Brian - Regulation got us into the mortgage mess. Please spend some time reading about CRA and the impact that ACORN has had on forcing the issue. CRA, in addition to Clinton's position of removing redlining, has caused a vast majority of the mortgage problems. I know you don't like to hear that, and I know you'll also say "you got that from talk radio," but hey, it's the truth. The Dems knew it was a problem, they refused to fix it when republicans tried. That's public record. Some republicans are complicit, yet, but the majority of the problem is the refusal of the dem controlled banking committee to remove the CRA regulations and hold FM/FM to the same standards as any bank (one could argue this is increased regulation, or one could argue it's the reversal of a "special" regulation.

Paulson, Benanke should have been fired a long time ago. They are worthless, weak and incredibly stupid. Bush called for reform 17 times in the last three years, yet he supported this mess. I'm not sure where his head is at, but it's definitely not on free markets.

Free markets work. Don't fall into the George Soros position that gov't must regulate more and more and more. He'd have all of the banks gov't owned if he has his way.

What needs to be regulated, if anything, is the friggen federal gov't. And we voters have done a piss-poor job of regulating anything.

Quadrillians? Not that much money out there, Brian.

Listen, I'm no socialist democrat. I'd be first in line to blame Barney and Pelosi and clinton if I had half a chance. The fact is, the problems with the mortgage market can be rest at the feet of both parties. But more importantly...and you really need to understand this...the mortgage crisis is NOT the problem. It was the cataylist for a much wider, far reaching problem, in that as confidence was lost in one finacial sector, and banks began to freeze up, it had a snowball affect on the rest of the financial market, which was just as F-ed up as the mortgage market. Hence the hundreds of trillions of derivities with no backing whatsoever. What we have here is mother of all investor panics, throughout the world, across all sectors.

Trust me, this is be known by future historians as the Great Panic of 2008. And it's nowhere near over.



Reform was not possible once the bubble began. The problem got too large too quickly. The reason there was no reform is that root of the 3rd and last bubble that kept us out of the collaspe we should have gone through in the 1970s, was cheap and stupid mortgages. They were deathly afraid of housing prices collasping the moment mortgages became too hard to obtain. Once investors got spooked, as cheap mortgages were no longer enough to keep housing prices inflated and people began to default and the market closed off mortgages on its own, it was too late.

The bottom line is no matter what, we'd have ended up where we are today. It just a matter of how bad it would be in the end. The only real solution would have been to allow us to go into a major recession or depression back in the 1970s, 1990s or early 2000s. Then we could have made a fresh start under far better economic conditions with a far stronger industrial and producing economy that could have eventually worked its way out of the situation. But now the recession/depression will be forced on us, under the worst possible conditions, where our debt load far exceeds any hope of ever being repaid, which means default is now guaranteed and with an producing economy and industry that is now many times weeker. In short, the bankruptsy of the United States of American is now unavoidable. Everyone now knows it, hence the great panic of 2008.



Your not hearing me. There is no such thing as a true free market. What you think of as a free market, is still regulated by, at the very least, foreign governments and international government agencies, WTO, IMF, WB, etc. The only debate is whether the U.S. allows U.S. corporations and banks to operate in a completely free for all economy, in competition with banks and corporations that are supported by and regulated by foreign governments and tax bases. That's largely the directly we've been headed since the 1980s and that's a receipt for utter collaspe of the U.S. economy...oh wait...lookie where are today. <img src="/forums/images/graemlins/rolleyes.gif" alt="" />

If we could operate only within our borders, where the federal government protected cross sea and cross international border commerce and U.S. businesses acted freely within the borders of the U.S., it might be an interesting experiment. But those days are long gone.

You have two choices in this current market. You can either allow your businesses to operate in a free for all manner, where they suck off the tit of the U.S. tax payer and consumer, but operate as essential international corporations with their own soveriegnty, as we essentially have been, or you can operate an economy where the best interests of each country are looked out for by their own government. We operate in the former. Every other nation on earth, operates on the latter principles. We're the ones that are collasping first.

