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Wednesday, October 1, 2008

 

 

See if any of this sounds familiar:

"What was there to hamper the furious onward march of business? Not the government, whose regulatory officials and commissions seemed to be napping...What was destined to halt the forward progress of business was the fact that (Wall Street) had become bemused with paper values - with the piling up of speculative or artificially generated wealth which had little relation to the production of goods...The irresponsible actions of men who did not stop to think they were constructing a caricature of the capitalist system were paving the way for disaster...Who could have halted the disaster? (The Republican regime) was apparently too wedded to the idea that government must keep its hands of business."

So wrote historian Frederick Lewis Allen, looking back at the root causes of the 1929 Wall Street crash. What followed, of course, was a marked shift in the political winds. Four years later, the voters gave Franklin D. Roosevelt a mandate (however ill-defined) to do something about the economy. As Allen would later write, laissez-faire capitalism was out and federal oversight of the markets was in - thereby eradicating the old order "in which everybody's economic fortunes were determined by the action of buyers and sellers in the open market, with the government standing aside."

We appear to have reached a similar juncture today. The modern conservative movement - founded on a philosophical hostility to government - has largely exhausted itself, thanks to the excesses of those cowboys who were allowed to roam free, constructing a caricature of the capitalist system. A new chapter in our national saga is at hand. Many Americans, including swing voters, are not necessarily fans of strengthened government intervention (indeed, as we well know, the government screws up a lot), but, as in 1933, Americans look to government in times of serious crisis.

This is one of those times - and most polls suggest that this sentiment is buoying Barack Obama's prospects. For instance, it's particularly noteworthy that, in the latest Quinnipiac survey of battleground states (released this morning), Obama is now leading John McCain by eight points in the state of Florida. I repeat, Florida. Florida is McCain's make-or-break state. The key statistic concerns the economy. When asked to choose the candidate who could best handle our economic woes, Floridians favored Obama by 14 percentage points; independents favored Obama by 17 points.

There are durable stereotypes in American politics. Maybe, in a normal year, the "liberal" tag would be hurting Obama, as it tends to hurt most Democratic presidential candidates. Same goes for the "soft-on-terrorists" tag (formerly, the "soft-on-communism" tag). But not this time; indeed, Obama's Florida numbers actually got better after the first presidential debate, despite the fact that McCain tagged him as the most liberal senator. The problem for McCain right now is his party label. When the economy is seriously distressed, voters tend to favor government action, and they view the Democrats as the party of government. That perception was formed during the Hoover-FDR years, and it has persisted ever since. Voters generally don't trust the Republicans to govern wisely during an economic crisis; indeed, McCain is also burdened by the record of the Bush administration, which has demonstrated that this generation of Republicans can't even govern competently.

Republicans are stereotypically viewed as the free-market party, and when the markets go seriously awry, Republicans generally suffer. Voters perceive this even without knowing all the supporting evidence, including: GOP activist Grover Norquist's ambition to shrink government and "drown it in the bathtub"; the Reagan administration's decision to relax provisions of the Depression-era federal oversight law that was designed to regulate the big financial firms; the 1999 GOP-sponsored legislation (supported by McCain) that removed the last shackles of that federal oversight, thereby allowing the financial industry's Ponzi schemers to run wild.

And on Monday of this week, we had the House Republican conservatives, behaving like those Japanese soldiers who stayed in the bush to fight another day, refusing to believe that their war was already lost. Granted, the bailout bill had flaws, and the predictably inept Bush administration sold it badly. But two-thirds of the House GOP members voted no primarily in fealty to their outmoded principles, the belief that the government should leave the markets alone. The same principles that got us into trouble were apparently deemed ideal for getting us out.

Ideological rigidity works in tandem with willful amnesia. They seemed incapable of remembering what happened nearly two decades ago, when the savings & loan banking industry collapsed (as a result, naturally, of a deregulation climate). In response, the federal government stepped in, established an agency called the Resolution Trust Corporation, and cleaned up the mess at a taxpayer cost (in today's dollars) of  $200 billion. We essentially socialized those bank losses, and we survived.

David Brooks, the New York Times columnist and troubled conservative, said it best yesterday about the House conservatives: "It has been interesting to watch them on their single-minded mission to destroy the Republican party...With this vote, they've taken responsibility for this economy, and they will be held accountable. The short-term blows will fall on John McCain, the long-term stress on the existence of the GOP as we know it...What's sad is that they still think it's 1984. They still think the biggest threat comes from socialism and Walter Mondale liberalism. They seem not to have noticed how global capital flows have transformed our political economy" - and that this new reality requires "the steady and powerful hand of some public institutions."

Some kind of rescue plan is still likely to pass. And regarding the potential long-term political fallout, conservative commentator Ross Douthat writes: "This is still George W. Bush's economy. Republicans who think the public will blame the Democrats, and specifically a President Obama, if the bailout is massively unpopular come 2010 or 2012 are almost certainly kidding themselves. Whether it succeeds or fails, the bailout seems likely to be remembered as the last great fiasco of the Bush Era, not the first big-government fiasco of a new liberal moment, and there's very little the Republicans can do to change this."

The last great fiasco of the Bush era...with similarities to the fiascos of the Hoover era. The national zeitgeist is shifting, and if Obama wins this election, conservatives will be forced to seriously reexamine their precepts. It will no longer be enough to declare hostility to government, or to assume that cutting taxes is a sufficient government action.

As conservative thinker (and former Bush speechwriter) David Frum argues in his new book, "There are things only government can do, and if we conservatives wish to be entrusted with the management of government, we must prove that we care enough about government to manage it well."

