CNN admits “Trump's right: The economy is doing well and he deserves some credit”

[suncowiam]

I wouldn't call it "Bush's crash", given that the underlying risk factors preceded him.
This was also true of the trigger, ie, 9/11, which was the result of numerous long
standing domestic & foreign policies. High LTV loans, loans to risky borrowers,
heavy ownership subsidies, & institutionalized inflation were the norm before his
administration. And those created the bubble.

Note also that these risky practices continued, & some were even made worse under
the Obama administration, eg, foreclosing on properties unnecessarily, causing much
financial loss & personal turmoil.

I agree that high LTV loans are too risky. But prior & subsequent presidents & Congress
are continuing the same policies. It would've been politically impossible for Bush to
convince Congress to stop high LTV & other risky lending because the political fallout
would've been unendurable.
There's a powerful lobby of homeowners who want to borrow to the hilt, & have governments
(state & fed) subsidize the interest & property tax expenses. Note that in commercial real
estate lenders typically wanted about 30% equity as a condition of lending. This would be
a much more reasonable requirement for homes. Then, were there an economic decline,
owners would still have equity, & could afford to sell & move to where work is.

I saw very few investors buying properties to fix up for the purpose of reselling. (This never
looked profitable to me.) So I don't believe they were a significant portion of borrowers.
Moreover, such investors typically cannot finance the cost of improvements. so they bring
cash to the deal to enable adding equity. This is low risk.

To buy a property for quick resale has a high hurdle, ie, about 10% total transfer costs,
in addition to carrying costs. And any profit earned is short term gain, so it's taxed at
ordinary income tax rates. This is uninspiring.

A "foreclosure boom" meant that assets were taken from some owners, & sold at a distressed
property discount. Aside from this not creating any value, it's a heinous practice because
of the woe caused those who lose their properties. A great deal of real wealth is lost to
physical damage & lawyers (who suck vast sums from the process).

If those assets could've been kept in the hands of owners still capable of paying off
the loan, this would've been the more financially & socially responsible thing to do.

I disagree that this cut losses. When a loan goes bad, & the property is sold for much
less than the principal & interest owed. This actually increases losses relative to
renegotiating with the original borrower/owner. The lender should be the one who
decides how to minimize his own losses. It should not be decided by some broad
policy mass foreclosure without regard for the borrower's or lender's interests.

There's still a net loss with this approach.

Let me just simplify this a bit. The ultimate lender is the US government.

The point that they control interest rates should satisfy what else they can control to regulate the value of cash.

Anyhows... I have a very busy day. Appreciate the conversation. Have a good one.

[Edited]
Also, this is why I pointed to flippers...
House flippers triggered the US housing market crash, not poor subprime borrowers

 

[Revoltingest]

Let me just simplify this a bit. The ultimate lender is the US government.

No, for non-governmental lenders, ie, not Fannie Mae & Freddie Mac.
Example:
All my current loans are with a local bank which doesn't sell the loans.
This bank got no bailouts or other government assistance.

Also, this is why I pointed to flippers...
House flippers triggered the US housing market crash, not poor subprime borrowers

I'll have to read this later.
But the opening paragraph....
"The grim tale of America’s “subprime mortgage crisis” delivers one of those stinging
moral slaps that Americans seem to favor in their histories. Poor people were reckless
and stupid, banks got greedy. Layer in some Wall Street dark arts, and there you have
it: a global financial crisis."
....argues against a straw man. In the public discussion I've seen, the "poor" weren't
blamed as the cause. Moreover, the largest lender was the federal government (Fannie
Mae & Freddie Mac), which behaved similarly to other lenders.

Edit......
From the article....

This would explain why, as the researchers put it, “the rise in mortgage delinquencies is virtually exclusively accounted for by real estate investors.” The share of single-mortgage borrowers who couldn’t keep up on their loan payments barely budged between 2005 and 2008.

This is problematic....."single mortgage borrowers" applies to those with only first mortgage loans. To imply that having more than one mortgage makes one an investor is wrong because many homeowners (non-investors) have 2nd & even 3rd mortgages on their homes.
Moreover, lenders impose different requirements upon investors (non-owner occupant borrowers), eg, higher equity & interest rate.

Mounting evidence suggests that the notion that the 2007 crash happened because people with shoddy credit borrowed to buy houses they couldn’t afford is just plain wrong. The latest comes in a new NBER working paper arguing that it was wealthy or middle-class house-flipping speculators who blew up the bubble to cataclysmic proportions, and then wrecked local housing markets when they defaulted en masse.

This claim of "mounting evidence" actually presents none. Moreover, the supposedly
debunked claims don't relate to mine, which aren't about people who are poor or have
shoddy credit. I see a system created by the fed which created the bubble with
dysfunctional incentives. I don't blame the borrowers, who were just doing what was
in their reasonable self interest in their experience.

When I'm dictator, here are my policies.....
- End institutionalized inflation, ie, let prices fluctuate due to market forces rather than
over-expanding the money supply. (This mitigates prices rising due to perception of
an inflation hedge.)
- End personal tax deductions, eg, home mortgage interest, home property taxes.
(This is fairer to renters. And it makes home ownership about utility rather than
investment.)
- Put all lenders on notice: No bail-outs if your loan portfolio fails.
(This will change their perception of risk, inducing safer lending practices.)
- End lending regulation which opposes working with troubled borrowers.
(Government should not be intentionally causing financial loss.)
- In the event of economic disaster, assist only borrowers.
(This will indirectly help lenders survive.)
- Stop attacking & meddling in the affairs of other countries.
With fewer enemies, we'll suffer fewer terrorist attacks.
- Privatize all governmental lenders, eg, Fannie Mae.
(Taxpayers shouldn't be on the hook for them.)

