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Rosenberg Takes On Obama's Hypocrisy Next
Even as the "banker meeting" is presumably underway (with several bankers bitchslapping the president and joining telephonically), following up on yesterday's thoughts on Obama's most recent rhetorical force majeure, in which he bashed "fat cat" bankers after pandering to their every whim for the entire duration of his presidency courtesy of Larry Summer and Robert Robin, today David Rosenberg shares his thoughts on the so-called Blame Game.
Below we highlight President Obama’s weekly address, in which he blames the big bad banks for luring borrowers into the myriad of products during the credit bubble, a bubble that in our view was promulgated by the nation’s policymakers.
When things go awry, however, it is very easy for those in Washington to point the fingers at somebody else. What did Congress, the SEC, the Fed, and the White House think in that 2002-07 bubble period except that excess credit was creating jobs; in turn, those jobs were creating prosperity and that prosperity led to votes. Now the borrowers, who signed contracts, and as adults should also be held accountable, are being treated as “victims” by politicians and the media.
“Over the past two years, more than seven million Americans have lost their jobs, and factories and businesses across our country have been shuttered. In one way or another, we’ve all been touched by the worst economic downturn since the Great Depression.
The difficult steps we’ve taken since January have helped to break our fall, and begin to get us back on our feet. Our economy is growing again. The flood of job loss we saw at the beginning of this year slowed to a relative trickle last month. These are good signs for the future, but little comfort to all of our neighbors who remain out of a job. And my solemn commitment is to work every day, in every way I can, to push this recovery forward and build a new foundation for our lasting growth and prosperity.
That’s why I announced some additional steps this week to spur private sector hiring. We’ll give an added boost to small businesses across our nation through additional tax cuts and access to lending they desperately need to grow. We’ll rebuild more of our vital infrastructure and promote advanced manufacturing in clean energy to put Americans to work doing the work we need done.
And I have called for the extension of unemployment insurance and health benefits to help those who have lost their jobs weather these storms until we reach that brighter day.
But even as we dig our way out of this deep hole, it’s important that we address the irresponsibility and recklessness that got us into this mess in the first place. Some of it was the result of an era of easy credit, when millions of Americans borrowed beyond their means, bought homes they couldn’t afford, and assumed that housing prices would always rise and the day of reckoning would never come.
But much of it was due to the irresponsibility of large financial institutions on Wall Street that gambled on risky loans and complex financial products, seeking short-term profits and big bonuses with little regard for long-term consequences [emphasis added]. It was, as some have put it, risk management without the management. And their actions, in the absence of strong oversight, intensified the cycle of bubble-and-bust and led to a financial crisis that threatened to bring down the entire economy.It was a disaster that could have been avoided if we’d had clearer rules of the road for Wall Street and actually enforced them.
We can’t change that history. But we have an absolute responsibility to learn from it, and take steps to prevent a repeat of the crisis from which we are still recovering.
That’s why I’ve proposed a series of financial reforms that would target the abuses [emphasis added] we have seen and leave us less exposed to the kind of breakdown we just experienced.
They would bring new transparency and accountability to the financial markets, so that the kind of risky dealings that sparked the crisis [emphasis added] would be fully disclosed and properly regulated.They would give us the tools to ensure that the failure of one large bank or financial institution won’t spread like a virus through the entire financial system. Because we should never again find ourselves in the position in which our only choices are bailing out banks or letting our economy collapse.
And they would consolidate the consumer protection functions currently spread across half a dozen agencies and vest them in a new Consumer Financial Protection Agency. This agency would have the authority to put an end to misleading and dishonest practices of banks and institutions that market financial products like credit and debit cards; mortgage, auto and payday loans [emphasis added].
These are commonsense reforms that respond to the obvious problems exposed by the financial crisis. But, as we’ve learned so many times before, common sense doesn’t always prevail in Washington. Just last week, Republican leaders in the House summoned more than 100 key lobbyists for the financial industry to a “pep rally,” and urged them to redouble their efforts to block meaningful financial reform. Not that they needed the encouragement. These industry lobbyists have already spent more than $300 million on lobbying the debate this year.
The special interests and their agents in Congress claim that reforms like the Consumer Financial Protection Agency will stifle consumer choice and that updated rules and oversight will frustrate innovation in the financial markets. But Americans don’t choose to be victimized by mysterious fees, changing terms, and pages and pages of fine print. And while innovation should be encouraged, risky schemes that threaten our entire economy should not [emphasis added].
We can’t afford to let the same phony arguments and bad habits of Washington kill financial reform and leave American consumers and our economy vulnerable to another meltdown.
