Wait, wait, wait, wait.

You started out defending Zero’s erroneous citation of GLBA as the root of the mortgage crisis. Then you didn’t even bother to shift gears as you abandoned GLBA and endorsed my interpretation of CRA 1977, except you claim it was the rating agencies that screwed up.

You don’t think the Marxists in Congress screwed up when they required, by law, that banks and lending institutions approve mortgages that could not be paid? Bankers did not want CRA 1977. Republicans did not want CRA 1977. The problem mortgages were buried in bundles of securitized mortgages, some of which were sold overseas and were not recognized as problems until the artificially inflated housing market started to collapse. The Democrats in Congress invented this Ponzi scheme, and it depended absolutely on the mortgage markets rising forever, a circumstance that has never happened for any market a single time in all history.

You surely remember the hi-tech dot.com Bubba Bubble? It was only eight years ago. The DOW rose 100% (6000 to 12000) in four years, and the NASDAQ rose from nowhere to 5000 at the start of year 2000. The NASDAQ had a value of $5 trillion at the start of Clinton’s last year in office, and it was down to $2.5 trillion when Clinton left office. A few months later, the value of the NASDAQ was down to $1 trillion. This was a lot more than the current mortgage problem

You did not learn anything from that? Of course not. President Bush bailed your sorry Democratic asses out, and the economy recovered nicely. President Bush and Senator McCain have tried to reform the mortgage market and the Dims did not want any reforms until they suddenly woke up to the problems they had created. Now the Dims want the Republicans to bail them out of the problems they got themselves into. The only trouble is that the people are suffering from your stupid Marxist nonsense. So there will be a correction. But don’t lie to the people, because if you do the corrective action will be much worse next time.

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Son, your Marxist ideology is showing.

President Coolidge lowered taxes and tax receipts went up, as retained capital was put to use generating employment, income, and profits, which generated more tax receipts.

President Kennedy lowered taxes and tax receipts went up, as retained capital was put to use generating employment, income, and profits, which generated more tax receipts. Kennedy’s actions were quite controversial at the time, but worked exactly as advertised (Laffer). President Johnson raised taxes, and the USA economy went into seventeen years of stagnation, culminating in the Carter catastrophe.

President Reagan lowered taxes and tax receipts went up, as retained capital was put to use generating employment, income, and profits, which generated more tax receipts.

President Bush lowered taxes and tax receipts went up, as retained capital was put to use generating employment, income, and profits, which generated more tax receipts.

Son, your Democrats are not trying to maximize freedom, growth, or tax receipts, you are trying to maximize Marxist control of the people and of the economy, and with it, political control of the USA. But the USA has done quite nicely, thank you, without Marxist interference. LBJ’s Marxist War on Poverty cost a mere $6 trillion, and the sole result was the substantial destruction of Black family life in the United States. The Democrats’ Community Reinvestment Act 1977 cost a mere $1 trillion, but all at one time, unlike the WoP, the cost of which was spread out over thirty years.

You are deliberately trying to undermine American values as embodied in the Constitution of the United States of America, and you will not succeed. Enjoy.

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When my husband and I moved our real estate agent told us we could buy a much bigger, newer home. We saw the nicer, more expensive homes and chose one we could improve as time and money permitted. Sure, we were tempted to move into the perfect home. We chose not to purchase a home that would have left us strapped if either my husband or I lost our job or gas prices increased, etc. If our fellow Americans had made the same decision maybe we wouldn’t be in this mess. So many today go out and finance all of their wants, then ask the government to pay for their needs. Now they want the government to pay for their wants. Where does it end?

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You are obscuring the real cause of this crisis either for ideological reason or because you simply don’t understand what happened.

Subprime loans and mortgage securitization can be great economic tools if used right. The problem only occured because credit rating agencies were fraudulently slapping AAA ratings on bad debt. Lenders can’t make bad loans if they can’t sell them to unwitting investors. This happened because investment banks directly paid the credit rating agencies, which set up a “ratings shopping” system.