 

  

Posted by Dick Polman @ 11:19 AM  Permalink | 93 comments
Comments   
Posted 02:52 AM, 10/05/2008
psikeyhackr
The invisible hand has become the invisible pickpocket. Capitalists talk about enlightened self interest but they don't advocate mandatory accounting in the schools so everyone can be enlightened. We don't hear that from economists either. Economists make a big deal about GDP but they don't mention NDP very much. NDP is GDP minus DEPRECIATION, but economists only depreciate CAPITAL GOODS. There have been 200,000,000+ automobiles in the United States since 1995. If each car lost $1,500 in depreciation each year that would come to $300,000,000,000 every year. That is FOUR TRILLION DOLLARS since 1995. Our economists treat cars and television like fruits and vegetables. That DEPRECIATION is defined out of existence in our economics textbooks. GDP = BS! psik
Posted 10:39 AM, 10/02/2008
Gibba Mang
I think it's crunch time for McCain. If he can't get a big momentum shift in the next week or two, he's done.....McCain really hurt himself with the "suspension" of his campaign and initial bailout deal. He declared that HE would get a deal done only to be stabbed in the back by House GOP. If they don't respect him, neither do most Americans.
Posted 10:02 AM, 10/02/2008
p-diddy
Swedesboromike: Cutting off all foreign aid? Does that mean that the U.S. no longer gets billion dollar loans in fund useless wars? That Saudis won't be allowed to buy up mortgages in Kansas? I think the idea that eliminating the Dept. of Education will improve education in this country is pure bull. I also think it's repugnant. Education funding is mostly based on property taxes. If federal funding is eliminated, funding disparities between poor and affluent areas will be exacerbated. It's a pretty novel idea when you think about it: the way to improve public education is to defund it as a whole, and widen disparities between poor schools and wealthy ones?
Posted 09:49 AM, 10/02/2008
p-diddy
Yobill: I think it's crunch time for McCain. If he can't get a big momentum shift in the next week or two, he's done. The next two debates are focused on the economy and healthcare. Not favorable topics for McCain. You can bet that sometime in the next two or three weeks the McSame campaign will pull some sort of stunt - an outrageous campaign ad, some sort of new "revelation" about Obama, something. He's a desperate man in his last throes (thanks for the line, Cheney).
Posted 09:39 AM, 10/02/2008
p-diddy
I remember a while back I got into a snit with a small government true believer on this message board (the old one). We were arguing about education spending and taxes. Finally I asked him/her if taxes were necessary at all, and if so, for what purposes. He/she replied that taxes were necessary for only two government programs: the military and the police. What a statement! That conversation stayed with me.
Posted 02:30 AM, 10/02/2008
No Ids
Milton Freidman is dead and so is his bankrupt philosophy. Although it is theology to the rich right-wing nutters out there. We tried it it under Reagan (FAILED) Bush1 (FAILED) and Bush2 (FAILED). This is just faith based economics, when the facts don't support your "opinion"
Posted 02:30 AM, 10/02/2008
No Ids
Milton Freidman is dead and so is his bankrupt philosophy. Although it is theology to the rich right-wing nutters out there. We tried it it under Reagan (FAILED) Bush1 (FAILED) and Bush2 (FAILED). This is just faith based economics, when the facts don't support your "opinion"
Posted 11:54 PM, 10/01/2008
yobill626
Per the comments of both Libs & Cons here a couple of weeks ago, the consensus was that however the election stood in the polls in mid-October was how it was going to go. Cons, you're guy is running out of time. With FLA currently polling blue & NC & IND at toss up, John "Captain Binghampton" McCain has to turn it around REAL quick. Up at bat tonight, Caribou Barbie! He might own the D-Backs, but he's looking a lot like the Mets to me...
Posted 10:45 PM, 10/01/2008
swedesboromike
To JIM R- Deregulation in the Trucking Industy, My 20th year in trucking was in July. Deregulation in trucking killed the established companies becasue they were all teamster companies. Only one stand alone Teamster company survives today is ABF. Yellow corp owns Roadway, New Penn, Yellow, and Holland. Thats it. Everyone else is non union. What the govt. did in 1980 under Carter was allow new companies to spring up and sell their service for whatever price those chose without being sadled with high cost union labor and archaic work rules. The established companies were at a significant disadvantage because while the industry was deregulated the established trucking companies were not offered a free and fair way of determining wether their workforce could become non-union. so what happened is the common denominator has been that the Teamster companies failed and new more efficient ones sprouted up. so essentially the govt de-regulated and regulated at the same time.
Posted 10:27 PM, 10/01/2008
LJL
bon ludicrously said: "The free market is still the political focal point of the Republican party.".....Uh, if the "free market" is the focus of the Republican party, then they would let the collapsing institutions fail. No, "Hypocrisy" is the focus of the Republican party. Just like a little bathroom toe-tapping is OK when you need it, a little government-sponsored corporate welfare (socialism) is OK when you need it as well. You morons are starting to believe your own fairy tales....(no pun intended)
Posted 10:11 PM, 10/01/2008
JimR
With so much of government spending set in stone, there's not much chance to cut real spending and with the normal inclination of government to sustain itself, there's not much likelihood anyone will even try. So, whoever gets in isn't going to be able to cut taxes or increase social programs. Too many mortgages were sold to the "unable-to- payers" but not $700B. The cheats in the system who play the angles are responsible. The government often makes a mess of things but deregulating the airline and trucking industry hasn't done much good and where utility deregulation has occurred, all kinds of cheating has taken place. The Govt needs to be able to keep things in check, at least a little bit. It's comical to see the lords of the 'free market' looking for the hand-out when they lose at the craps table. Profit is privatized - loss is socialized. Both parties are dirty here. I used to believe in naturally occurring term limitation, that voters would be smart enough to throw out the cheats and bums, but it doesn't happen. Throw all of them out and start over.
Posted 09:12 PM, 10/01/2008
swedesboromike
A plan to fix it all... 1. Cut all foreign Aid. Of any kind. No more billions for Pakistan.NO more Tsunami relief or Billions for to fight Aids in Africa. Cut it all Except Iraq and Afghanistan. win those and leave 2. Outlaw earmarks 3. Sell naming rights to all government buildings and national parks 4. Must have 10% down and a fixed rate mortage. No exceptions 5. Eliminate 1/2 half of the house of representatives. combine districts to save money 6. Eliminate most of the Departments or combine them. Such as office of Homeland Security, Department of Eduction ( local school taxes pay for eduction not the federal government ) 7. Drill everywhere! the best way to put Russia, Venezuela, and the middle east in the poor house to become energy independent