Yesterday, the House passed comprehensive reform legislation that incorporates some of the essential changes we need, and the Senate Banking Committee is working on its own package of reforms. I urge both houses to act as quickly as possible to pass real reform that restores free and fair markets in which recklessness and greed are thwarted [emphasis added]; and hard work, responsibility, and competition are rewarded — reform that works for businesses, investors, and consumers alike. That’s how we’ll keep our economy and our institutions strong. That’s how we’ll restore a sense of responsibility and accountability to both Wall Street and Washington [emphasis added]. And that’s how we’ll safeguard everything the American people are working so hard to build – a broad-based recovery; lasting prosperity; and a renewed American Dream. Thank you.”
As a long-time reader of our research and valued friend told us over the weekend, “he [Obama] finally threw the banks under the bus”. While not suggesting the adjectives are undeserved, I am afraid that the U.S. President has invited all consumer borrowers, creditworthy or not, to abdicate their financial responsibility. We now have borrowers as victims.” Ain’t it the truth. And the consequences will be profound. Our friend reminded us that in regard to our theme of “frugality”, the current reality is that “frugal” represents just the first wave in a fundamental change in behaviour towards complete self-interest and risks morphing into something a little more troubling, such as abdication of individual responsibility.
Meanwhile, the adjective used to describe the banks and their actions, were, in a word, scary (and if you want more on ‘scary’, read the WSJ assessment on Obama’s appearance on the television show 60 Minutes yesterday — talk about being completely out of control and inciting divisiveness — see Obama’s Slams ‘Fat Cat’ Bankers). This backlash against the banks, whose behaviour was condoned by the government when the credit and housing bubble was in full swing, is surreal.
As we said, the media has no problem in running articles that complain about the lack of credit being extended by the evil banks, even though it was excess debt taken on by a profligate consumer that got us into this mess to begin with. The front page of the Sunday NYT runs with Rates Are Low, But Banks Balk at Refinancing. Basically, 60% of mortgage borrowers carry interest rates that are above the current market cost, but refinancings are still down 57% from year-ago levels because the banks have battened down the hatches on their lending guidelines; “The plight of homeowners has become a volatile political issue”, according to the NYT. Well, that’s probably not the case for the 30 million Americans who own a home with no debt or the countless others who have a mortgage but also know how to live within their means. The article says “the banks that once handed out home loans freely are imposing such restrictions that many homeowners who might want to refinance are effectively locked out.” So, because the banks lent freely in the recent past, and this excess was at the root of today’s problems, then the banks should go back to those days of reckless lending behaviour.
The media has no problem in running articles that complain about the lack of credit being extended by the evil banks
Come again? Nowhere in the article is there any reason provided as to why the banks are “stricter” — maybe it has something to do with the amount of equity the borrower has in his/her house, or what his/her credit-rating has been cut to, among others. The way the media and politicians are portraying the situation is that it is every citizen’s god-given right to have credit. This is amazing. We aren’t exactly recommending a return to Calvin or Kant puritanical behaviour, but what we are seeing unfold right now is very disturbing.
We continue to stress that everyone read that front page article from Thursday’s WSJ, which was absolutely disgusting — titled American Dream 2: Default on Mortgage, Then Rent. The word “and Spend” should have been in the title too — consumers are no longer paying their mortgage and using the funds for other things like trips to amusement parks. This is now seen as being a totally cool and appropriate thing to do — stop paying your mortgage and go have fun.
It’s the lender who will end up being screwed, but nobody cares about that faceless bank, right? The tone of the article, and this is the Wall Street Journal we’re talking about, sent chills down my spine — no concern at all about the growing ability and willingness of consumers to walk away from their financial obligations. And certainly no remorse by those quoted in the article who have defaulted and left somebody else holding the bag. It may very well be this “tacit approval” of such irresponsible behaviour that will end up crippling banks’ ability and willingness to extend credit in the future, because we have news for the President: being public companies, the lenders’ fiduciary responsibility first and foremost is to their shareholders, not deadbeat debtors.
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1st smart thing the fat cat bankers have done: bitchslapped Obama by being late to his meeting. Props.
"...no concern at all about the growing ability and willingness of consumers to walk away from their financial obligations. And certainly no remorse by those quoted in the article who have defaulted and left somebody else holding the bag."
This has been a meme here that keeps getting more attention. I expect people (Main Street) see this hypocrisy, and are understanding that leaving them (Banks) holding the bag is not a moral but business decision. As much as I expect the "moral" argument to come up, it's mooted by the lack-of-good-faith in the transaction to begin with.
I don't expect it to get better either until the "proper" heads roll. Mr. Tosh is right, "I don't want no peace. I need equal rights and justice."
I appreciate the clarity of thought that went into this essay.
I'm glad people are proclaiming both their constitutional rights as well as their obligations and legal responsibilities.
