tag:blogger.com,1999:blog-865494184012705718.post638334191455209909..comments2008-09-30T22:05:52.017-04:00Anthony Palmer, Ph.D.http://www.blogger.com/profile/00043374303541804437noreply@blogger.comBlogger5125tag:blogger.com,1999:blog-865494184012705718.post-46452863566743615042008-09-30T22:05:00.000-04:002008-09-30T22:05:00.000-04:00<I>typical us vs. them. we are all in the financial ship together like it or not. there is plenty of blame to go around. why not blame the lending companies for simply making bad loans; approving loans for risky clients. sounds like bad business practice to me and im not even talking about predatory loans, just BAD loans.</I> <BR/><BR/>I actually <I>do</I> blame the lenders for doing this kind of thing - but that doesn't mean I don't blame the borrowers as well. Unless the lender lied to them about what they were available for, they knew they were getting a subprime "teaser" rate that would go up later on, and they still took the loan - many of them because they figured they could sell the house for a profit before that happened. <BR/><BR/>Ultimately, Thomas, most of the people who got these subprime mortgages were people who just don't have the credit to get a non-above-prime mortgage loan, and probably shouldn't. Now it is affecting everyone's credit (since the banks are very reluctant to lend money), so we bail out the banks - not the homeowners. To clarify, though, I would be fine with giving court judges the discretion to negotiate a new payment plan in bankruptcy court, but that's it. <BR/><BR/><I>what about 20 years of debt-financed government spending? you really are taking it out on individual consumers. just blame everything (free market collapse) on the consumer.</I><BR/><BR/>I notice you didn't actually answer my point - you simply knee-jerked in favor of the little guy. By the way, debt-financed government spending goes back more than 20 years - but it has only been in the last 20 years that American savings rate have plummeted, going into the negative in the past few years. <BR/><BR/><I>banning subprime loans is unpleasant??? they are named SUBprime for a reason. where on earth do we get the idea that everyone in the US out to take out a loan so they can buy a home they dont need? asinine. let's send everyone to college too so they have to take out loans they can't re-pay because they cant find any jobs because they been sent overseas. </I><BR/><BR/>How is this even relevant? Do you actually plan to <B>answer</B> my point that it would be an unpleasant (for many borrowers) but good idea to ban subprime mortgage loans? And work on your sentence structure, too; I can barely get the jist out of your semi-coherent post.<BR/><BR/><I>and hopefully some smarter rules to encourage domestic savings.</I><BR/><BR/>Seeing as how I never said I opposed such thing, only that I favored regulations to encourage people to save, you fail at responding. Again, and for the third time, actually respond to my point; stop trying to lead off with red herring attack.<BR/><BR/><I>Fun? there's no need to make economics so difficult. several economists and people at the nation (magazine) and other places have seen this coming for months if not years. perhaps we should have been listening to them instead of just waiting for another collapse that you assume we could do nothing about.</I><BR/><BR/>Did they predict that it would lead to a freeze on credit supplied by and between banks? People have been giving warnings, sure - but it's not as if they knew what they were trying to do as soon as the problem started. Hence why there is wide-scale disagreement over whether the Treasury and Federal Reserve's actions are the appropriate ones among economists.<BR/><BR/><I>sure there are some cyclical aspects to the market but major swings and prolonged recessions can certainly be prevented or lessened. how? through careful monitoring and regulation. like it or not regulation helps both the individual consumer and large corporation.</I><BR/><BR/>Notice how I <I>did</I> argue for more regulation in my post, and <I>didn't</I> argue for government intervention when a crisis hits? I'm getting real tired of your distortions, Thomas; next time, answer my actual post when you do instead of attacking me for tangential reasons.Brettnoreply@blogger.comtag:blogger.com,1999:blog-865494184012705718.post-18922077411659088782008-09-30T20:56:00.000-04:002008-09-30T20:56:00.000-04:00We have grown up in a culture that espouses one to not rely on the government to solve our problems but through personal responsibility. It is curious that when a crisis strikes, the first thing we do is turn to the government. I don't necessarily blame the homeowners anymore for buying into bank products that, unknown to them, were faulty (they were great products at the time). On the other hand, I don't believe in the bailout because I believe in the ability of the market to fix itself but I am able to at least pin blame on the industry, and even free-market theory itself. <BR/><BR/>Something has to give, either free-market theory has failed us and we go for the bailout, or we allow the market to work itself out which could hurt people...and in turn they lose faith in the theory. We are at a crossroads. I am quickly finding that I am questioing my views on the market like never before. The exciting thing is that we are in a pivotal time in American history and while it sucks to live through it, it is great to be a part of it.DBhttp://www.blogger.com/profile/01267112937396907790noreply@blogger.comtag:blogger.com,1999:blog-865494184012705718.post-27190035274466753172008-09-30T17:46:00.000-04:002008-09-30T17:46:00.000-04:00brett said,<BR/>"I'm opposed to bailing out homeowners who got these bad mortgages unless they were