The bottom line is the U.S. cannot flourish in the current global economy where its wealth, power and technology are traded freely among nations who specificly look out for their own best interests first.



And now you're starting to see the root of the problem.

Start doing some reserach. As of March, 2007 the derivities market was offiically estimated at over 512 trillion dollars, according to the bank of international settlements.

Guess what? There's not 512 trillion dollars worth of money out there either. It's all debt. The quadrillion is a rough estimate by various sources of what it could be today, since the bank of international settlements hasn't taken an accounting for more than a year.

Don't feel bad, nobody believes it when they just hear it from me. It's too outragous, but once they read the official reports, they're just as shocked as I was...and just as shocked as all the investors around the world who are now panicking their behinds off.

From what I've been reading:
- Stock markets around the world are collapsing, not just us. If they weren't my international funds would be doing great.
- Comparing percentage declines to other industrialized nations, we are actually doing very well.

This doesn't mean, however, that I think we have the best run economy in the world.

And if you think we're the only nation that has business sucking off the taxpayer wallet, then why are all the other *industrialized* nations also working bailouts?

A lot of your stuff makes sense to me, but this paragraph in particular flies against all the international news I've seen from any source. Be careful with generalizations such as "all" or "every"--I'm sure the people in the Sudan, Chad, Somalia, North Korea, or businessmen in Venezuela would take offense to learning how the government is in charge and runs things for the good of the people.

In a "free for all" market (aka a true free market) businesses would do as they normally do--pay taxes in return for operating. I would never argue we had a free and open market.

Likewise, corporate bailouts are not a norm for our government, and are usually notable when they happen. Chrysler is often brought up, or the 80's S&L failures. Strangely the 2001 Airline assistance isn't. If it was common, news stories would have to dredge decades into the past to find examples.

Protectionism (not free market) is more common. Tariffs, trade barriers such as our 4-7x price we pay for sugar since 1816, the Harley Davidson protection against Asian bikes, the 25% Chicken Tax on Trucks/SUVs that's been around since 1963 before SUV's even existed, etc.

I think you misunderstood what I was saying. Every other country on the earth operates on an either very high level of socialism, if not pure socialism and that includes both personal and business levels.

While we certainly have our breed of socialism here, where our policies depart from nearly every other country on earth, is that our government has specifically remained powerless to either direct or influence where our companies do business. While most other countries not only directly support their corporations to a much higher level, but in exchange for that..or just because they can...they direct their corporations to remain in country and by and large, the corporations have business practices that are in the best interest of their host country.

Because of this, as a country, we cannot compete against other nations, because we do not support our businesses and corporations to the same level they do...nor should we, theoretically, in perfect world.

The but world is not perfect. It is currently set up where the United States, it's great wealth and power aside, is at a tremendous competitive disadvantage with all other countries.

To make matters worse, our financial power and wealth is waning in a very big way. We may get lucky and other countries may wane at the same rate, leaving us poorer, but still at the top of the heap...or we may not. But the biggest problem of all, is that our industrial power, technology, information and to a large degree, our wealth, is being taken off shore by formerly American corporations and given to nations that are economically friendlier to those businesses, largely to due their more authoritarian approach to government and their use of their collective tax base to support businesses, obstensively, to promote the best interest of their country and citizens.

The U.S. is a free for all nation and when competing against either poor nations or pure communist nations as we have post World War Two, through the end of the 1980s, our system reigned supreme and did us fairly well. But communism has given way to a hybrid form of socialist/capitalism that almost all countries have adopted in one form or another and we simply cannot compete against that system at all...especially when our government takes no action to prevent or even discourage our own industry from launching out on their own as sovereign global corporations and fully embracing those socialist/capitalist economies based entirely on their own best interests with no consideration for America's best interest.