Who created modern credit ratings regulation?

The SEC under the Ford administration did. The 1994 Democratic congress gave Greenspan the power to fix it, but Greenspan balked under pressure from the 1995 Republican congress. The 2002 Republican congress ignored the problem again in 2002 when it was reviewed.

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Mydquin defends Obama’s attack on the Gramm-Leach-Bliley Act (GLBA), but GLBA has nothing to do with the current mortgage mess. The mortgage mess originated in a quite different federal law, the Community Reinvestment Act 1977 (CRA 1977), which passed during the Carter Administration. GLBA and CRA 1977 are not even cross-referenced in basic financial and economic texts.

CRA 1977 was passed in response to a noted phenomenon; banks took deposits in poor neighborhoods and would not loan out funds within these neighborhoods. This practice was known as redlining. CRA 1977 established the requirement that money be made available for loans within the neighborhoods in which the bank offices were established. Bankers opposed CRA 1977 in legislative hearings, because they feared they would be forced to loan money to people who could not pay off the loans. CRA 1977 passed regardless. The damage was contained for a time, but the Congress and regulatory agencies, in their infinite ignorance, continually weakened such safeguards as existed in CRA 1977, and the huge mortgage market slowly became infected with weak and unstable mortgages. Some of the specific actions that created the current instability include:

* The Boston Fed in 1993 (Clinton Admin) reduced financial safeguards on mortgages, specifically allowing minimal or zero down payments and reducing income requirements for obtaining a mortgage. The specified beneficiaries of these policy changes were minority applicants, but everyone had to be held to (or given the benefit of) the same standards; therefore upper income individuals also received mortgages with favorable, and irresponsible, terms. ACORN, the same criminal enterprise that regularly commits voter fraud, was a major proponent of these relaxed mortgage standards, and during this time frame Mr. Obama was an employee of ACORN, so Obama surely is familiar with the real background of the mortgage mess which he now tries to blame on banking deregulation. Which surely means that Obama was lying during the first debate. So, what is your excuse?

http://www.nypost.com/seven/09242008/postopinion/opedcolumnists/house_of_cards_130479.htm?&page=0

* But that was not the end of the weakening of financial controls on mortgages. In 1995, the Clinton Administration further relaxed mortgage safeguards under CRA 1977 and permitted the securitization of bundled mortgages. The securitized bundles of mortgages were sold all over the world, foreigners assuming that the USA knew how to manage it’s financial affairs. With an unknown number of weakened mortgages in the securitized bundles, and no firm identification of which mortgages were not performing, the stage was set for financial uncertainty, if not financial disaster.

* The 1995 changes to CRA 1977 were so controversial that there was a review mechanism written into the law. The 2002 review noted with approval that the number of homeowners and particularly minority homeowners had increased, but failed to note the number of weak and non-performing mortgages.

The Bush Administration has tried repeatedly to tighten mortgage requirements, and John McCain specifically proposed laws to improve the mortgage and financial posture of the United States, but Democrats keep voting the Republican reforms down.

Now there is a full-scale financial mortgage crisis, and Democrats want Republicans to join in a bipartisan effort to address the problem. But the Democrats created the mortgage crisis; few Republicans were stupid enough to vote to weaken the financial and economic status of the United States. Moreover, the Democrats, as the majority party in both houses of Congress, now have the votes to correct the mistakes they made. But they want the Republicans to vote with them, so Americans will be fooled into believing that this unpopular action was not the fault of Democrats alone.

If the Democrats want the Republicans to vote with them in addressing the Democrats’ mortgage mess, you can BYA that the Republicans will require meaningful safeguards on the nations business. Otherwise the Dems, all by themselves, can explain to the voters how they screwed up.

This same scenario is playing out on a much grander scale in Social Security. Every President since Eisenhower has stated that SS is not sustainable, and Democrats refuse to make meaningful changes.

