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October 10, 2008

More Econ-Crisis Blogging: IMHO Another Bush F

We elect Presidents to make crises better, not worse. But the Bush Administration made 9/11 worse by getting impractical and corrupt in their response to that crisis. Now we've got lost cred, an invasion too far, bungled along with the first one.

I've come to the conclusion that Bush appointees have also been making the financial crisis worse. Bernanke's been making virtually all the investment money of affected-company stockholders go away by making shares almost worthless; this adds up to taking investment money away on the grand scale during a crisis where there's not enough investment money; and it seems to me we should hold management responsible rather than the usually-in-the-dark shareholders. Paulson gave us last week's confidence crisis when he promised tons and tons of money he has no authority to promise and told us they were desperetely needed, and the Congress was, naturally, skeptical.

My guess on what's happened is that Bush has, since 9/11, stopped doing serious feedback on his reports' plans. The invasion and especially financial plans seem like they need tons more work to me, that should've seen serious revision before use. Though, the decision to invade and long delay to notice the postwar failures seem like a different kind of problem.

Before 9/11, two or three times I happily noticed stupid plans reaching the Bush White House to be cut down and revamped to not-so-stupid plans that showed respect for popular rights. Clearly, that day's long past. Bush' even gone to unbelievable lengths to shield his administration from law; that predates 9/11, but Blackwater's liability shield seems to me to take it to a whole new level.

I think things will likely start getting better quicklyish if Obama's elected. He seems to've been good at choosing the best in his campaign. And presidents entering office have historically done best at figuring how to address crises, and have the best window of opportunity with the first 100 days. Bernanke's term doesn't end until 2010, but I think he's likely to do better if given more challenge to his ideas and plans.

Thoughts?

Posted by Jon Kay at October 10, 2008 04:16 AM
Comments

I know you'll scoff, but do you really want to use Obama's past choices of associates as an indication of what he would do as President? Jim Johnson, Rev. Wright, William Ayers... if you find them insignificant, what's an example of something that would be significant?

Posted by: Justin at October 10, 2008 12:23 PM

You can't be serious. If you really meant it, you'd be against McCain, becuase, unlike those two gentlemen, Palin's an extremist ACTUALLY ON THE BALLOT, which, of course, is what matters.

I know Kerry, McCain, and the older McCain campaigners may have been happy not to have noticed, but it's hardly the '60s or '70s anymore, is it? Obama was in grade school, of course, when the whole hippie vs authoritarian thing and race wars rhetoric played out - this is all about those talking about hippies and not Obama himself.

Posted by: Jon Kay at October 10, 2008 01:49 PM

Justin,

In terms of SUBSTANCE instead of fearmongering,
McCain's economic advisor is Phil Gramm who basically helped start this whole mess with deregulation. McCain himself is a rabid deregulator, unless he's flopped again.
Without McCain it would have been the Keating 4.
McCain wants up to pay FULL PRICE for the bad debt.

ARE YOU NUTS?!?!?!?

If you want associates there's Palin's speech to the Alaskan secessionists THIS YEAR.
There's McCain goig to a Pro Life conference in Oregon where the speaker praised a woman for shooting a doctor who performed abortions.
http://rawstory.com/news/2008/McCain_connections_coming_back_to_haunt_1007.html
She was a delegate for McCain at the convention this year.
An active domestic terrorist sympathizer.

Posted by: Marcus at October 10, 2008 02:08 PM

Government regulations that pushed lenders to give bad loans caused this. The deregulation that occurred was necessary to allow the overall increase in regulation.

In any event, McCain's associations aren't my interest here. My interest is if Obama's associations are at all problematic to his supporters. I take it by your answers that they are not.

So, going back to my follow-up, hypothetically and honestly, is there anybody he could work or be friends with that would trouble you?