Posted 09:01 PM, 10/01/2008
swedesboromike
But the problem is that government was involved in screwing it all up. Lenders were urged to lend to people who could not pay them back under the safety that Fannie Mae or Freddie Mac would but the loan. Anyone who dare not loan to poor person risked a law suit. Listen... if I am forced to gamble in Atlantic City and I am told that if I lose a guy named Freddie Mac will incur the loss then I'll go gamble until 6am! I would do it every day.
Posted 09:01 PM, 10/01/2008
Djoko Pritza
I love how Palin sympathizers have spun out the talking point that the problem is the McCain people won't let Palin be herself. Just let Palin be Palin and all will be well. Well, the reason McCain people won't let P be P is because P is such a disaster. It's like a lose-lose. Tom, what do ya say?
Posted 08:28 PM, 10/01/2008
Djoko Pritza
Hey, I just heard r*c*sts are not going to be allowed to vote this year!
Posted 08:05 PM, 10/01/2008
p-diddy
A Western European nation would never take a mean-as-hell moron like Sarah Palin seriously. After eight years of terrible Bush policies (the MCA, illegal wiretapping, the Iraq invasion, irresponsible tax cuts, no healthcare reform, the privatization of government, deregulation of our economy etc. etc.), and in the midst of a seriously scary financial crisis, I find it downright frightening that we would consider someone like Sarah Palin for 2nd in command. This nation is in serious trouble. All partisanship aside, does anybody on this board think Sarah Palin is anything but a political gesture? Her candidacy is the biggest mockery of American politics of all time.
Posted 07:59 PM, 10/01/2008
PattyPat1962
Xi Jah can only type so much in between wanks.
Posted 07:18 PM, 10/01/2008
nnizy
Has anyone actually met any of these negative, hate filled folks on these boards? It's real easy when you can hide behind your keyboard. Seriously, did something happen in your developmental years? Did mom or dad ignore you? It's just so, well, I guess it's actually fascinating. I really want to know. C'mon over - Steve Zinn, 12419 High View Ct. Indianapolis, IN 46236 - 317-748-3180. So here is something for thought. In a 30's depression style which is likely with or without regulation, and regardless of which party is in command, blah blah blah, what will be the significance of only 2% of the workforce being employed in agriculture vs the 21% in 1930? Does this matter? Also, in spite of the lazy references to being European like on this board, the fact is there is very little room for shifting the tax burden, and even increasing regulation. Improving regulations, for certain. Unfortunately this will not include much if any scrutiny of undue influence, or failures to perform oversite in congress (on either side of the aisle). You can find numerous warnings written into the congressional record about this disaster in the making. And the last thought. Can we afford everything? If we see a crash beyond anyones current thought, say 30% unemployment, civil unrest, and, well you fill in some blanks, will we look back at 10's billions spent on well meaning but incredibly burdensom compliance with the American With Disabilities Act, multiple federal programs that flood cash into drug and medical treatments thereby guaranteeing increase revenues and no incentive to lower costs? The same for higher education. What about HIPA? Huge costs implementing this folks (I make money from the program even though I have nothing to do with health care). Next time you visit a large doctors practice or med center, just ask the nice person at the front desk if anyone has ever asked a question about the HIPA form. Have YOU ever read it front to back? Sarbanes-Oxley?
Posted 06:55 PM, 10/01/2008
p-diddy
Xi Jah, I notice you don't use apostrophes correctly in many of your posts. You need to brush up on contractions and possessives (your/you're, parties/party's, etc.). I recommend picking up two books, The Elements of Grammar and The Goof Proofer. Just a gentle admonishment from your friendly public school teacher. Oh, one more thing: it's all over for McCain.
Posted 06:47 PM, 10/01/2008
mike l
On the front of yesterday's Inky, there was list of the 10 biggest stock market drops in the last 100 years with this one being 17th. I coulldn't help but notice that 9 of those 10 bad days were during republican administrations. The one Democrat one came during the early part of FDR's adminstration. Now what does that show you?
Posted 06:37 PM, 10/01/2008
resmerelda
Politicians in both parties are to blame for this awful mess. If you have a couple of minutes, this link provides more facts than you'll find in the regular media. http://patriotroom.com/?p=2479
Posted 05:55 PM, 10/01/2008
Master Dreamz
Someone explain to me why this wouldnt work: $700 billion (a number that has no basis in reality, it was just pulled basically out of thin air) divided by the number of homeowners in this country would mean roughly $200,000.00 (I am guessing there about 5 million homeowners in the country). People take that money pay off their debt that makes the banks flush with money again, people would now have more money to buy things because they have no debt -- travel, cars, etc.. And, just to make sure the government gets their money back, which this buyout doesnt ensure from the banks, you raise income tax by ten percent across the board until the debt is paid off with interest. I just cant understand how giving money to the banks so they can lend to each other is going to help me. I can see how me giving money to banks to lower my debt will help me, the bank, and the economy. I really dont trust big business to do right by us -- you, me, and the government -- at least not without real oversight.
Posted 05:04 PM, 10/01/2008
NigeltheMastiff
I know my liberal bias -- and probably my Quaker values -- are showing, but I am concerned about the vulnerable citizens of our country. I can't in good conscience just walk away and say, "Take care of yourself," to the handicapped, the sick, at-risk children, and even adults who are trying to help themselves. And I would hate to see us go there, becoming more and more inured to misery, poverty, ignorance, etc. I believe in social programs. That being said, I also believe in personal responsibility. And I believe in good organization. Many of our programs are poorly organized with little or poor oversight. But we can't turn our backs on our own citizens in need. We'd have anarchy. And I fear that cutting all spending might result in that.
Posted 04:37 PM, 10/01/2008
thelastRepublicaninPhilly
still_independent, that "zero basis" idea also sounds like a good idea to explore. I'm open to almost any idea that will cut unnecessary spending and reduce the tax burden on the American people. The fact is that the government as a whole is just spending way too much money on everything. I think there are a lot of ways (government and non-government) to accomplish a lot for the American people. You know, I've yet to find a single person that honestly says, "I don't pay enough in taxes, I wish the government took more from my paycheck." Oh, and liberal, just so you know we also get "economic catastrophe" when we raise taxes. History is absolutely clear about that, too.