The solution..would have been not to engage other countries in such a way that encouraged the socialist/capitalist system and instead we should have fought communism right down to socialist form, but instead, when the Soviet Union collapsed, our war against communism/socialism completely collapsed as well and we embarked on a policy of engagement that was really nothing more than effort on our part to take advantage of semi-industrialized nations who could produce goods much cheaper and without regulation, but what we did is create a giant monster that is now become larger, more powerful and certainly wealthier than us..on a net level.

We created our own demise and we doomed the true free, democratic, capitalistic system we aspired to promote throughout the world all through the cold war.

So, America really has two choices at this point. Conform to the socialist/capitalistic system or die. I don't like either choice, believe me. But it's becoming clearer, especially in the wake of the current bail out bill and final collapse of our old pure capitalistic system, that we are going to conform to a new socialistic/capitalistic system and even worse, probably give up the last of our economic sovereignty and adhere to a new global central financial system that replaces the one that is currently collapsing.

In the 60's, the world was going communist. It looks good on paper. The argument could be made we had a choice--go communist or die. We didn't, and we did better. (Note: You would have to debate if Russia or China are truly communist any more, or simply "1-party control." When you're raking in billions, have huge differences in pay, and looking for ways to out-compete others, it's hard to argue you're communist)

Is America losing wealth at a huge rate? (Well, aside from the recent *worldwide* collapse.) Or, for the last 20 years have other countries been raising up to match our level? I believe the latter, based on total global net economic worth.

And what's better--other countries hating us for our wealth, or developing their own and wanting to maintain stability?

I think socialism would fade as uncompetitive *if* we would get back to a an *open* and *free* competitive model. Unfortunately, we creep more socialistic every year, and our response to every issue is more government intervention, distorting the free market, and leading to more government intervention.

Speaking of which, it took me a while but here is the status on housing breaks by the fed.

Rent: No tax breaks. No federal assistance, except for the very poor in the welfare program (Section 8). Some states give some people a state tax break. Can't pay your rent? Evicted.

Buy home: Deduct interest on mortgages up to $1 million, deduct property taxes, shield capital gains taxes on sale from federal tax. In 2008, the tax breaks cost the government $145 billion. The government funnels below-market-rate credit into housing through Fannie and Freddie, which can borrow at preferential rates at taxpayer expense, and be bailed out, also at taxpayer expense. First time home buyers can recieve a $7500 tax credit. Mortgage ceiling for Fannie/Freddie raised from $417k to $625k. Can't pay your mortgage? Government bailout programs.

None of this counts, of course, the hundreds of billions in extra tax money spent on roads and utilities, additional snow clearing, or even gas for school buses, as people are more spread out and need more roads, sewer pipe, and all the rest to connect them.

I'm not anti-home; I happen to own one and prefer it. I am just honest about it: Renting taxpayers get the shaft, and walkable neighborhood condo living is much more energy efficient. We need to remove the government from the "free" market and let people make their own, unbiased opinions. You might see a lot of 2500 sq ft condo communities popping up, especially in areas with extreme climates that require high energy costs to moderate (New England heating bills, AZ cooling bills).

Home ownership rose from 64% of households in 1994, to 69% in 2005. For that 5% raise in US home-ownership, we collapsed the world financial market and wiped out people's retirement savings. Was it worth it?

- Data from Newsweek, August 4, 2008, p37

I agree they are not truly communist. It's a new governmental system that mixes serious socialism with totalitarism and capitalism.

Governmental systems change and evolve all the time. This new system doesn't have a name, which is really striking given how much power and popularity it has gained, but then that probably helps keep people in the dark about it.

Lenon and Stalin are probably getting serious woodies right now in hell because their brainchild has since evolved into a system that takes full advantage of the western capitalist greed, while retaining at least a good portion of their basic principles and socialism and totalitarism.