We can deal with the mortgage mess if we act responsibly. SS is a much bigger mess, and we have a limited time to correct the problem. Hint: you cannot correct the SS problem by continuing to raise taxes.

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I read your Mill mis-quote. Did you happen to read Jay’s quotes?

The United State of America is not a pure democracy and never was intended to be. Pure democracies bring about dictators and the likes of Hitler. How do you think he came to power?

I do believe there are some in government who are the enemy of the peope. Take a look at this: http://governor.mo.gov/cgi-bin/coranto/viewnews.cgi?id=EkkkVFulkpOzXqGMaj&style=Default+News+Style&tmpl=newsitem

I’ve never met a socialist who calls himself a socialist. I wish you great success in your business endeavors. Feel free to send 80% of your income to the federal government thanking them for providing you with the roads, infrasctructure and protection that have made your success possible.

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In a democracy (should one ever actually erupt on this continent), the People are Sovereign. But, acting as individuals, the People are impotent. In order to exercise their Sovereignty, they need the machinery of a democratic government that represents their will and carries it out.

To you, the government is some external enemy that would force its will upon you to whatever degree it can get away with. To me, the government is the agency by which I and 300 million other Americans make decisions about our society and then put those decisions into effect.

For a democracy to work, there MUST be what is usually referred to as a Social Contract – an implicit agreement by all citizens that the will of the majority – as applied by and through their representative government – is accepted by all. There must be protections built in for the minority, lest we get a tyranny of the majority, but essentially, in a real democracy, the government is not the enemy of the people, but the embodiment of the people.

You really are clueless about all of this.

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It is true that you and I use the roads a little (I drive from my home in Pennsylvania to Manhattan, a 160-mile round trip, once a week to meet face to face with my fellow company officers), and you and I do pay for their upkeep in our taxes (I suspect I pay a lot more than you do, for that matter).

But consider your own benefit from the interstate highway system and compare it to Wal-Mart’s or Con Agra’s or General Motors or the thousands of other companies that rely on the highway system to bring the resources to their factories, the employees to their jobs, distribute their products throughout the country, and deliver customers to the retail outlets – just so that you and I don’t have to go out and hunt down our dinners tonight with a club.

Of course the rich pay more since they get a larger share of the total pie. The real question that we are all dealing with is how *much* more they benefit from the system that gave them the opportunity to make their fortunes and, consequently, how *much* more should they should reasonably feel obligated to give back to that system that enriches them.

By the way, what I have done for a living for the past 35 years is act as a consultant in enterprise software design and development for the banking and financial industries. My client list over the past few decades looks like a who’s-who of today’s economic news stories and has included Dow Jones, the New York Stock Exchange, SIAC, Bear Stearns, Merrill Lynch, Chase Bank, US Bancorp, MarketAxess, Fleet Securities/USClearing/Quick&Reilly , Knight Securities, National Westminster Bank, Goldman Sachs, and a dozen others. During that time, as an entrepreneur, I have founded three companies (two of them consulting companies dealing primarily with Wall Street) and made them successful. I have experience designing systems for banking, international trade, equity and derivative trading (yes, including MBSs and CDOs), back office clearing, market data delivery and analysis, interfacing to the OMHex electronic markets, Quant-(quantitative analysis)based computerized trading, and so on.

I stopped consulting years ago because I (along with most of my clients) could see this current trainwreck hurtling our way) and did not want to be a party to the damage I could foresee being done to ordinary people

I am again in the process of creating a new, and – so far – highly-successful enterprise – this one in the eCommerce supply chain domain. Our client list already covers just about every major retailer in the nation, from Walmart to Nordstroms and, even in this stalled economy, we are currently growing at 34% a year.

So, when I talk about the US economic meltdown, I am not just reading from some Right-wing or Left-wing phrasebook. I have a few bona-fides and I’ve been in a position to watch this all happen from the inside – from the bridge of the Titanic, so to speak.