Posted 04:29 PM, 10/01/2008
ncatty
Why can't a brilliant politico like Nancy Pelosi get her majority to steamroll the wascally repubs? Or was the defeat the very rare display of true bipartisanship?
Posted 04:21 PM, 10/01/2008
ncatty
Oh yeah, david brooks is the "troubled conservative" at the NY times? He may be "troubled" but who says he is a conservative?
Posted 04:20 PM, 10/01/2008
Phillysub
Nigel, yes I agree there should be a guiding principle that provides for oversight. I think if we had a purely free market, the laws of economics themselves would provide oversight in that businesses would not take the risks they have taken. However, since our system has become so intertwined with government programs that through off the natural checks and balances of economics, we probably do need additional oversight of some kind.
Posted 04:19 PM, 10/01/2008
ncatty
If the repubs in the house who voted against are like the never say die japanese soldiers, who are the more numerous no-voting democrats like? SS soldiers?
Posted 04:03 PM, 10/01/2008
liberal
Probably the looniest of all suggestions is McCain's talk about "freezing" government spending. History is absolutely clear about what happens when the government cuts spending in hard times: economic catastrophe.
Posted 03:58 PM, 10/01/2008
liberal
So far, all of the republican apologists are missing or finessing the basic point: the current crisis is a result of the government's NOT regulating, with the free market doing what unregulated markets do; that is, go for broke. I don't see how this validates the Bush administration or the unfettered free market, no matter how you spin it or how many democrats may have been involved in some way.
Posted 03:56 PM, 10/01/2008
NigeltheMastiff
Yes, but don't you think there should be some sort of oversight? Maybe not from the government, but from some entity? Lack of oversight almost always results in bringing out the lowest common denominator of human nature -- sadly. When you think of corporations, there's always oversight and a very clear hierarchy of authority. Someone must be minding the store, in other words.
Posted 03:55 PM, 10/01/2008
still_independent
lastRepub: the only problem with his proposed freeze is that non-defense, non-homeland security discretionary spending is a not very large percentage of our budget. Freezing it will not pay for much of the current deficit, let alone any more tax cuts. Also remember that Social Security ran a $200 B surplus last year, so the actual deficit is $200 B higher than we talk about. According to the 2008 SS Trustees report, this surplus will begin shrinking in 2010, thus hurting the deficit even more. ... It would never work, but I'm in favor of a "zero basis" plan. Instead of gov't agencies having to justify INCREASES, how about their budgets get reset to zero and they have to justify ANY spending.
Posted 03:51 PM, 10/01/2008
Phillysub
NigeltheMastiff, I don't mean to make light of this situation and perhaps using the word 'bumps' is a poor choice of word on my part. However, I don't believe any of our nest eggs would be as big as they are, despite the recent losses, without the free markets in the first place.
Posted 03:44 PM, 10/01/2008
NigeltheMastiff
Last Repub, I don't really feel I made bad decisions. I tried to save money, lived within my means, I pay off my credit card every month. Yet I'm getting killed because of others' greed, irresponsibility and lack of ethics. And there are many other people in the same position. It's just criminal.
Posted 03:34 PM, 10/01/2008
thelastRepublicaninPhilly
NigeltheMastiff, you're right this is more then just a bump. A lot of people and businesses are getting hurt right now. Aside from politicians I hope there are a lot of smart businessmen and economics experts working on this problem. I agree with Phillysub that a free market is the way to go but a lot of people made a series of bad decisions which caused this mess.
Posted 03:30 PM, 10/01/2008
thelastRepublicaninPhilly
still_independent, you're right. I neglected to mention that spending would also have to be cut to gain the necessary benefits of tax cuts as well. I liked McCain's idea of a temporary freeze on spending; it's a bold move and worth exploring. Of course I'd like to see some number to verfiy the effectiveness of it.
Posted 03:21 PM, 10/01/2008
NigeltheMastiff
PhillySub, speak for yourself. I consider this much more than a bump. I have nine years for my nest egg to recover to the point where it was when the markets disintegrated. I was hoping it would grow and provide me with some retirement income. Those already retired and trying to live from their investments are suffering the most. I don't believe the Great Depression or this financial disaster are bumps. They affect real people with real fear and pain.
Posted 03:19 PM, 10/01/2008
77volks
The best part of this mess is that the bailout has a foreign investment codicil. Since we have been financing the federal gov't at expanding rates since the end of the surplus after George was installed, by using the foreign economies, it appears as though their gamble is going to pay off. So, balancing the bailout with the foreign powers that are financing our government, along with the majority of our debt, on the backs of the taxpayer is a novel idea. Since a stock market investment is supposed to entail some sort of risk, this bailout, will definitely socialize most of the economy. Try blaming this on the folks that took out the loans and you lose credibility. Yes, they signed the paperwork, if you think they knew what the creative accounting detailed on those papers entailed - you are a bigger fool then the signers. There are investment bankers who wrote portions of the creative financing instruments who have no idea what they entail. Hope we all enjoy supporting the reckless and at times illegal behavior of the highly compensated Wall Street Bankers.
Posted 03:18 PM, 10/01/2008
77volks
The best part of this mess is that the bailout has a foreign investment codicil. Since we have been financing the federal gov't at expanding rates since the end of the surplus after George was installed, by using the foreign economies, it appears as though their gamble is going to pay off. So, balancing the bailout with the foreign powers that are financing our government, along with the majority of our debt, on the backs of the taxpayer is a novel idea. Since a stock market investment is supposed to entail some sort of risk, this bailout, will definitely socialize most of the economy. Try blaming this on the folks that took out the loans and you lose credibility. Yes, they signed the paperwork, if you think they knew what the creative accounting detailed on those papers entailed - you are a bigger fool then the signers. There are investment bankers who wrote portions of the creative financing instruments who have no idea what they entail. Hope we all enjoy supporting the reckless and at times illegal behavior of the highly compensated Wall Street Bankers.
Posted 03:15 PM, 10/01/2008
LoserMcCain
Ough! Check out the BRUTAL piece of reporting on Rolling Stone about McBush's manufactured Maverick/War Hero persona. He was a total coward while the Forrestal burned ... http://www.rollingstone.com/news/coverstory/make_believe_maverick_the_real_john_mccain
