you missed how the public ate it up?
Do you really think legislation to "deny minorities the most basic of human 'rights' " (i.e. housing) would have worked?
What would have happened is that the Dems would have taken the House 2 years earlier and all war funding for the WOT would have ceased.
You cherry-picked quotes from Bush talking about minority ownership (which by the way DID increase even in the sub-prime area), but did not comment on how Bush sent his guys to Congress to warn them to reform the laws. Do you really think Barney Frank was going to shut up and the MSM was going to report things honestly?
What Obama and the Democrats (and the Republicans) have destroyed is the money. Congress has failed to carry out its Constitutional responsibility to regulate the value of money for 98 years, and the result is what we have now.
No money system lasts forever, though. History is littered with the remains of destroyed money systems.
This is not at all the same as "the economy".
In fact, as soon as Constitutional money is restored, so that the productive activity and natural resources of this land can be properly valued and orderly exchanges can resume, "the economy" will take off like a rocket.
The false economy of housing prices, derivative exchanges, and selling Jackass DVDs will be erased, of course - but that's the whole point of sound money, isn't it?
Nothing has changed. They are still making subprime loans. Go to any mortgage broker website and you will see the pigs are still squealing and fighting to get their share of the government slop.
Those are two different arguments:
1) That Bush was beaten up by Democrats over the WOT.
(What does that have to do with telling the truth about what Bush actually did on housing loans for minorities?)
2) That Bush would have gotten beaten up even more if he proposed laws to deny minorities housing
(This has nothing to do with anything, it is easily proved below that Bush did the opposite of that, he pushed policies through a Republican congress to get poor minorities with bad credit home loans and then bragged about it)
You cant have it both ways (except in party centered politics.) You cant brag that you got minorities w bad credit in homes and then later when it leads to disaster claim it was really Democrats that did what you ALREADY bragged that YOU did and you were not able to stop it, even though you had the WH and congress. Yes, I heard this :'But Democrats wanted him to do it so we can deny he did it' argument before, it wont sell in the internet age.
Bush home Ownership links:
You remarked that Bush had both Houses of Congress, implying that it would have been easy for him to reverse an entrenched, very popular program the Democrats has invented.
I told you why this was dead wrong.
Bush did not PUSH the policies. I also told you how he had his Cabinet members go before Congress to try to get reform. There is NO WAY this was going to happen without him losing both Houses much earlier, thus putting the WOT in peril.
Spoken like a true RINO BushBot. Bush was a First Class WUSS who NEVER stood up for himself and NEVER met a Big Govt “program” that he didn’t like. Bush(41/43) were and are more like Ford than Reagan.
I remember the day Pelosi was threatening to hold back funds for Iraq.
Bush basically announced that he was going to start to publicize how the Democrats held back funds from Vietnam and it led to the boat people exodus.
Nancy did a fast 180 and released the funds the next day.
Yeah...you're right...Bush didn't stand up just for himself, he stood up for the military and the country.
NO, you like to repeat that strawman argument you made up. My argument is one you have no defense for:
Bush had both houses of congress and so could stop his own minority home ownership policies by not promoting them(below):
Rino kool-aide taste good today?
Yep sure did, all the while for 2 SOLID Years his POS “Generals” Abizaid and Sanchez and BUTT-BOY L. Paul Bremer let our guys get IEDed at the cyclic rate.
REALLY?????, what do you call this speech he gave?
GWB 2002 Speech :We have a problem here in America because fewer than half the Hispanics and African Americans own their own homes. Thats a home ownership gap; a gap that we got to work together to close. And by the end of this decade well increase the number of minority homeowners (future Obama voters ) by 5.5 million familiesPresident Bush Mortgage Speech 2002(Helping those w bad credit buy houses)
One of the major obstacles to minority home-ownership is financing. Fannie Mae and Freddy Mac (who I will bail out in 2008) have committed to provide more money for lenders, they committed to meet the shortage of capital available for minority home-buyers. Freddie Mac just began 25 initiatives around the country to dismantle barriers (like income requirements) and create better opportunities for home-ownership. One of the programs is designed to help families with bad credit histories to qualify for home ownership loans (by faking their income) . You dont have to have a lousy home for first time home-buyers. You put your mind to it the first time low income home buyer can have just as nice a house as anyone else (till those adjustable rates go up).
American liberals began to consider anti-communism a kind of mental disorder.
They still do note actions.
Dimrats follow a similar plan.
Create a crisis, take advantage of that crisis.
The trainwreck of 2008 is just part of their whole cloward piven strategy.
Bush hated the military and urged his generals to get them killed at the fastest rate possible.
All the photo ops and speeches he gave almost on a daily basis were fakes; he gagged whenever he found out that Rove was forcing him to go out and do another one.
Here's another reform Bush proposed back in 2003.
How Bush apologists can deny the obvious is beyond me. It really makes me scared of having another Republican(RINO) in the WH because it's like nothing was learned from it.
“I guess you don’t think Bush stood up for the military?”
Sent them over on a fool’s mission in Iraq, while doing nothing to stop the invasion from the south.
Yes, it was entirely foolish to topple Hussein.
How I wish Saddam was still there shooting at our planes, terrorizing the world with threats of WMD, funding suicide bombers, and killing his people.
Bush was entirely evil for taking him down.
USDA loan, 100% loan and you can ask the seller to pay your 3% of closing costs. $ to buy a home on this program? 0
FHA, 3.5% down but will allow buyer to borrow or accept gifts for that 3.5%. Closing costs are about the same percentage so the seller is normally asked to pay that in addition to the 6% agent commission and lower the sales price. Freddie and Fannie loans are usually these FHA loans. Freddie has now offered to pay the 3.5% closing costs and now is giving a $1200 bonus to selling agents.
VA is now and has always been a 100% loan.
A very small percentage of loans are conventional, 20% down, no mortgage insurance.
30% of home sales right now are cash, now were talking!
From his GWB speech in 2002 it looks like his reform of Freddie and Fannie were getting them to give out bad loans to minorities with bad credit to secure their votes in the next election 2004, it didnt work out too well in 2008 after they lost those homes they couldnt afford.