TPS

Makes Dan Quayle look intelligent. First: I have not voted for either major party in the presidential election since 1992. Second, after watching her interviews, I have to throw my 1 cent in on this: you've got to be smoking crack if you defend this idiot. No wonder McCain is going to make sure there is no VP debate--she is a !@#$ing dolt! Christ! I understand most of you vote your party lines, but anyone who tries to defend her is a total party hack. Hey, if she (errr...he) wins, maybe AD will be the next Treasury Secretary...

Here's an interesting perspective. banks made bad bets?

I think the more important question is if it's a "clear majority of registered voters." What percentage of the poorest 50% actually vote relative the top 50%?

Of course, that is how the system has always worked--the weak are weeded out in downturns. I know this is no typical downturn (it's the "perfect storm" of downturns), and I have not argued against this latest phase of bailing out Wall Street; I just don't think it is the be all end all either--I do believe you need to do something to stop the downward spiral in real estate, otherwise those assets that aren't purchased and look good now, won't be later. As I said, each time the bandaid gets bigger. Do you think this will end it?

There's no doubt that credit is tight and it is trickling down to main street, that is how credit crunches work. So I'm not denying that reality. However, your original article/example seems to be more a consequence of GM's reliance on truck and SUV sales back-firing in a slowing economy with $4/gal gas. As that article states, many dealers will go out of business since they don't sell what consumers now demand. I simply disagree with your assesment on that ONE. The 'Big Three" are paying the consequences of relying on sales of gas-guzzlers when $4/gal gas prices hit in the middle of a credit crunch. So you get a double whammy--falling sales and inability to raise funds.

The article states that "bad auto loans" were responsible. Once they started having problems with their loans, GMAC pulled out last summer. As it further states, GM's sales are down some 2 million cars, and that the number of dealerships will decline. His problems were NOT caused by lack of credit. Could he have survived if GMAC stayed in? I highly doubt it.

On the flip side of that coin, why would banks extend (mortgage) credit in markets where housing prices are still falling? No one knows if a mere $700 billion is enough to bail out Wall STreet. In each case the bailout Bandaid gets bigger and bigger. As long as housing prices continue to fall, and delinquencies and foreclosures increase, you haven't solved the root of the crisis. Despite the attempts to blame democrats, republicans, lax lending standards, or the push for increased homeownership, the blame for this crisis lays at the foot of Wall Street.

His "credit problems" are a function of his inability to sell trucks and SUVs. It's a bit disingenuous to blame this on the credit crisis.

Isn't it about getting the "toxic stuff" off of the balance sheets? And I raise that issue because of this: DBank

How will anyone outside of Paulson know whether he's buying securities that actually have mortgages explicitly tied to them or not? For example, if he buys the worst of the tranches from a packaged CMO and the higher rated tranches are still out there, then who actually has claim on the underlying mortgages backing all of the tranches? Will the government be stuck with something it can't ever sell?

Didn't you get your refund from the last time govt did this? Isn't that what happened when "the govt made money" on the last bail out?

SHTF? Should I short them?

I agree. I would add a few more culprits though. For one, the ratings agencies were complicit in their very generous risk models so the asset-backed securities could get their top ratings; then the monolines jumping in on insuring the nonn-AAA. As in every bubble, everyone wanted a piece of the action...

You seem to imply it's changes to promote increased minority homeownership, but the articles indicate those programs aren't to blame. So what is your point? Besides, I believe most of the problems derive from the "house flippers" in the really hot markets. You buy an asset with someone else's money, and if it goes up in value, you sell it; if it falls, you walk away.

Of course the walls were coming down for decades going back to deregulation in the early 1980s. Securitizations also go way back (and my recollection is that they were started by banks, but polished by IBs). My point is the current financial crisis stems from the housing bubble. Maybe 1999 is not the starting point either (And i didn't say that the end of GS was responsible, I said that you can start there)? Could it be the fallout from Enron and fraud in the stock market caused investors to move to a new market in 2002? As I said, there are many factors (including both parties) that can be blamed. However, I do disagree with the belief that this housing bubble was caused by something from 20+ years ago. As for Spitzer, that's exactly what he was writing about, that state's were trying to go after predatory lending practices but they were being squelched by the Feds.

Bull2. It doesn't go back "decades." It starts in 1999 with the end of Glass-Steagall. That should make the right happy because we all know who was president--although I could play the congress card like y'all like to do.... The interest only loans, the no-doc/lo-doc loans are all recent phenomena. I posted an editorial awhile back by Spitzer (while he was still governor) who blamed the administration for preventing states from limiting predatory loan practices. There is a lot of blame to go around, and almost all of it happened after the 1999 deregulation. Btw, did you mean to say "reserve requirements"? Or did you mean down payment on the mortgages?

First, I agree with much of this. However, if one does blame the guarantee, then that gets to the argument made by austrian folks here, that without government intervention of any kind there would be no crisis; or at best, they'd be less severe. Intervention of any kind is not the cause; crises arise from the nature of financial capitalism--leveraged and profit driven (note to those who always try to put words in my mouth--this is not a value judgment either about the system). Financial innovations arise from seeking profits or to circumvent regulations which restrain profit making. We agree that financial speculation and bubbles have always happened, always will. While older factors play a role, it's a consequence of behavior that began in 1999 with the end of Glass-Steagall--In fact, one might argue that this deregulation was more imortant in causing the crisis than government's guarante of the GSEs. So the walls come down; the enron debacle has investors looking for returns elsewhere (and of course they're flush with cash from Bush's supply-side tax cuts... ); 911 has the Fed lowering interest rates; China ensures they stay low; the bubble begins; everyone believes tulips will continue to rise in value; everyone is making money hand over fist; everyone who isn't yet, wants to; build more houses, offer interest-only loans so more people can qualify, generate more fees; risk has been lowered by securitizing; another lucrative market emerges with insuring the CMOs, CDOs, etc, which are split into so many different pieces some fund managers don't even know what they're holding--but they are insured); the insurance vehicle itself becomes an asset to trade; and on and on... Why should it stop when everyone is making so much money? The very nature of a bubble causes people to under-estimate the risk. I don't think it's a devious plot by the heads of companies saying, "well the government will bail us out." I don't think there are many CEOs willing to risk losing control of their firms by doing so. I'll say it again, it's just the nature of the beast. The financial industry said they'd self-regulate. That didn't work too well. Regulation won't prevent future crises, but it can reduce their severity. "We live in interesting times..."

I guess this is what you meant by "circle jerk."

That was funny. Sometimes you are almost likeable...

Commodity prices went up because billions of dollars from investment houses poured into the futures markets driving up all prices. Some people actually believed the "professional analysts" from these same investment houses who said oil could go up to $200 a barrel. Their bubble has burst. Because they need cash to shore up all their other areas, they are liquidating their commodity investments; hence the drop in prices.

How long ago were Freddie and Fannie given implicit guarantees? Did the crisis start 50 years ago? Seems to me something much more recent triggered this crisis...

Those are in Kindleberger's famous book as well. I wanted to focus on the US prior to the fed.

How do you define "big ass bubble?" Here are a few before the fed was created: US Banking crisis of 1837, speculation in cotton and land. Depression lasted until 1843. 1873 financial crisis based on railroad speculation. 1893 sliver speculation crisis and a depression that lasted 5-6 years. 1907 financial crisis related to coffee and union pacific.

I think it's pretty clear now that speculators--investment banks, hedge funds, and others--were the ones driving oil prices, not "fundamentals." WSJ The article is from today's WSJ.