Posted 03:14 PM, 10/01/2008
Phillysub
The free market has served this country well for over 200 years. Focusing on the bumps along the way instead of the tremendous benefits, is lowest common denominator thinking.
Posted 03:05 PM, 10/01/2008
still_independent
lastRepub: I agree with everything in your last post ... except (of course) one thing. Please show any independent economic study that shows tax cuts paying for themselves. It only yields "higher revenue" in two cases. The first is capital gains. Usually, after a capital gains cut, the next year's cap gains revenues go up as some rush to "cash out" at the lower rate. this is usually a one year spike. The second, and more common case, is that revenues generally go up every year, regardless of tax policy. If I cut taxes and revenues go up, this doesn't show causality. I can even find you quotes from Laffer himself stating the cuts don't pay for themselves. ... Now I'm all for tax cuts (I'm actually a GW fan one week a year, and it's in April), but we need cut cut spending to pay for any tax cut.
Posted 03:01 PM, 10/01/2008
psv
bpphilly, but three years after yours. My point is that linking Clinton to this is short-sighted, which you've tried to do in earnest by repeatedly posting the same link. Bush delineated a grand vision not once but twice which, by the very terms he laid out, suggested subprime lending on a massive scale, to a tune of 5.5 million homes. He encouraged Fannie and Freddie AND private banks to hop on board. He flat out stated that down payments are a problem and that contracts need to be simplified 'for people just arriving from Peru'.
Posted 03:00 PM, 10/01/2008
thelastRepublicaninPhilly
NigeltheMastiff, yeah I know. I was watching Fox News last night (yeay, big shock, huh?) and they were playing some of the clips from 2005 when the democrats were saying everything was fine; but then this mess happened. The part I like was not the 2005 part but one of them (I forget his name right now) actually came out and simply said, "we were wrong, we were wrong and we need to come together and fix it." I was paraphrasing but I was thinking finally a politician gets it. OK, that one can stay but toss the rest.
Posted 02:58 PM, 10/01/2008
still_independent
bpphilly: again, what have sub-prime default rates been? And what have the sizes of the loans been that are defaulting? As you are in "personal finance working within the markets on a daily basis", these stats should be easy to come by. As an aside, did that all mean CFP? Broker? What?
Posted 02:55 PM, 10/01/2008
thelastRepublicaninPhilly
Rauol Duke, remind me never to let you handle any of my finances. The simple fact is this; we can't pay for everything. We'd like to, but we have to prioritize. No president can deliver on everything; never has and never will. Mostly because he has a congress to answer to and things come up that we would never have expected. What needs to happen first is the dollar needs to be strengthened and businesses need more output; the best and proven way to do that is to lower taxes. This often yields higher revenue. This is the EXACT OPPOSITE of what Obama is proposing! His tax hike will affect everyone directly or indirectly and will destroy the crippled economy; which will aslo yield less revenue. You can't get blood out of a stone and you can't provide programs from funds you don't have.
Posted 02:53 PM, 10/01/2008
NigeltheMastiff
Last Repub, I think our exchange proves the point that to be truly bipartisan, we must admit our own mistakes and foibles as well as those of the other side. Then, as you say, try to move forward together, which will probably be somewhere in the middle. And in the long run, that most likely makes the most sense. It disturbs me that our country has become a place of extremes.
Posted 02:49 PM, 10/01/2008
bpphilly
psv: You might also want to note that the speech you provided the link for was from June 18, 2002. 3 years before McCain's and others attempts to open up the accounting practices at both said organizations.
Posted 02:45 PM, 10/01/2008
Rauol Duke
CD75, you bring up a good point. Would go into a long discussion but have a meeting in a few minutes. As far I as I am concern Barack will deliver on everything. Just because this administration blew the bank on a useless war and funding their buddies does not mean Barack is going to Blow the money. What he will spend on are items which have long term return, such as National Health Care, Energy Independence, Rebuilding our Infrastructure, over time these items will cause unprecedented growth, it is the bottoms theory.
Posted 02:44 PM, 10/01/2008
bpphilly
still_independent: I know exactly what is going on because I'm in personal finance working within the markets on a daily basis. This whole mess starts with the housing market's collapse, then moves to the sub-prime defaults, which leads to the problem of over leveraged banks buying and selling CMO's whose value cannot be truly determined, to the problem we have now, that no one is willing to give anymore credit to anyone. Snow ball effect. But you probably knew that.
Posted 02:44 PM, 10/01/2008
thelastRepublicaninPhilly
NigeltheMastiff, I'm still with you. Most politicians only look out for there party rather then what is best for the country. Both sides are at fault and we can source article after article and prove the other one is wrong. Both sides were riding the train when it was good but will blame the other for the derailment. But that's not really the point. The point is how do we proceed from this point. Do we point fingers and fight, or do we actually make some tough decisions and get something done? We need leaders that can make tough decisions and leaders that can work with people on both sides of the isle.
Posted 02:43 PM, 10/01/2008
psv
For everyone who doesn't have time to read the articles, such as bpphilly, I'd like to highlight a key quote from one of Bush's speeches: "Freddie Mae -- Fannie Mae and Freddie Mac -- I see the heads who are here; I want to thank you all for coming -- (laughter) -- have committed to provide more money for lenders. They've committed to help meet the shortage of capital available for minority home buyers. Fannie Mae recently announced a $50 million program to develop 600 homes for the Cherokee Nation in Oklahoma. Franklin, I appreciate that commitment. They also announced $12.7 million investment in a condominium project in Harlem. It's the beginnings of a series of initiatives to help meet the goal of 5.5 million families. Franklin told me at the meeting where we kicked this office, he said, I promise you we will help, and he has, like many others in this room have done. Freddie Mac recently began 25 initiatives around the country to dismantle barriers and create greater opportunities for homeownership. One of the programs is designed to help deserving families who have bad credit histories to qualify for homeownership loans. Freddie Mac is also working with the Department of Defense to promote construction and financing for housing for men and women in the military." I'll leave out the private sector business running along the same lines, but you get the drift.
Posted 02:42 PM, 10/01/2008
NigeltheMastiff