Posted by: Justin at October 10, 2008 03:01 PM

Justin how misinformed can you be?
According to a recent Bob Brinker program this was the reality:

In 2002 only ONE in 50 loans were sub prime
In 2006 it was 1 in 3

Oct 2002 is when Bush totally relaxed the loan rules as part of his "America's Home Ownership Challenge" pushed the private lending sector (including F&F) to make 5.5 million new minority and low income mortgage loans.June2002 WH press release:

"The government-sponsored corporations created to increase the liquidity of mortgage markets, so more capital would be available for mortgage loans, are supposed to lead the market in reaching underserved populations. While these corporations have increased their commitments to these efforts, they lag behind private lenders in this regard, according to government studies. The Administration will revisit the regulatory goals for these corporations’ purchases of affordable housing loans, which are set to expire in 2003. The federal government should demand more and should hold such publicly-chartered corporations accountable for better performance."

http://www.whitehouse.gov/infocus/homeownership/homeownership-policy-book-background.html

Also the top 2 dozen financial institutions pledged 1.1 trillion to fulfill Bush's plan.

White House Press Release entitled, "Focusing on the Nation’s Priorities – Meeting America’s Housing Needs":

"In 2002, the President issued America’s Homeownership Challenge to increase first-time minority homeowners by 5.5 million through 2010. The Federal Housing Administration (FHA) mortgage program is an important tool for reaching that goal. In 2006, 31 percent of those using FHA mortgages were minorities purchasing their first home. The 2008 Budget continues Administration efforts to modernize FHA by improving its ability to reach traditionally underserved homebuyers (aka those who do not normally qualify for loans), such as low- and moderate-income families, individuals with blemished credit, and families who have little savings for a down payment."

and finally HUD, often the GOP problem child when they are in charge...

BUSH ADMINISTRATION ANNOUNCES NEW HUD "ZERO DOWN PAYMENT" MORTGAGE Initiative Aimed at Removing Major Barrier to Homeownership LAS VEGAS - As part of President Bush's ongoing effort to help American families achieve the dream of homeownership, Federal Housing Commissioner John C. Weicher today announced that HUD is proposing to offer a "zero down payment" mortgage, the most significant initiative by the Federal Housing Administration in over a decade. This action would help remove the greatest barrier facing first-time homebuyers - the lack of funds for a down payment on a mortgage. Speaking at the National Association of Home Builders' annual convention, Commissioner Weicher indicated that the proposal, part of HUD's Fiscal Year 2005 budget request, would eliminate the statutory requirement of a minimum three percent down payment for FHA-insured single-family mortgages for first-time homebuyers.

http://www.hud.gov/news/release.cfm?content=pr04-006.cfm

Zero down payment....that was smart. Gee, isn't that smart economic policy folks?


Not a stretch to think that limiting the sub prime loans to pre 2002 levels would have made for a saner, slower growing housing market and less systemic risk overall.

My own personal take was that since job creation was well below CEA's projections given the amount of tax cuts, Bush was trying to find another way to goose the economy.

Posted by: Marcus at October 10, 2008 03:38 PM

Since he hardly interacts with Ayers or Wright then there's no problem.

since you brought it up

Do you have a problem with Palin's witch hunter reverend or the Alaskan Independence Party (Palin gave a video speech this year).

Do you have a problem with McCain's associations with convicted criminals such as G. Gordon Liddy(he donated money to McCain) and the traitorous Ollie(Dart Missiles to Iran and Iraq) North, or the anti-abortion terrorist supporter Marylin Shannon who was a delegate of his this year.
http://rawstory.com/news/2008/Womans_rights_advocate_McCain_sides_with_1008.html
Do you have any problem with the connections he has to South American death squads or anti-semitic organizations?

ANY other misinformatiive crap I can clear up for you?

Would you like to actually debate the issues or like McCain (a yellow belly backstabber who can't even muster the courage to talk about Ayers to Obama's face) are you just going negative because you lose on the issues?

Posted by: Marcus at October 10, 2008 03:49 PM

I'm much more interested in what Obama says and especially does. I don't care about Bush II's own association with a radical pastor - I care that he failed the country. I do care about old felon buddies like Poindexter when they get special, trusting deals (remember, Bush TRIED to give him a contract for the end of privacy as we know it). If Obama gives Ayers that kind of deal, I'll start caring.

Every President meets and deals with many, many people in his lifetime, probably to the good, but just by the odds that means plenty will be scum.

Posted by: Jon Kay at October 11, 2008 01:16 AM

So, going back to my follow-up, hypothetically and honestly, is there anybody he could work or be friends with that would trouble you?

I think the answer to that simple question was "No," Justin. I'll skip some of the obvious sarcasm about the effects of transcendental ascension....

Posted by: Tully at October 11, 2008 10:15 AM
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