Quote:
Originally Posted by TheGame
Economics is a requirement at all the high schools in my town.
By the way, if you haven't noticed I've pulled out of the economic discussion in his thread. The reason being that I don't want to argue off of anything but results. Everyone is quickly jumping on Obama's back about his plan, even though nothing he has done so far has affected the economy whatsoever.
|
The only blame I place on Obama is that he's pushing for "a" plan, not this one. I believe he fears inaction to crisis and how it will shape his public opinion. The bill itself was not written by him, but I think he's felt a
little pressure to back it even though even he has disagreements. But in the end,
if thats true he's suffered a failure of leadership.
Quote:
|
The republicans had their chance to help the economy, but had a historic fail. The reason for the big fallout is the government not taking enough action and setting stricter regulations for the banks. The reason they didn't do that is because the republicans where over the government at the time, and allowed it to happen.
|
Actually, you could make the argument that regulation helped create the problem. It's called the Community Reinvestment Act that was signed into law by Pres. Carter and expanded by Pres. Clinton. Basically, the act twisted the arms of lenders to offer loan products to low income people who would ordinarily not be approved. This created the need for "bad loans", such as interest only adjustable rate mortgages (ARMs) that were traditionally only for investors who wanted to "flip" houses for quick profit and lower their overhead created by carrying a mortgage from month to month until the house sold. These loans made the homeowners especially vulnerable to time constraints (most readjusted in 5 years for much higher monthly costs) and market conditions (interest only for the first few years, so when the market takes a hit and the owner has to sell he has little to no equity in house). This created whats called "upside down" mortgages, where the owner owes more than the house will bring on the open market and we find ourselves in the housing mess we're in right now.
Also Fannie Mae was compensated by the government for every "bad loan" they acquired from loan originators (those asses are another topic), so literally we all helped to create this mess using our tax dollars. We can thank Barney Frank for that mess, who is a democrat and somehow got out of this entire debacle unscathed.
Not every lender abided by the CRA, and while they lost out on immediate government incentives, those that didn't follow the act have proved to be more resillient in these times (Wells Fargo for example) but even these companis are getting hammered by the credit crunch because most large companies traditionally work on credit, not liquid assets.
Now I'm not saying tat there weren't other factors (loan originators beign a big one), but the topic you posed is about regulation and making blind statements blaming one party or another doesn't help the matter. The fact is that regulation doesn't, the right kind of regulation helps. Also, more than one party was responsible for this debacle, so our discussion should be about IDEAS, not who came up with those ideas.
Keep in mind FDR installed more regulations than one would care to remember, and also resided over the longest (8 years, and it was getting WORSE before WWII, not better) and most severe economic duldrum in American history. If we'e not careful, rushing to place blame and change the nature of economy can do far more harm than good.