Lenders themselves have been very unscrupulous. I went a couple of weeks ago to a radio interview that the president of my college was doing at our local branch of Georgia Public Radio. In the break, we were discussing the financial meltdown, and he (the reporter) told us that a few years ago when he and his wife were living in Tampa, they were trying to get a loan from Wells Fargo -- which, by the way, happens to hold my own mortgage -- and were told to enter twice their salary in the income line. Fortunately, this reporter refused to do so. However, he is college educated and quite intelligent. I think many of these people who had these ridiculous loans weren't. Should they have educated themselves better? Of course. But human nature being what it is, they saw their dream, went to an expert who told them to do something unethical, and they did it. Both sides were wrong. I tend to fault the lender more in these cases, as I see it somewhat like the scam artists who manage to take the life savings of the elderly, who are more vulnerable. Still, each side had a responsibility that went unfulfilled.
Posted 02:37 PM, 10/01/2008
psv
Ah, bpphilly, you didn't read the entirety of either speech.
Posted 02:37 PM, 10/01/2008
still_independent
Nigel: amen! tom, bon, jmc, bpphilly, et all: as much as you keep pointing back to 1999 as the root of all evil, please explain as to why from 1196-2004, ~9% of mortgage originations were sub-prime, yet from 2004-2006, subprime morgages represented ~21 % of all loans? I'm not entirely sure how to blame it on Clinton, but please, feel free.
Posted 02:34 PM, 10/01/2008
bpphilly
psv: Yeah I understand and appreciate the principles behind all of this, but in this speech he doesn't talk about pressuring lenders to give money away at high rates as Clinton did, he doesn't claim that Fannie/Freddie buying up the sub-prime loans as not risky as the Dems who ran them contended, he simply wants to make resources available to those that didn't have them before like educational programs, better job training, not just a freebie loan. Maybe you missed a key quote in this speech: "And so I want to, one, encourage you to do everything you can to work in a realistic, smart way to get this done." Realistic and smart is not buying a house you cannot afford. Realistic and smart is not giving someone a mortgage for 300k who only makes 25k a year. I'm not denying that the lenders are dirty at all, but common sense tells you you shouldn't drive a Mercedes when you're a teacher or laborer that makes a very modest income and the same goes for when your purchasing a home. Like I said, I understand the principles and idealogies behind this, but that didn't give the DEMS who ran Fannie/Freddie the right or reason to use unscrupulous practices to pad their own wallets all the while running them into the ground. They were called on it by the Republicans in 2000 and again in 2005 and they did everythind they could to block transparency. You can't draw parallels between ideas and actuality. I called your raise, but sorry my flush beats your straight.
Posted 02:24 PM, 10/01/2008
still_independent
bpphilly: again, YOU asserted that nearly all sub-prime loans have defaulted in the last two years. Again, PLEASE SUBSTANTIATE. If you think defaulting loans are all that are causing this mess, then you really have no clue... As an aside, KellyWise was referring to the loans that started getting made in the late 90s/early 00's are the ones that were getting repaid. Is it your contention that the loans that were made a decade ago are the ones defaulting NOW?
Posted 02:23 PM, 10/01/2008
NigeltheMastiff
pbphilly and all: truly, there is enough blame to go around in all quarters. The Democrats and Republicans are both guilty. As one reporter said, "President Clinton lit the match, but Bush et al poured gasoline on the fire." I feel completely non-partisan in my outrage and fury.
Posted 02:22 PM, 10/01/2008
CD75
I think there needs to be a discussion about what Obama has promised and what he will actually be able to deliver. How about an articale on that? He has promised so much to everyone that I do not see how he can meet his own hype and expectations. Remember 2 years ago when the dems took back the congress how much "hope" there was for change? What has changed since then? What has congress done for the last 2 years? There is a differnce between promising change and having a plan to do it.
Posted 02:19 PM, 10/01/2008
still_independent
bon: Friedman was a very strong proponent of drug de-criminalization and very strongly against the war in Iraq. What's your point? He wanted the federal reserve dismantled, and unfettered currency exchange markets. Do you really want to get into a Friedman discussion w/ anyone?
Posted 02:17 PM, 10/01/2008
bpphilly
still_independent: Check the Wall St Journal, CNN, etc and you will see, in case you haven't heard, that the sub-prime defaults put us where we are right now. But I suppose you would also agree with Obama's policies that generate more than a trillion dollars of NEW govt spending when our economy is on the brink. And also, maybe you could explain why Obama ripped McCain for saying that the fundamentals of our economy are still strong, only to utter the exact same phrase last week. Interesting how the spin picks up even more speed.
Posted 02:13 PM, 10/01/2008
psv
And one more for bpphilly, just for good measure: http://www.hud.gov/news/speeches/presremarks.cfm
Posted 02:11 PM, 10/01/2008
still_independent
bpphilly: please offer any statistics to back up "... how could that be given that just about ALL of them have entered into default in the last 2 years". Before you throw around the phrase "your bogus stats", please offer some.
Posted 02:09 PM, 10/01/2008
psv
bpphilly, I see your article and raise you one: http://www.whitehouse.gov/news/releases/2002/10/20021015-7.html Synopsis: GWB wanted it just as badly, if not more so. In any event, I'd rather let this 'correction' take place and go through a deep depression than give them a bailout. A bailout keeps a failing business afloat and keeps these so called bankers employed - this 'correction' would ensure that mismanaged banks disappear, as they should, never to be resurrected and keep these idiots unemployed. The $700 billion bailout is just a temporary; the Fed can't monetize this debt because who is going to buy it? Not China, who announced that they're staying out of buying more debt from the U.S. Further, the credit default swaps still outstanding are somewhere between $40 and $60 trillion (we don't know how much because these so called bankers aren't very good at writing these things down) - more than the world's GDP. I'm with the republicans on this one: kill the bill, let the chips fall where they may.
Posted 02:09 PM, 10/01/2008
AHiredGun
Last Repub: I agree Carter was a poor president but there is no comparison. Bush is not only the worst president in U.S. history, his administration is also the most corrupt in U.S. history; way worse than Grant's or Harding's administration, both of whom also happened to be Republican by the way.
Posted 02:03 PM, 10/01/2008
bpphilly
And KellyWise, I'm not sure where you got your stats that the sub-prime borrowers had a near perfect rate of repayment, but how could that be given that just about ALL of them have entered into default in the last 2 years? You're a true spin-doctor, but nothing more and your bogus stats prove it.