Thanks Tyler! :-)
All of a sudden everyone's assigning blame. Gee, last I checked it was a clusterf%^k of biblical proportion, with consumers, banksters/brokers, media, politicians at EVERY level of government, ratings agencies, GSE's, regulators, big business, Main Street, all piling onto an orgy of greed, arrogance and excess. Plenty of blame to go around folks... there weren't many who didn't partake of the gluttony (and unfortunately, as always, the ones who DIDN'T will be the ones who take it up the ass the furthest).
True, but you have to admit that the current administration is leading the way by first incessantly blaming the prior administration, and now by "throwing the bankers under the bus".
Our friend reminded us that in regard to our theme of “frugality”, the current reality is that “frugal” represents just the first wave in a fundamental change in behaviour towards complete self-interest and risks morphing into something a little more troubling, such as abdication of individual responsibility.
Is it no small wonder that in the full realization of what the policy of Judicial Exclusion means for greater society the concept of personal responsibility must follow. For those of you who may happen to be confused, I leave you with this.
“Crime is contagious. If the government becomes a lawbreaker, it breeds contempt for law; it invites every man to become a law unto himself; it invites anarchy.” - Louis D. Brandeis
Extremely lopsided analysis tinged with self righteousness; not helpful, not true.
Mainly just not honest, don't you think? Making a mountain out of molehill of a few people being irresponsible. As Miles points out, crime is contagious. Deadbeats are indefensible, but the fact is, the total "obligations" the banks walked away from, leaving someone else holding the bag, are in the trillions, exponentially greater than the loss on the mortgages of a couple hundred idiots who have killed their credit rating for 20 years by defaulting. And some of those losers may be going to amusement parks, but the bankers dumped their bad bets and flew off to one of the islands they bought with the billions they skimmed off the top of the fraudulently rated CDO and CDS Ponzi scheme they built over the past 7-10 years. None of that money was deserved.
Rosenberg's just pumping out disinformation to mis-direct people's anger.
Mortgages are secured loans. The banks don't get "screwed" - they get the collateral they (unwisely) deemed to be sufficient. Cry me a river.
Except that Barney Frank, Dodd and Obama (through Acorn) used arguments and policies for "social justice" and "diversity" to force those banks to lend to underqualified borrowers. Then the said same appointed their cronies to run Fannie and Freddie and allowed them to run up hundreds of billions on the taxpayers tab.
The negligence lies first and above all with the Democratic party.
Well, if the banks are losing money from not getting repaid on these mortgages (and credit cards for that matter).
Why then are these CEO's, executives, mgt, and bankers paying themselves billions in record bonuses? More money than every before in the history of the country during this depression.
Hmmm?
Here is the truth.....People dont give a shit anymore about their credit score, paying their bills on jacked up high intrest rate cards, or being hostage to the games that are played on Wall St and in DC. So lets call it even. We wont borrow from banks or use credit anymore, and you can pay yourself all the money in bonus and salary that you want( without using taxpayer money). We will see who needs who more. People have waken up. People are at the point where its better to tell your credit card company, any unsecured loan, and even your mortgage lender.....to fuck off.
Walk away from your debt and be free. Screw the banks and credit cards, foreclose on your house that has plunged in value, and file bankruptcy.
You will then be FREE from the matrix. Credits not coming back for years and years. So to pay your loans in hopes of getting credit exttended to you sometime down the road is just plain stupid. Take al lthe money you were going ot spend on interest and minimum payments and stick it under your mattress and watch it grow and grow.
"Why then are these CEO's, executives, mgt, and bankers paying themselves billions in record bonuses?"
Unless you are a shareholder of these banks, it just does not matter how much they pay in bonuses. If you are unhappy the government has thrown money at the banks, petition your government representative to stop giving them money.
The populist rants about anyone's pay is a symptom of the growing socialist movement in the country. Everyone one now wants things to be more equal - and I thought we defeated that form of government that tried to do that.
A smart and balanced essay. The usual analysis has degenerated into a Good Guy-Bad Guy narrative that fits a dramatic form (no one does this better than Taiibi), and of course The Little Guy is more appealing as a hero than a Banker/Bankster. Of course the bankers are "greedy." The goal is to make money. I also assume that if lending is a core business, they would lend if (a) the balance sheet is in okay shape re: reserves [often not the case now] and (b) they can find qualified borrowers with decent collateral. The fault, as Rosenberg points out, is on both sides: irresponsible borrowers and lenders who abandoned all sense of lending standards, egged on by corrupt ratings agencies. So Obama can be as hortatory as he wants, but they're not going to lend if the profit edge does not exceed the profitability of borrowing at zero and playing the stock market and taking the Fed's free ride. I think the big banks will just wait till the last of the dodgy loans has gone splat,those with the shorter-term ARMS, and then we'll know we're at bottom.
