Posted on 04/08/2009 6:01:56 PM PDT by Libloather
Don’t blame GOP for this mess
Wednesday, April 8, 2009
Hoover most certainly did not ignore the problems. Hoover (contrary to his fundamental beliefs) took action. Unfortunately, as explained in Amity Schlae’s “The Forgotten Man,” Hoover “by intervening in business, signing into law a destructive tariff, and by assailing the stockmarket” did damage on all three fronts. You also are apparently unaware of the massive public projects at federal and state level that Hoover pushed for as part of his program to retain employment and high wages. The Republicans did not have a program of “doing nothing” as you stated.
The Republicans do have an alternative budget. They did not, as you state, “offer nothing.” The main points may be found at http://online.wsj.com/article/SB123854083982575457.html. I leave it up to you as to whether you read the full document. If you are like many of our representatives, who I expected to read and understand bills on my behalf, you will not, as they did with the stimulus bill. I would like all our representatives, by the way, to provide an affidavit swearing that they read and understood the Obama stimulus bill before they voted for it. I doubt many will do so.
As for the “blame” in the case of the financial crisis, I have spent the better part of the last two years doing little else but researching the basic data trying to understand how we got to this point. Without doubt the causes of this crisis stretch back into the seventies and involve both parties, many administrations, congress , government agencies and well as financial institutions, mortgage companies, brokers, appraisers, financial ratings firms, and others. The causes are complex, much like the many rivulets that form tributaries which in turn feed what eventually becomes a raging powerful river. Housing, for example, is but one -- a tributary, I think.
Here’s a bit simply to illustrate the complexities:
Housing and mortgage elements first appeared at the end of the Clinton administration, for example (here I rely on the work done by Yale’s economics professor Shiller, who has gained quite a following as one who correctly predicted both the technical and housing bubbles). I do not imply that Bill Clinton bears major responsibility for the housing bubble. What is inescapable is that certain actions during his administration contributed to the beginnings of the housing bubble.
Presidents Clinton and Bush, and Congress, especially the Democrats and within the Democrats -- the Black Caucus -- pushed well-meant but poorly thought-out efforts that were central to creating and exacerbating the housing-mortgage bubble. Both Bush and Clinton looked for ways to extend home ownership. But what followed quickly was rise of ARMs, interest-only loans, “liar loans,” and other financial sleight-of-hand.
Other major “tributaries” included the criminal mismanagement of Fannie Mae and Freddie Mac, which not only exacerbated the housing bubblebut also the sub-prime crisis, abetted by what I consider unconscionable efforts by certain Democratic members of Congress to impede any real regulatory oversight over these entities. These are documented both in the text of the hearings and the visual recordings available at times on the Web. The efforts (to set in place regulatory controls) disingenuously boasted about by Barney Frank in 2008 were simply those that John Sununu, Chuck Hagel, and Elizabeth Dole, all Republicans, tried to implement earlier (beginning in 2003 with S1508) when they would have had a chance of success.
Meanwhile development of leveraged investment devices commonly referred to as derivatives, which had begun as a small tributary, became an incredibly fast flowing and powerful river in itself. In 1973, Fisher Black and Myron Scholes published a famous paper entitled “The Pricing of Options and Corporate Liabilities.” This paper explained how they derived and solved the Black-Scholes-Merton differential equation, solving a longstanding stock-option pricing problem -- known afterward as the celebrated Black-Scholes formula (Black left academic life in 1984 to become a partner of Goldman, Sachs & Co.).
A number of firms like J.P. Morgan developed financial devices in the 1990s to sell debt associated with securitized mortgages based on their ideas. These began the explosion in liquidity and leverages. The devices are also known as LCDS (loan credit default swaps), CDS of CDOs (credit default swaps of collateralized debt obligations), CFDs (contracts of difference). Basically they are means of placing bets on movements in the markets. The way was open to the floodgates of speculation. But for many years -- indeed since 1933, a measure of protection existed in the form of the Glass-Steagall Act. This act separated speculative investment institutions from the traditional banks.
Robert Rubin (who headed Bill Clinton’s National Economic Council, then served as Clinton’s treasury secretary) pushed to break down the barriers between the traditional bank and the investment institutions. While treasury secretary, Rubin sought the repeal of the 1933 Glass-Steagall Act, which as noted had separated largely unregulated and more speculative investment banks like Goldman Sachs from government-supervised and -insured commercial banks like Citi, which play a key role in the nation’s monetary policy.
Glass-Steagall was designed to prevent the kinds of speculative conflicts of interests that pervaded Wall Street in the 1920s and helped bring about the Great Depression. Congress formally repealed Glass-Steagall, in November 1999, by an act termed in some circles the “Citigroup Authorization Act.” Rubin had stepped down as treasury secretary that July. His new job, announced in late October of that year, was chairman of Citi’s executive committee. Rubin’s initial annual compensation was around $40 million.
Rubin’s links with the current administration are very strong. Although he ceased his personal fund-raising activities for political candidates, he remained very close to others in the Wall Street Democratic money machine, and to its party conduits, particularly Sen. Chuck Schumer, who headed the Democratic Senate Campaign Committee, and then Rep. Rahm Emanuel, Schumer’s House counterpart in the 2006 campaign, now Obama’s chief of staff.
Rubin enjoyed such privileged status among Democrats that when the Democrats took back the House in 2006, incoming Speaker Nancy Pelosi advised the new Democratic caucus that its first two briefings would include one on defense, with three experts of differing views. On the economy, Robert Rubin would be appearing, solo.