Posted 01:59 PM, 10/01/2008
bpphilly
KellyWise: You're not so wise, and you must not have read the article. ALL things in this problem point to this policy of giving unworthy borrowers credit in the name of social engineering. I agree the lenders were greedy, but you fail to realize that you cannot claim ignorance as your excuse for defaulting on a mortgage, ('I didn't know what an ARM mortgage was'). No one put a gun to the heads of the borrowers to buy homes. On the converse, Clinton and the Dems held a proverbial gun to the heads of the banks by pressuring them into making funds available to borrowers who were not credit worthy. The American Dream is not a RIGHT, it is a PRIVILEDGE. At the same time this article was written, Republicans raised the questions about Fannie/Freddie's accounting practices, valuation practices and their bonus structure. Barney Frank and Franklin Raines said both Org's were NOT undercapitalized and that there was no reason for Federal prodding. So they blocked ALL attempts to investigate these issues. And guess what, the Republicans were RIGHT ALL ALONG!!! Fannie & Freddie were way too risky under the guise of doing "what's right for society", they were completely undercapitalized, and they were STEALING from these companies the entire time! Who was it that walked with $90 mil after running the company into the ground??? And even with the truth staring you in the face, in print, in the liberal NYT, you and the rest of the Libs still refuse to be accountable. Unreal how anyone could attempt to refute this article and it's implications to the Dem/Lib policies of the past!!! So KellyWise, nice try, but try again...this time after you READ the article.
Posted 01:40 PM, 10/01/2008
Talvenada
CD75: Not only will people be disappointed by the lack of total amount of progress, but how quickly said progress occurs, which will be fueled by unrealistic expectations voiced by The Pubs by next April the first.
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Posted 01:30 PM, 10/01/2008
Talvenada
YODA: We have no idea what will see the light of day before 1/20, or what past actions will be discovered after that date. ...........I'll be around more after BB season ends in Philly.
Posted 01:28 PM, 10/01/2008
KellyWise
bpphilly - I read the NYT story from your link - what's your point? Are you trying to say that Clinton's push to get more people to own homes through sub-prime loans by FM caused the crisis of today? Sorry - nice try, but not possible. Instead of picking through NYT archives to "find" something to pin on Dems, try sticking with current facts and then come back and play tag. The crisis was caused by greedy lenders who gave mortgages to people who couldn't afford to pay them - 80% of those mortgages are for homes worth over 200K. The FM program helped low-income workers get mortgages on homes that were mostly all under 150K - and they had an almost perfect record of pay-back, where the higher mortgages had an equally high foreclosure rate. The Dem policies of the 90's HELPED the economy. It was the last 5-8 years of Bush policies and the Republicans who shaved away any regulation of the industry. Grover Norquist is seeing his wet dream come to life!
Posted 01:28 PM, 10/01/2008
thelastRepublicaninPhilly
tom - wilmington, de, didn't Obama also promise to end povery with his global poverty tax? Did he also promise to completely rebuild our ENTIRE power generation capacity so that we don't use any more coal or oil? I guess he thinks that only that top 5% is going to pay for it. Did it ever occur to anyone that the top 5% might actually just leave and go to a different country since the taxes are just too high? Why do you think people and businesses more out of cities?
Posted 01:15 PM, 10/01/2008
thelastRepublicaninPhilly
AHiredGun, sorry but Jimmy Carter was the worse president ever.
Posted 01:15 PM, 10/01/2008
tom - wilmington, de
I saw Obama today in LaCrosse Wisconsin. He basically promised everything under the sun to everybody involved. He still talks about cutting taxes for 95% of all Americans, even though 40% pay no taxes at all. He is going to fix our infrastructure by building roads and bridges; he is going to educate our children by "investing" in our schools; he is going to provide health care for all Americans AND, if you currently have health care, your premiums will go down; he is going to get prescription drug prices down; we will be off imported oil in 10 years AND be able to STOP global warming; he is going to "shut down" the tax loophole allowing businesses to set up offices in a foreign country to avoid US taxes (so I guess they will just move outright); and he is going to have a "pay as you go" budget. So, just how much do you think out taxes will go up with all the new spending Obama will have WHILE he brings down the deficit and reduces the national debt? How much are you guys willing to pay? As for Polman's piece today, total BS. The New Deal programs are our biggest problem in government today. The "temporary" Resolute Trust Corp is still operating, even though the S&L problem has been long over. Government regulation did nothing for our economy during the 1970's, when virtually everything was regulated, from the airlines to trucking. With how the government has botched Social Security, Medicare, Medicaid, Welfare, and a host of other entitlement programs, what makes anyone think they can handle this situation. And lest we forgot, MoveOn.org is also a lobbyist group, and Obama listens to them.
Posted 01:14 PM, 10/01/2008
thelastRepublicaninPhilly
Wow, Polman you are dense. The House Republicans dug in and said no because in fact it was a bad bill and should not have been passed (something that both Bush and Obama supported). Because the republicans (and 95 democrats) refused to go along with Bush's poorly conceived plan (that Obama supported) so that a better bill can be worked out. http://www.realclearpolitics.com/articles/2008/10/thank_the_house_for_rejecting.html We all know that in 2005 John McCain saw this problem coming and wrote legislation to fix F&F; but the democrats, including Obama, blocked it. And now we have this mess. Even Bill Clinton blamed the democrats for not listening to republicans. The bill that the House Republicans have developed is a much better bill for the American people, there is more insurance, more oversight, cost less, more tax reductions and credits. Way to go! Thank God they didn't just tow the party line and used their head.
Posted 01:12 PM, 10/01/2008
jmc
bpphilly: Thanks for the link. Amazing how the real truth comes from the most unlikely source, the NYT. It was Clinton administration social engineering responsible for Fannie and Freddie. The mortgage crisis rests soley on the shoulders of liberalism. Polman knows this, but he thinks nobody will notice his lies by omission.
Posted 01:02 PM, 10/01/2008
AHiredGun
Well, I see the neo-con lemmings are still walking and talking in tandem, right off the edge of the cliff, and taking McCain chances of being president with them. Bush has cemented his status as the worst president in U.S. history and the GOP will have to pay the price for this debacle, not to mention the American people - again.
Posted 01:02 PM, 10/01/2008
frankg962