I mean what could better? Either you go to war and bankrupt yourself, destroy your country and society or you make offers to a greedy capitalist society that they can't bear to refuse and allow them to freely and willingly transfer all of their wealth, technology and manufacturing to your shores, all the while draining their own resources to point of not even being able to make war. And now to top it all off, now that they have all the wealth, and we don't..we have to borrow that wealth back, making us the slave to the lender. Like I said...Stalin and Lenon, are loving this right now. They couldn't have a done a better job destroying America if they had forever to do it the old way.



It depends on how you measure wealth. Our GDP is better (or at least was) that any single country, but is less than the European Union. It also depends on how you measure GDP, as that's changed, like every other economic measurement, to influence the numbers.

When you run the numbers regarding government reserves, we are probably among the poorest of nations, certainly major nations, when you subtract our debt verses are miniscule reserves, compared to China which has a net wealth in the trillions.



The world is fast gravitating to a new global economic system with global government control. It's seem surreal, but it's true. We already have a global economic government in place and as the world collaspes, this new system will fully take over which means it won't matter one lick what we do or system we have. Either we compete in the new system or we completely abstain from it. And our depedence on foreign investment, oil, debt and even goods and food, means that it's not possible for us to go into isolationism and not completely collaspe as a nation. At least not anymore.

In other words, balls out of our court now. Our chance to stop this was not to support the new global economic government and the new socialist/totalitarian/capitalist system that was taken hold in places like Asia and Russia, South America and now Europe.



It's a very interesting point. Housing was heavily subsidized and it's partly why prices were and still are so unrealisticly high. In my opinion, housing has now become a fool's investment and probably will remain so for many years to come, probably even decades. It's a done deal now. The only people who will prosper now in the housing market are those who purchased so long ago that that might still realize a net profit when the prices finally settle at their bottom years from now or those that are able to buy years later when prices are at record lows and are able to do so with cash.



Well, the current economic crisis is not all about home mortgages. The home mortgage crisis touched off a minor panic, which then affected and grew into a giant global credit/financial panic, but it affects all aspects of the global economy and banking system.

If was housing alone, we could solve the problem today for less than $700 billion, but it's a problem that exceeds all the wealth and all the money supply in the world, hence the greatest financial panic of at least 100 years or more.

I was using "housing" to simplify the whole real estate and credit issue. For example, upside down on houses has people **gasp** not able to use their homes like ATM's to go out and buy things. The Wall Street Journal talked about the hundreds of billions that banks are piling up in the federal reserve system, afraid to lend to anyone. A more accurate description is to say the "real estate/credit market caused a crash in investment houses and banks, leading to a freeze up in the commercial paper market, which caused the current market crash," but it's verbose.

And I hate hearing over and over (on the news, not anyone here) that "the housing market has to recover before the rest of America can recover." A house on just over 1/8 of an acre in the middle of the desert outside Tucson, with almost zero yard, and they're still wanting $375-400k for it. My buddy's house in a nice neighborhood, edge of Tucson, 2400 sq ft, no yard $465k (down from a peak of $575k).

The median income for a household in Tucson is $30,981, and the median income for a family is $37,344....before the crash. How can houses be so incredibly out of whack with income? I argue the problem is too many people for too many *decades* have been living beyond their means....and this fix is *not* short term. People need a serious reality smack, and it's here.

It won't be "fixed" until people realize that keeping up with the Joneses by trying to spend more is a fool's game, and buying things with cash instead of paying twice as much on credit is a fool's game.

I'll just be happy when I can afford a decent house here. Renting is still the better option as some people are happy to have any help pay for their home. My heart doesn't bleed for anyone who loses their shirt on their house. I feel worse for people who were close to retiring and hadn't moved enough money out of the market and into bonds, and were trusting a financial adviser.

I agree with all of that.

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Oooh, I forgot. People/businesses running into credit/debt problems and the resulting fallout is whack 1.

Whack 2, which will probably be much worse as we're not planning for it, will be when our government credit/debt problems come due. When social security, instead of an excess being raided like a kid's piggy bank, becomes a debt to be paid, when the rest of the world wants more interest for our bonds, when we can't borrow credit and our government is forced to live within it's means....ugly day coming.