clearly the victims of predatory lending"<BR/><BR/>typical us vs. them. we are all in the financial ship together like it or not. there is plenty of blame to go around. why not blame the lending companies for simply making bad loans; approving loans for risky clients. sounds like bad business practice to me and im not even talking about predatory loans, just BAD loans. <BR/><BR/>brett said, "past 20 years' worth of debt-financed consumer spending"<BR/>what about 20 years of debt-financed government spending? you really are taking it out on individual consumers. just blame everything (free market collapse) on the consumer. <BR/><BR/>brett said, "unpleasant things like banning subprime mortgage loans and restricting certain money flows." banning subprime loans is unpleasant??? they are named SUBprime for a reason. where on earth do we get the idea that everyone in the US out to take out a loan so they can buy a home they dont need? asinine. let's send everyone to college too so they have to take out loans they can't re-pay because they cant find any jobs because they been sent overseas.<BR/><BR/>brett said, "and hopefully some smarter rules to encourage domestic savings." how about paying people true living wages so they have enough to save and spend. what a novel concept.<BR/><BR/>brett said, "We still don't know exactly what this means, and that's the "fun" of it; you never get to figure out what you need to do to stop a major economic crisis until it has already occurred, in most cases."<BR/>Fun? there's no need to make economics so difficult. several economists and people at the nation (magazine) and other places have seen this coming for months if not years. perhaps we should have been listening to them instead of just waiting for another collapse that you assume we could do nothing about.<BR/><BR/>sure there are some cyclical aspects to the market but major swings and prolonged recessions can certainly be prevented or lessened. how? through careful monitoring and regulation. like it or not regulation helps both the individual consumer and large corporation.Thomashttp://www.blogger.com/profile/08465344493876474902noreply@blogger.comtag:blogger.com,1999:blog-865494184012705718.post-18916808048244400142008-09-30T08:28:00.000-04:002008-09-30T08:28:00.000-04:00An excellent post, Anthony. I'm with you on the personal responsibility issue - I'm opposed to bailing out homeowners who got these bad mortgages unless they were clearly the victims of predatory lending (meaning that the company neglected to tell them they qualified for a regular loan, and pushed the subprime loan on them). <BR/><BR/>The dilemma relates to what David Brooks says in a column in the NYT today; that there is a <B>vast</B> amount of money sloshing around in the international credit and money markets, and when it starts pouring into an economy on the slightest hint of opportunity, it overrides all sense and reason on the part of that country's money managers. The worst thing about it in the US is that it created a severe disincentive against policies that might have prevented this (like a ban on subprime mortgage loans), for fear of jeopardizing economic growth.<BR/><BR/>Since cultural and personal incentives towards savings and domestic sources of capital seem to have been completely corroded due to the past 20 years' worth of debt-financed consumer spending, I suppose regulation will have to serve. They'll have to do unpleasant things like banning subprime mortgage loans and restricting certain money flows, and hopefully some smarter rules to encourage domestic savings. We still don't know exactly what this means, and that's the "fun" of it; you never get to figure out what you need to do to stop a major economic crisis until it has already occurred, in most cases.Bretthttp://www.blogger.com/profile/05741738070067590221noreply@blogger.comtag:blogger.com,1999:blog-865494184012705718.post-16969532297250791102008-09-30T02:35:00.000-04:002008-09-30T02:35:00.000-04:00A mixed economy of socialism and capitalism is not such a bad idea. I don’t understand why some people complain bitterly about social welfare, but insist that something must be done immediately when it comes to corporate welfare. Both social and corporate welfare are needed to some extent because free market capitalism is not a perfect system. The Great Depression proved that.<BR/><BR/>Many Republican politicians are claiming they won’t vote for a taxpayer bailout. These are some of the same politicians who continue to say the market needs to be less regulated (and they have voted accordingly). They stubbornly refuse to fix a problem they helped create.<BR/><BR/>Spending and taxes are not bad things per se. It’s wasteful spending that needs to be reformed. And there is plenty of blame to go around for that. I think a spending freeze would be a disaster in a capitalist society whose market fluctuates on a dime. Just like today’s market dropping 778 points on news that the bailout failed.<BR/><BR/>Like Biden said paying taxes is patriotic. I don’t mind my tax dollars going to bailout someone or something as long as that person or organization is held to some standard of accountability. I would hope someone would bail me out if I were in a crunch (even if I was partly to blame). It’s called social responsibility and it’s what makes the world go ’round.<BR/><BR/>And it’s strange how many Republicans seem so concerned about saving a fetus, but do very little to help the child once it’s born. Hell, they are notorious for cutting childcare programs. It’s also strange how many Republicans seem so concerned about fighting wars but consistently cut funding for veterans.<BR/><BR/>Sorry for ranting.Thomashttp://www.blogger.com/profile/08465344493876474902noreply@blogger.com