Agreed - greedy lenders met equally greedy borrowers and a mess ensued. Let the borrowers and lenders work it out without government assitance and direction. Too bad about the pain. If you are low leveraged, you are skating through this mess just fine. Nobody forced anyone to borrow or lend money. Live by the obligation you signed.
So true! Rosenberg's analysis is of the kind that while you might disagree with - you have to respect. Unlike Tabibi's sensationalist rubbish. I guess that's the difference between a scientific approach and journalism
Take yourself out of the system and walk away from ALL your credit cards and bills. After you file BK and then start saving cash like crazy.....do everything you can to not pay for these bailouts via your taxes.
Do everything you can to avoid being taxed like crazy. Rent your home dont buy (no property tax for you personally), etc etc.
PEOLE ARE DONE PLAYING THESE BS GAMES. THE MOVMENT TO WALK AWAY ON ALL YOUR BILLS IS JUST GETTING STARTED. ITS THE CONSUMERS WAY TO SAY 'F YOU WALL ST AND F YOU DC". WE ARE DONE BEING PAWNS IN YOUR GAME. WE ARE SICK OF HEARING ABOUT BANKERS AND BONUSES. WE ARE SICK OF THE COPORATISIM THAT SPEWS OUT OF THE GOVERNMENT. WHEN THERE ARE NO JOBS AND NO OPPORTUNITY FOR THE PEOPLE, YOU CAN SHOVE YOUR MONTHLY STATEMETNS UP YOUR ASS.
WE ALL KNOW THE GAMES BETWEEN YOU AND DC AND WHAT YOU TELL THE AMERICAN PEOPLE ARE A BIG PONY SHOW. ONCE AGAIN, SHOVE IT UP YOUR ASS.......WE ARE NOT PAYING.
And despite what I wrote above, I think this is a principled stand and I agree. There's no citizenship requirement that you get involved in all this crap at all, and as more people proceed this way, by choice or necessity, the game will begin to change drastically.
The bailout of the banks is easily cured by a 2 yr bonus tax. Walking away from an obligation without financial hardship is wrong. No one forced anyone to take out too much debt versus their income - again, financial hardship reasons aside.
I am telling you. This Obama sudden anger towards bankers is only a study or balloon of the White House to study the writings of MSM (if any) on O's role in the financial crisis.
The premise behind financial deregulation was that big financial institutions would manage their risks, and not engage in fraud, to protect their long term reputations. They did both (mismanage risk, and engage in fraud). This is where the blame belongs. Regulators were asleep, because they chose to be asleep, on ideological grounds. Government should properly take the blame for this part, but once it does, the deregulate at all cost philosophy must be ditched.
In my book, Obama is hypocritical because he is a Wall Street lackey in practice, making now populist noises as he is beginning to realize the degree of political damage he has suffered. He is working on his next bait and switch.
Finance economy must be reined in, if the real economy is to recover. Until this is understood and practiced, we are going nowhere.
Yes. The mortgagers were willing to lend money to basically unqualified and high risk borrowers because they KNEW they could pawn off these loans to OTHERS with the aid of phony agency ratings on the debt. They just wanted their fees and BONUSES.
When this high risk debt started to default, the mortgagers got stuck. And those derivative insurers got stuck. Then they got BAILED OUT. They didn't get JAILED out The phony ratings agencies didn't get JAILED OUT. It was blatant fraud!
The government bailed out these fraudsters. Why? Payback for all those campaign contributions.
And what do the ethical people get for paying their bills. Laid off.
Everything you say is true, but isn't Rosenberg's point that the borrowers volunteered to be victims, and without them the game couldn't have gotten started? So as the commenter said above, it's a culture-wide problem of believing you get things for nothing and we're entitled to live beyond our means. Our "non-negotiable" standard of living turns out to be pretty negotiable, and subject to severe mark-down.
Not the borrowers. The people who bought these MBS packages were defrauded. Like your pension fund, for example.
If the smartest guy in the room tells you it is in your best interest and you are an unsophisticated person financially might you not just go ahead and do it?
http://www.usatoday.com/money/economy/fed/2004-02-23-greenspan-debt_x.htm
Hopefully David Rosenberg's moralistic rant doesn't reflect his true economic judgement. The bankers fed the bubble. Without the bankers writing $700k mortgages to strawberry-pickers in Salinas,CA, there would not have been a bubble. I have friends who just wanted a house, and didn't want to get priced out of the SF Bay area who had little choice but to feed the bubble. As far as I'm concerned, all the bankers, "regulators" and politicians who watched this thing inflate out of control deserve to be on the streets, looking for a real job (janitor?).
I assume Rosie isn't worried about the mortgage on the house he bought 20 years ago. As for the people who bought into the bubble, the only sensible thing is to walk away. They've been conned, and they should feel no obligation to pay off their fraudulent debts.