You wingnuts trying to lay this all off on Fannie and Freddie are killing me. Let's see, this bailout is aimed where? Wall Street. Hmm and where did Paulson work before becoming Sec Treas? Goldman Sachs on Wall Street. No nothing fishy there. You know if it looks like a duck and quacks like a duck, it probably is a duck. For those of you too young to remember the days of federal regulation of Wall Street, it really wasn't that bad. Warren Buffett and others found ways to make millions honestly during that period. This made me think about something else though and if anyone had any constructive thoughts on it I would love to hear them. Milton Friedman, I believe, won the Nobe Prize for economics by claiming that a company had one responsibility, to make money for shareholders. Now prior to his postulate, most people who opened businesses acted as a citizen of the community where they did business. In other words, most businesses prior to the late 70's felt that they had at least two responsibilities, to shareholders and to the communities where they did business. It seems to me that the adoption of Friedman's philosophy is part of what has brought us to this "market knows best" moment. Anyone else have a thought on this?
Posted 12:56 PM, 10/01/2008
bpphilly
jmc: I already posted this...but Bunch, Polman & Co. won't touch this subject with a 10ft pole even if their jobs depended on it... http://query.nytimes.com/gst/fullpage.html?res=9C0DE7DB153EF933A0575AC0A96F958260
Posted 12:56 PM, 10/01/2008
SteveMG
In the speculation about the near term future of the economy one analyst supposed this will be a long recession, but shouldn't get worse than that because of the the % of GDP taken up by government and health care spending. (It may have been on Charley Rose, but I saw so many experts lately they are starting to run together). The problem with that assumption is that when govt revenues go down during a recession, combined with the finite patience of the foreigners who subsidize our deficits, AND when health care benefits are lost from layoffs and shutdowns, those two sectors won't contribute their share.
Posted 12:55 PM, 10/01/2008
herheineystinkhole
Eeeew, mostly the usual Moose-mounting Repugs here today .... boring. Bye!
Posted 12:32 PM, 10/01/2008
jmc
Nothing about the Community Reinvestment Act, nothing about the 2004 hearing in which Republicans warned about Fannie and Freddie, and Democrats (particularly Barney Frank) who denied up and down that there was any problem at all, and nothing on the 95 Democrats who voted against the bailout. Do you have a shred of journalistic integrity Polman?
Posted 12:22 PM, 10/01/2008
liberal
One step toward being European? Is that such a bad idea? It's funny, nobody seems to realize that in some ways our country is more socialist than the European mainstream. For example, most of their motorway/autobahn/autoroute system is managed by private companies, something that seems anathema in the US. And of course we have the state liquor monopolies. Etc. The europeans seem more attuned to which things are done well by the government, and which are not.
Posted 12:18 PM, 10/01/2008
Rauol Duke
And what is so bad about being European? Would you prefer Mexican? If we leave the Republicans in charge what we will become is a third world country. I would prefer to remain American but if the choice is between Europe and Central America or South America, I would choose Europe. Canada would be the better choice.
Posted 12:14 PM, 10/01/2008
vc bear
Wishing for more regulation might give you a real supprise. Obama and our political class reach out to tell us more government policy will provide a "better world". The reality is regulators are just placid goverment bureacrats who don't do much. Explain to us the fact that the PA state insurance commission can let Reliance fail and have no idea that the insurance company was in that bad a shape. Explain the bust of the most recent telecom act and the failures of the FCC. Worst most recently I was at the Securities and Exchange commission when they annonced the agreement with CITI on its penalties for the securitizatio of mortgages. They carted out the staff that did the deal and talked about how wonderful they were doing the peoples work. The last question was a simple one. How did you miss the problem in the first place and why were you sitting on your hands? There was a defining silence in the room. I watched Bill Donaldson give a talk after he left the SEC. Here is one of the most moral men on Wall Street. In the Q&A he was asked a question. Should hedge funds be regulated? His response I am not sure what a hedge fund is? Ask for more regulation.. Obama dosn't have a clue what he is talking about,
Posted 12:13 PM, 10/01/2008
CD75
If Obama wins the presidency, the expectations he has created will be so high that he has doomed himself to failure.
Posted 12:11 PM, 10/01/2008
CD75
Obama and the dems are using the same "fear and scare" style of politics that Bush used with the war on terror. The problem is at the end of the day you lose credibility. If Obama is elected president he has set the bar so hight for himself that things will really "change" and when they do not, he and the dems will be in the same spot 2 years from now that the repubs are in. Don't get to giddy yet dem backers.
Posted 12:07 PM, 10/01/2008
bpphilly
Maybe you should try covering the real story, but I guess that would require you to stop your partisan nonsense and constant lobbying for Obama...check this article out written in 1999. http://query.nytimes.com/gst/fullpage.html?res=9C0DE7DB153EF933A0575AC0A96F958260
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Posted 11:50 AM, 10/01/2008
yoda
Bush's last fiasco - we can only hope. He still has 3 1/2 months left to make his mess bigger...
Posted 11:47 AM, 10/01/2008
bon
This is very well written Polman, but mostly nonsense. The free market is still the political focal point of the Republican party. (You should also take note that Obama and Hillary both claimed to be supporters of the free market in the primary, even though they are not. This means that rhetorically, it still sells.) I wish I were Milton Friedman so I could explain to you why this happened and why capitalism and the free market are still the best bet. I am not so I will simply say that the free market has made this country prosperous beyond our wildest dreams. We cannot allow one bad, and hopefully fleeting, moment to make us forget that. That is the very picture of shortsightedness.
Posted 11:41 AM, 10/01/2008
Mr. Smith
And so we take one huge step toward becoming European. At least we have straight teeth, and our women shave their legs...
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About Dick Polman

Cited by the Columbia Journalism Review as one of the nation's top political reporters, and lauded by the ABC News political website as "one of the finest political journalists of his generation," Dick Polman is a national political columnist at the Philadelphia Inquirer. He is on the full-time faculty at the University of Pennsylvania, as "writer in residence." Dick has been a frequent guest on C-Span, MSNBC, CNN, NPR and the BBC. He covered the 1992, 1996, 2000, and 2004 presidential campaigns.

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All commentaries posted before April 18, 2008, can be accessed at www.dickpolman.blogspot.com.