And, by the way, I am not a Socialist (what entrepreneur is?) – the world is much, much more complicated than simply two pigeonholes labeled Capitalist and Socialist. But then, please refer back to my post quoting John Stuart Mill…

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Now, if we’re to be quoting Mill – - I assume you acknowledge him to be a bright fellow and an expert in his field, otherwise you would not invoke his name – - I rather like this one, particularly as it applies to the present situation in the Middle East:

“War is an ugly thing, but not the ugliest of things: the decayed and degraded state of moral and patriotic feeling which thinks that nothing is worth a war, is much worse. When a people are used as mere human instruments for firing cannon or thrusting bayonets, in the service and for the selfish purposes of a master, such war degrades a people. A war to protect other human beings against tyrannical injustice; a war to give victory to their own ideas of right and good, and which is their own war, carried on for an honest purpose by their free choice, — is often the means of their regeneration. A man who has nothing which he is willing to fight for, nothing which he cares more about than he does about his personal safety, is a miserable creature who has no chance of being free, unless made and kept so by the exertions of better men than himself. As long as justice and injustice have not terminated their ever-renewing fight for ascendancy in the affairs of mankind, human beings must be willing, when need is, to do battle for the one against the other.”

Concerning our present political situation, I think this passage from Mill is appropriate:

“Society can and does execute its own mandates: and if it issues wrong mandates instead of right, or any mandates at all in things with which it ought not to meddle, it practises a social tyranny more formidable than many kinds of political oppression, since, though not usually upheld by such extreme penalties, it leaves fewer means of escape, penetrating much more deeply into the details of life, and enslaving the soul itself. Protection, therefore, against the tyranny of the magistrate is not enough: there needs protection also against the tyranny of the prevailing opinion and feeling; against the tendency of society to impose, by other means than civil penalties, its own ideas and practices as rules of conduct on those who dissent from them; to fetter the development, and, if possible, prevent the formation, of any individuality not in harmony with its ways, and compel all characters to fashion themselves upon the model of its own. There is a limit to the legitimate interference of collective opinion with individual independence: and to find that limit, and maintain it against encroachment, is as indispensable to a good condition of human affairs, as protection against political despotism.”

Or perhaps this one, which I take as a kind of credo: “The only purpose for which power can be rightfully exercised over any member of a civilized community, against his will, is to prevent harm to others.” You might keep that in mind the next time you quote Mill in a comment in which you assert, with the typical arrogance of unleavened intellect, “Anybody with an IQ above room temperature understands that it is reasonable to say that those who gain the most from it have a responsibility to pay back into the system commensurate to their gains.”

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I would suggest that, once he and his tribe have evolved enough to have the intellectual equivalent of opposable thumbs, the Lonely Conservative study a bit of Game Theory, in particular non-cooperative games in which individuals are free to strategize based on what they perceive to be their own best interest. This is the single most self-destructive idea that underpins the conservative economic religion pushed by Barry Goldwater, Milton Friedman, Ronald Reagan, the Cato libertarians, and the current crop of wackaloons advising John McCain, and Game Theory has been conclusively been demonstrating its weakness since at least the end of the 1940s.

I suggest that Lonely Conservative starts with an examination of the “Tragedy of the Common” and then looks at the “Prisoner’s Dilemma” (both easily googled) to show why the profoundly misguided policy of “freeing” individuals to strategize for their own goals not only inevitably fails to produce optimal, or even desirable results for the individual, but usually ends up destroying the individual and, often, the entire society in the bargain. As is happening today.

And, Lonely, while you are cogitating upon this, ask yourself why a government dedicated to deregulation and privatization is being forced by the dire results of its own misguided policies to nationalize (e.g., socialize) the mortgage and investment industries, forcing taxpayers to pick up the tab in the process.

It is so wonderfully ironic that nationalization of our economy is coming not from the outer fringes of the Left, but from the core of the Right in a desperate last-ditch attempt to undo the damage caused by trying to put their own “think-tank” economic theories into practice.

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Keep in mind Blue Sun-a government that can give can also take away.

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