"I have friends who just wanted a house, and didn't want to get priced out of the SF Bay area who had little choice but to feed the bubble." WHAT THE HELL KIND OF THINKING IS THIS? OF COURSE THEY HAD A CHOICE!
A man should always pay his just debts. Be careful before you sign the paper from the "greedy banker".
There is a LOT of blame to go around. All you greedy bankers who contributed to all of this: you are likely to pay big.
The regulators and the rest of .gov are at risk of tax rebellion. Would serve them right, and put them on notice that we the people (or at least are supposed to) run the country.
And YOU want to be my latex salesman...
The reason those houses ran up to $700K was because the Democratic party was forcing the banks to lend the money in the name of "Social Justice". Everytime the government gets involved in private industry, they end up breaking it, as we see here. The housing bubble, like most of the ones before it, were the result of government meddling.
Need to check out Max Keiser's latest interview with William Black (www.maxkeiser.com):
1. Take any kind of limits off of risk management or any other factors that constrain a lenders ability to make loans.
2. Lenders pump out massive amounts of credit generating huge short term profits in the process.
3. The top officers pocket massive bonuses off short term revenue growth.
4. The Ponzi finance scheme when all the bad loans finally default. However, those at the top make off like bandits.
White collar crime convictions from the S&L crisis: > 1000
Number of white collar convictions to date from current crisis: 0 (if you exclude Madoff who turned himself in).
This isn't about personal responsibility. This is about extending credit to people who should not have had it in the first place. The whole process was rife with fraud from the gitgo from the rating agencies (AAA MBS debt) to low doc/no doc mortgages, to lenders pressuring real estate appraisers to give high end appraisals to inflate loan amounts and consequently fees.
No, the free market will take care of this. It's called bankruptcy. Lots of folks will get burned, but more importantly, we need prosecutions for the wrongdoers at all levels of the Ponzi scheme fraud.
Is a bank who lent money under government pressure to a minority homeowner who received a mortgage on more house than he could pay for in the name of "social justice" any more "fraudulent" than a government that gives a job to an underqualified member of a minority in the name of "affirmative action"?
If everyone decides at once, hey fuck wall street and fuck the banks. Then wall street and the banks will be fucked. A rant about how mistaken the public are as they slavishly follow Obama and the MSM won't change their opinion. Nor does it show any real understanding of the problem.
Citizens have zero responsability to pay money back at any stage, more fool you all for thinking this was ever not the case.
Obama/Bernake's mistake was in not giving all that money to citizens as stimulus to pay back debt and keep the economy floated. After all our citizens are much more deserving of a bailout or assistance for their individual mistakes, rather than a company which by definition should fail and close for being insolvent. Obama is just cranky he gave it to Wall street.....and they did exactly what he should ahve expected.
The fault is on both sides, and in tragic fashion, the government has set a bad example by embracing moral hazard from the get-go.
The Obama Administration had the ability to stop and reverse this policy on the very first day in office. No only did they not do so, they made the veil of secrecy even more opaque so that banks could "earn their way" out of this mess. All the while, they preached of an era of "greater openness and accountability".
Hypocricy is thick in this administration-- and getting thicker by the minute. The general public started catching on very early that rhetoric didn't match action. Now the "little guy" is wanting a little piece of his own pie by sticking it to the "big guy", because the "big guy" is getting backstopped by Big Government. Wow... fathom that.
The bottom line is lack of trust-- and this Adminstration the had American public's trust in bunches only a few months ago. It's amazing how quickly they've frittered it away. But when you make bad choices at on your economics team and create catch phrases that can work against you (change you can believe in) when actions don't match words-- well, I really cannot sympathize.
Failure to liquidate the insolvent banksters, failure to implement real insurance, and more importantly entitlement, reform, failure to end the madness of foreign adventurism, is a failure of the tough over the easy and the truth over the specious.
I am a fierce social liberal (and fiscal conservative.)
Mr. President you are losing my faith and you are losing my vote.
And Barry, if you're losin' me, you are down deep in the hole my friend.
The time will come when you will have to make a choice Mr. Dunham, will you be schooled and do the right thing or will you just ask for a bigger shovel?
Choose wrong and a demagogue like the Manchurian Mountain Mama might just have a shot of taking you on and winning.
If Palin gets in even the most avowed liberal would award Incurious George the Nobel Prize in comparison.
Just wondering, who is in the mainstreet class?
I know when Obama says fatcat bankers he is refering to the ruling class.
But mainstreet, when this term is used does it refer to the homeless, umemployeed, the working class, the middle class and the upper middle class ?
or is mainstreet the middle class and we are not even talking about the working class and below ?
Sounds like people not paying their bills is a "too big to fail" situation, just as much as the banks were last year. Time for a citizen bailout. Of course, suddenly we hear about all these bad immoral defaulters.
