$700 B Bailout

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Originally Posted by FRPLG

The basis for the current credit crunch this country is facing comes directly from our government's deisre to get more people owning houses. Efforts to create a market of "affordable housing" initially forced banks via legislation and litigation to loosen decades of conventional lending practices based on financial sense and empircal evidence. Basically the gov't forced lenders to create programs that allowed people who were broke to buy houses. In a lot a ways this was a good gesture and even smart. Hell they even implemented it somewhat properly initially essentially guaranteeing the loans via Fannie and Freddie. The problem is then they got politcally greedy and really started pushing to open this "affordable housing" market up, despite what smart people knew were probable long term issues. They let Freddie and Fannie become bastions of bad loans and they couldn't support them and they failed. This has sucked the value out of the credit market because all these loans, bundled as securities and bonds so they could be sold(because they were shit and banks knew it) became "valueless" because the net(freddie and fannie) was gone. On top of that the "real value", the actual values of the homes within these loans, aren't considered within the market as part of the asset value of the securities BY LAW. So loans worth 30B in actual property are only worth 10B on paper. Market seizure time baby!

The video Slinggin posts actully has a good timeline of what has gone on from a political standpoint if you just try and ignore the rhetoric.

Make no mistake, the fault on this from a purely politcal standpoint lays at the feet of the democrats and their blind mission to get poor people to buy houses but in all honesty the Repubs had plenty of opportunity to fix this in the 15 years and didn't do it. It would have been politically unpopular to basically end the free ride and none of them had the cajones to what was right. They ignored it out of self preservation while dems were too dumb to even realize what was happening.

What is pissing me off right now though is this bullshit about "8 years of failed economic policies". This has nothing to do with deregulation at all or any of Bush's economics. This crap was going on before Bush and regulators told everyone and everyone basically couldn't figure out a way it helped them politically so they did nothing.

F 'em all. Blame Bush for a lot of crap but this doesn't even remotely have anything do with him from a causation standpoint.

I agree the Rep had time to fix this but what would the headlines have read if they decided to tighten credit and loans which would affect lower income the most. It would have been a politial suicide and they knew that. Just look back at the early 90's and Newt and all the starving children and hurting old people news articles that went on with everything he tried to do.