After Obama’s election, the president-elect chose as his top economic advisers Timothy Geithner as treasury secretary, Lawrence Summers as senior White House economics adviser, and Peter Orszag as budget director -- all of whom are past proteges of Rubin. Even the headhunters for Obama have Rubin ties: Michael Froman, Rubin’s chief of staff in the Treasury Department, who followed him to Citigroup; and James Rubin, Rubin’s son. On Jan. 9, Citigroup announced his resignation, after having been criticized for his performance. He received more than $126 million (I could be off a few million here and there) in cash and stock during his eight years at Citigroup. I am sure you are aware of the costs to the taxpayer stemming from bailout funds paid to this firm.
I do not have a conclusion as yet. I suspect that hidden in all the other actions, such as those described above, the slow loss of well-paying skilled worker and lower-to-middle management jobs as our industrial base shrank and service-related jobs began to dominate the economy may be key to understanding our present situation.
I think there is enough blame to go around. But understanding of the facts are important if we are to understand the origins of this crisis and to develop reasoned approaches to solving the crisis.
John A. Valersky
The Democrats have been running the Congress since Jan. 2007, 11 months before the recession began.
And Republicans passed Gramm-Leach-Bliley and appointed Hank Paulson as SecTreas. Politicians from both parties took money from the fraudsters and looked the other way while the Treasury was looted.
They’re all guilty.
Yes, but only one party is getting the blame.
Perhaps that is because our side is too busy talking about Mrs. obama’s eyelashes to fight back.
Very possible. A lot of that.
A while back my wife and I saw a sign at a stop light for a housing development that read, “No Documentas, No problemos”.
No documents,no problem???? In other words, if your hear illegally, we can still get’cha into a house.
I could go on and on. The republicans a few years ago had it all, both houses of congress, the white house and at least an even Supreme court.
What did they accomplish?
Bush with HIS compassionate conservatism that morphed into socialistic programs like the RX entitlement, billions for AIDS in Africa and his hundreds of billions in stimulus that had to be passed NOW, Right now or we will collapse crap.
I beg to differ, the republicans (with the exception of a few) are just as guilty as the democrats in driving our country toward bankruptcy.
What set up the the Democrap victory in the midterms.
Newsflash y'all, the two party system is as corrupt as the day is long.
In fact, both parties spend millions to keep third party candidates out of the race.....why?
Cause they don't want ANY common sense entering into the picture.
just had a visit from a democrat...”its all Bush’s fault and Obama is going to save the world. she couldn’t vote for McCain because he kept talking about being a POW”.This while she was watching Obama bow on the news. Is it all Dems or just the ones that I know that are totally insane.I think its safe to say that Dems had congress the past 2 years and have been very busy. Busy destroying the country.
Liberalism is TRULY a mental disorder!
I saw about 2000 of these maggotty misfits in DC
on March 21st!
It was enjoyable, however, to vent upon these cretins
for a few hours at Arlington Circle.
this fact:
Is far more relevent.
More stupid liberal Democrat talking points.
Let’s repeat a simple fact for those folks who keep letting the Democrats off the hook: The Democrats have been running the Congress since Jan. 2007, 11 months before the recession began, and almost 2 years before the financial meltdown.
It’s bizarre how the DNC has been so successful at bamboozling so many.
“The republicans as well as the democrats have refused to shut down the borders”
False. 90% of Democrats voted FOR amnesty. Amensty failed because conservative Republicans opposed it.
It s was Republicans in the House and Senate who DID force the issue of securing the borders.
“The republicans a few years ago had it all” Not since November 2006.
“I beg to differ, the republicans (with the exception of a few) are just as guilty as the democrats in driving our country toward bankruptcy.”
BS. Every single GOP member of Congress vorted against the Obama budget. Every single GOP House member voted NO on the trillion dollar stimulus. THE BANKRUPTING OF AMERICA IS HAPPENING ONLY WITH DEMOCRAT VOTES IN THE PELOSI/REID CONGRESS. To say the Republicans are ‘just as guilty’ is plain ignorance.
You are guilty of letting the socialists off scot-free by spreading the blame to the innocent. This is something liberals are inclined to do. It’s flabby and false thinking based on a distortion of facts.
Ideals are more important than party. A lot of Republicans have forgotten that, and apparently a lot of posters here have forgotten that as well in the name of trying to blame Barry for everything.
Here in GA— Our Republicans have been in power for 5 years now.....this past session they did not CUT ONE GOVERNMENT AGENCY OR PROGRAM! But they created new ones.
They passed several UNCONSTITUTIONAL Bills into Law.
And the GOP will fund and support all of them because they are incumbents and have an R by their name. Challengers in the primaries will be shunned, etc....
What does it matter if they have an R by their name and act like Dems? And the RNC is part of the damn problem. It is a power structure- not representative of the people— period.
But if I am going to change anything— I need to start with myself. I refuse to be kind and cozy anymore. The RNC has had no interest in me until I get a letter asking for money. Suddenly I have had all kinds of GOP’ers get in touch with me within the last week— trying to give me talking points for the Tea Parties here in GA (I am the State Coordinator), trying to get me to join conference calls to report to them what I am doing.
THOUSANDS of people will be taking to the street on April 15th- they tried to ignore us.....but now they suddenly want to “help”— that help is nothing more than an attempt to soften the blows they will be getting from the folks on that day. They want to pretend they are on our side.....We have worked our tails off for 6 weeks- then 7-12 days before the event they want to jump in and steer?
NOT HERE IN GA! NO WAY!
For now on— I will not have myself to blame at all— ONLY THEM...Read my tag line— when I speak on the 15th— THEY WILL HERE THUNDER!
The republicans could have passed whatever they wanted prior to Nov. 2006, and they pissed it away. No balanced budget, no secure borders, practically the same crap the democrats are passing. Sure, they’re for “balanced budgets” now that they’re powerless and have no chance of passing anything. It’s easy to take a stand when you know your vote doesn’t matter anyway.
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