When the big guys do it (whether it's violence, corruption, defaults etc) it's business as usual. When it's the little guy doing it, it's always a Christian/Protestant moral issue.
We The People need to cut our own puppet masters' strings. Free at last.
+1
Obama's comments speak more to his approval ratings and far less to his relationship with the largest money center and investment banks...
Banker meeting done
Bank stocks go parabolic
Obama's a tool
Fog rolls through New York
Lord Blankfein stifles a smirk
God's work continues
that was excellent! much better than mine.
humbly deadhead bows
tip e bows even deeper
all haikus equal
why not commence a civil RICO action if there really is a pattern of collusion and fraud?
my reading indicates an action would be hard to defend, though unlikely to succeed. but at least it could enable discovery of evidence.
and what if it did succeed? oh bliss
Why should it come as a surprise that the people who gamed the free credit system would also game the default charade? Effectively what we have is exactly what we were supposed to have, a circular transfer of wealth, which inevitably leads to indentured servitude (think robert e. lee wilson selling shovels for more than the hobos could make digging ditches on his property)
First, loan money to everyone regardless of their ability to repay. Concurrently with the First (probably before), ensure the lending institutions pose systemic risk. Second, have debtors default , causing the threat of systemic risk should the creditor institutions actually have to eat their loans. Third, bail out creditor institutions regardless of cost. Fourth, in order to pay for the newly created debt, increase taxes on the most wealthy persons and entities (STICK IT TO THE MAN! YEAH!). And then, after the fact, Fifth, figure out the wealthiest people are going to find new ways around the porous tax code and/or due to the depression are absolutely unable to foot the bill. Then Sixth, stick it to the idiots that defaulted and their middle american counterparts, children, and grandchildren who do not have the means and/or desire to either A. game the system or B. move to another country.
And even later, seventh, finally whittle down the size of government, selling properties and transferring jobs to the private sector, if available (see california). And, the final act, Eighth, have private enterprise re-establish itself without a vast amount of our previous safeguards/shackles and re-enter the era of limited government + robber barons and/or foreign private actors... a new era of indentured servitude and little if any assurances.
I hope you like to see dirt on peoples' faces... might even be yours one day. But, long story short, somehow, somewhere, someone eats the turd... and if you think drawing up big credit and defaulting is only going to fall on someone else, you're wrong.
cute - this jumped right off the page.
"But even as we dig our way out of this deep hole,"
straight from our fearless leader. we'll just keep digging
'til we get to China, and then we'll just steal all our $$ back! problems solved, what a plan. I LOVE IT. american ingenuity will once again save the day. I'm JUST so PROUD to
be an AMERICAN.
Greenspan, Bush and their cronies created this mess. O and his team averted a major crises. Martin Wolf in the FT is absolutely right in his view that Bankers is just a team of Oligarchs that got a special license from the government to print money...no skill (alpha) is added between now and March 2009...hence now bonuses should be paid. Now that is why Brown, Szarkosy and now Greece are taxing these "fat cat bonuses" with 50% to 90% taxes. Give us that O...
"Greenspan, Bush and their cronies created this mess. O and his team averted a major crises."
O and his team didn't avert squat, in case the double-digit unemployment, credit contraction, skyrocketing mortgage/default foreclosure ratios, and cliff-diving tax receipts at all government levels escaped your notice. They merely kicked the can down the road in the hopes that the economy would magically recover on its own and they could use their BS "stimulus" as a lever for re-election. It had nothing whatsoever to do with saving the economy.
All the trash loans and moral hazard that helped create this crisis is still out there, and Obama enabled it by not just voting for TARP last year, but authorizing the rest of the funds to be released. He also didn't lift a finger during his time as Senator to introduce legislation that would increase oversight and regulation of the mortgage market. Stop making excuses for him.
"the media has no problem in running articles that complain about the lack of credit being extended by the evil banks, even though it was excess debt taken on by a profligate consumer that got us into this mess to begin with."
Until the dumbasses in charge realize just how wrong this line of thinking really is, they can and should expect much more of the same.
The problem isnt with the deadbeats who took free money. Anyone with more than two functioning brain cells knows that offering free money to freeloaders is financial suicide. The enablers, the people who thought it was a good idea to give free money to people THEY KNEW could never in a million years pay it back, they are the ones who are responsible for the mess they are in. Or, if thats not true, are we supposed to believe the billion dollar bonus babies are all functionally retarded?
We know know why CBS canceled "As The World Turns." It turns out that all the writers were needed to assist the White house with the poor acting & scripts currently being delivered. Rahm has it figured out that his man needs acting skills like Reagan to be popular once again.
I'm gonna repeat this again,
"Anything too big to fail is a sovereign state".
The only way to break up a sovereign state is to go to war.
Nemo
self-evident.org
If you are a fiscal conservative, then I say to you: We are bankrupting our nation.
If you are a social conservative, then I say to you: Oligarchy is not a family value.
If you are a liberal, then I say to you: Breaking them up is the only answer.
If you are a “moderate”, then I say to you: The status quo is a disaster waiting to happen.
If you are a populist, then I do not need to say anything.
If you a libertarian, then I say to you: These firms are corporations with the power to tax.
Pay the man Shirley.
with who young Spartan??? are you going to march up to 85 Broad?
the only way to win is to organize the monetary behavior of the masses. If people began creating their own local lending shops at low interest rates and these same people were honest about not overspending and paying back on time, then we could break away from their power... but there are way too many quickbuck scammers that would destroy and default all over that
there is just not enough honest people around to take the power back
GS and the government "...are swimming in the same boat..." :-)
See article in FT Alphaville below
http://ftalphaville.ft.com/blog/2009/12/14/111296/goldmans-collateral-da...
Musical Interlude:
http://blog.youwalkaway.com/?p=471&source=patrick.net
12 Months of Default (song to the tune of the 12 Days of Christmas)
That WSJ article, as msm usually does, posted the most sensational quotes. People who are walking away from their homes are not doing it so they can buy BMWs and go to Disnelyland. I'm sure some do. But let's not assume that two idiots represent the normal American worker. I'd bet that if a scientific poll was taken that the top reason for walking away would be "to start saving money" (instead of being house poor and living paycheck to paycheck).
The guys who were having 10 houses built with no intention to rent or occupy own some blame for sure. Those guys got wiped out long ago. Some people over extended themselves with second mortgages or overextended on their original purchase. They know that and like to say everyone else did the same thing. "I'm guilty and so is everyone else". Huge pay cuts, long term job loss and previously unheard of depreciation in house values have victimized the rest. I don't see how anyone in their right mind can dispute this.
I'm so sick of people blaming the banks or consumers. If free market forces were allowed to work Interest rates would have risen before the housing bubble got out of control and if the government wasn't involved in the housing market the banks wouldn't have had to compete with government sponsored mortgage companies. It is very simple but everyone is believing the government blame game because the government doesn't want people to know that they along with the federal reserve were responsible for this. Fraud is a different story and Moodys, GS, etc. deserve to be punished for fraud but they did not create this crisis. The government and the fed did.
yada yada, "its the corrupt governments fault"..."If only capitalism were allowed to work as its supposed to, uninterfered with by human greed". Yada yada. Its always someone elses fault isnt it? Capitalism is not exactly a kinship system now is it? Greed is pretty much part of the its faustian bargain and you will NEVER get a proper functioning captitalism because THERE IS NO SUCH THING BY ITS VERY NATURE. Its every man for himself in this system a la adam smith and we are going to see that idea now reverse on us for what it is. No way to live.
I am soooooo sick of people blaming governments for the ills of society. The government are only ever a reflection of the society they emerge from. We need a new way to live, and it has to be thinking of each other in every thing we do, not just every man for himself trying to make a million or whatever.
So you agree with me then. If you say that government is a reflection of society and the solution is for society to change then government would change as well. Thank you.
yada yada, "its the corrupt governments fault"..."If only capitalism were allowed to work as its supposed to, uninterfered with by human greed". Yada yada. Its always someone elses fault isnt it? Capitalism is not exactly a kinship system now is it? Greed is pretty much part of the its faustian bargain and you will NEVER get a proper functioning captitalism because THERE IS NO SUCH THING BY ITS VERY NATURE. Its every man for himself in this system a la adam smith and we are going to see that idea now reverse on us for what it is. No way to live.
I am soooooo sick of people blaming governments for the ills of society. The government are only ever a reflection of the society they emerge from. We need a new way to live, and it has to be thinking of each other in every thing we do, not just every man for himself trying to make a million or whatever.
"We need a new way to live, and it has to be thinking of each other in every thing we do, not just every man for himself trying to make a million or whatever."
The problem with this statement is that if I am "just for myself", I don't need you. But you think you have the right to run my life in the name of "a new way to live".
Why don't you just fuck off and leave the rest of us alone!
Indeed, deflation or inflation, this ends with the death of the US dollar.
Lets hope we don't allow them to bring in the Amero, or some other currency they are just waiting to unveil.
What I don't understand is all the people who genuinely believe that self-interest and short-sightedness caused this crisis, and is what is making the crisis worse as we speak. The idea then, would be to get people to stop being self-interested and short-sighted (the politicians/bankers).
But WHAT IF IT WAS NO ACCIDENT. What if there is a concerted effort to ruin the currency and ruin the country? Can we still turn things around by hoping the politicans/bankers come to their senses? The answer is no.
Civil war/revolution is the only answer.
People have to stop thinking that this was all an accident. The global economy has many implications including the loss of national sovereignty. EU is the framework and hegemony over the US for the years to come. Not the other way around.
total BS - companies walk away from their 'obligations' all the time.. does this guy want a 'riskless' public? Once they bailed out the banks, everyone's moral standing went to shit
Has Rosenberg lost it? Ya can't screw the pooch like this, without a team effort. At least one other party has to hold the dog or taxpayer.
Individual responsibility? First, we would have to publicly reinstate it, so everybody could see what it looks like. Then we could shirk it. If it ever appeared, Wall Street and the entire Beltway Bubble would break out in hives. There's no reason to be individually responsible, unless you end up on YouTube. It hasn't gone unnoticed that you can fhukk up an entire country or financial system, AND/OR get people killed, and you still get to be in charge. Not because you were an "adult", but because you weren't anything like one.
And is there somebody left in the room who is still in doubt about the timing on the Administration's position. I have to admit they were so busy sport punkin' progressives they lost track of the calendar approaching the Year of the Goat and Voter. Regretfully, it it is an inconvenience for them to have to spend a year pretending they actually give a chit about vanishing withholdings.
Rosenberg, don't fret yourself. A year of political food fights and seamy promises, and we'll be right back to massive memory losses, and the rabble as the sole proprietors of the slings and arrows of outrageous "responsibility".
Best first post ever.
I beg to differ with Mr. Rosenberg. Even if we are to believe that consumer share the blame here,but their portion is not as high as it is with the banx. ordinary citizens are a lot less finacially sophsticated than banx. One can argue that even banx are riddled with incompetent or corrupt people. Well exactly,they shouldn't be. Isn't that where every ordinary person has been programmed to think over the years?that banx are the last fortress of trust?. And if a banker tells you that you can make it,then most will honestly believe that?. I recall an article in a local paper about a young couple. the wife was so interested in a deal on a home where the couple will end up paying close to a million dollar total for a house that worth aabout one tenth of that, through some of the mumbo Jumbo ponzies. The young woman wanted to buy so bad,but only because they have hired a lawyer who knows them well,she stopped according to his advice. Simple;she honestly thought that they can make it. And what about corporatios?Their balance sheet have beem preyd upon by big banx for the longest time. Now here one can argue that corporation are not as much victims,since they are much more sophosticated than ordinary investors(or at least they should be).
As I have said time and time again, it will not be the banks holding the bag from these walk aways but rather the US taxpayers. The Government owns Fannie and Freddie and who do u think guarantees all that risk? Obama is just doing what he said he was going to do all along, spread the wealth - or in this case the pain. We elected a irresponsible crybaby .
The typical home loan is non-recourse, i.e., if the borrower defaults, the lender's only recourse is to foreclose on the property. Absent fraud by the borrower AND a complete absence of fraud on the part of the lender (i.e., banks giving out stated income/no-doc loans have no fraud action, since they should have known and would have with reasonable inquiry), there is no recourse to a borrower's other assets, or ability to garnish future wages or other income.
This means that the home mortgage is a business contract, and not a moral document. The borrower has two choices -- pay in full and on time, and have the benefit and responsibilities of ownership and the right to all appreciation of the asset; or stop paying, hand title back to the bank, and take whatever hit to one's credit rating comes. Both choices are perfectly legal and moral. The whole contractual arrangement leaves it in the hands of the borrower to decide whether to default or keep paying.
When dealing with business contracts, we should leave morality out of it. All the morality one needs to consult, is contained within the four corners of the mortgage documents. The walk-away option is perfectly legal, and it is contemplated in the typical mortgage contract by spelling out the consequences of failing to pay the mortgage.
The banks are now rightly tightening the criteria for credit. But the natural consequence of that is that people who owe twice what a house is worth, are going, eventually, to walk, when they see new neighbors coming in who are paying half what they are for the same house. We should just let all the credit chips fall where they may, so that we emerge from this financial crisis a more frugal nation, and also one with less debt (including governmental debt).
Inept nation - inept leader
Dang, Rosie has really stepped it up lately. Glad to see one semi-mainstream economist not holding anything back. I guess being back in Canana now, he doesn't have to worry about any of Washington's hastily passed punitive taxes on bankers. Thanks, Tyler.
The lender got screwed? What a joke! How many fees did they pocket as they loaned then packaged then resold the debt.
Then got the taxpayers to bail them out so they could sweep in with borrowed money and pick up the distressed properties for a song.
Moral obligation? Corporations walk away from agreements all the time if its not in their financial interest.
I here a tiny violin playing.
The lender got screwed? What a joke! How many fees did they pocket as they loaned then packaged then resold the debt.
Then got the taxpayers to bail them out so they could sweep in with borrowed money and pick up the distressed properties for a song.
Moral obligation? Corporations walk away from agreements all the time if its not in their financial interest.
I here a tiny violin playing.