 

[Sha'irullah]

I am not hostile to you but am dismayed that you don't consider the big picture that deals with all Americans and not just you. Many poor people have compassion towards others, probably more so than the wealthy do, so poverty is no excuse to ignore the plight of those in the lower income brackets and the elderly that are going to be negatively affected by Trump's tax cuts that strongly favors the wealthy.

I am directly stating my opinions are because of the poor and the tax cuts overwhelming help the poor. Allowed me to become a legal LLC off of nothing and grow me and my sisters business from 0$. Granted I still have issues with the tax cuts but not helping the poor is nonsensical.

You seriously lack insight when you write, you keep restating my circumstances and ask why I am not acting on them everytime I do.

 

[suncowiam]

No, for non-governmental lenders, ie, not Fannie Mae & Freddie Mac.
Example:
All my current loans are with a local bank which doesn't sell the loans.
This bank got no bailouts or other government assistance.

I'll have to read this later.
But the opening paragraph....
"The grim tale of America’s “subprime mortgage crisis” delivers one of those stinging
moral slaps that Americans seem to favor in their histories. Poor people were reckless
and stupid, banks got greedy. Layer in some Wall Street dark arts, and there you have
it: a global financial crisis."
....argues against a straw man. In the public discussion I've seen, the "poor" weren't
blamed as the cause. Moreover, the largest lender was the federal government (Fannie
Mae & Freddie Mac), which behaved similarly to other lenders.

Edit......
From the article....

This is problematic....."single mortgage borrowers" applies to those with only first mortgage loans. To imply that having more than one mortgage makes one an investor is wrong because many homeowners (non-investors) have 2nd & even 3rd mortgages on their homes.
Moreover, lenders impose different requirements upon investors (non-owner occupant borrowers), eg, higher equity & interest rate.


This claim of "mounting evidence" actually presents none. Moreover, the supposedly
debunked claims don't relate to mine, which aren't about people who are poor or have
shoddy credit. I see a system created by the fed which created the bubble with
dysfunctional incentives. I don't blame the borrowers, who were just doing what was
in their reasonable self interest in their experience.

When I'm dictator, here are my policies.....
- End institutionalized inflation, ie, let prices fluctuate due to market forces rather than
over-expanding the money supply. (This mitigates prices rising due to perception of
an inflation hedge.)
- End personal tax deductions, eg, home mortgage interest, home property taxes.
(This is fairer to renters. And it makes home ownership about utility rather than
investment.)
- Put all lenders on notice: No bail-outs if your loan portfolio fails.
(This will change their perception of risk, inducing safer lending practices.)
- End lending regulation which opposes working with troubled borrowers.
(Government should not be intentionally causing financial loss.)
- In the event of economic disaster, assist only borrowers.
(This will indirectly help lenders survive.)
- Stop attacking & meddling in the affairs of other countries.
With fewer enemies, we'll suffer fewer terrorist attacks.
- Privatize all governmental lenders, eg, Fannie Mae.
(Taxpayers shouldn't be on the hook for them.)

I'm not that keen on the loan/mortgage companies, but according to this:

Fannie Mae - Wikipedia

Fannie Mae and similar banks played a critical role in the collapse of the economy requiring the government to "take over."

All I can say is that the government fixed just no to the expectations of yours and others. There's probably not more I can add to this.

I have to go pray at a temple for about 2-3 hours today because its part of family/cultural traditions. I am so not looking forward to it.

 

[Revoltingest]

I'm not that keen on the loan/mortgage companies, but according to this:

Fannie Mae - Wikipedia

Fannie Mae and similar banks played a critical role in the collapse of the economy requiring the government to "take over."

All I can say is that the government fixed just no to the expectations of yours and others. There's probably not more I can add to this.

I have to go pray at a temple for about 2-3 hours today because its part of family/cultural traditions. I am so not looking forward to it.

Guess who created & exercises regulatory control over Fannie Mae & Freddie Mac?
Who bought the most Countrywide loans?
The fed had a ginormous role in creating risk factors for the bubble & crash.

I'm off to "temple" too....

 

[metis]

The Great Recession didn't happen because of too many regulations but too few, especially allowing banks to hold so little in reserve. Some economists basically called what we did as acting like a casino. Countries that weren't so loosey-goosey didn't see this directly happening with their banking system, however since banking systems internationally affect each other, they were affected by what happened here.​

It was mostly caused by over-speculation within the shadow-banking industry that by its nature has few regulations. After the collapse, the one thing that so many Republicans did was to try and blame it mostly of Fanny Mae and Freddie Mac, but that simply was just a fabrication. If in doubt, check out the Wikipedia article on "Fanny Mae" and scroll down to 1.3.

 

[Revoltingest]

The Great Recession didn't happen because of too many regulations but too few, especially allowing banks to hold so little in reserve. Some economists basically called what we did as acting like a casino. Countries that weren't so loosey-goosey didn't see this directly happening with their banking system, however since banking systems internationally affect each other, they were affected by what happened here.​

It was mostly caused by over-speculation within the shadow-banking industry that by its nature has few regulations. After the collapse, the one thing that so many Republicans did was to try and blame it mostly of Fanny Mae and Freddie Mac, but that simply was just a fabrication. If in doubt, check out the Wikipedia article on "Fanny Mae" and scroll down to 1.3.

Experts are very useful people, but sometimes things don't comport with one's experience.
Then tis best to cast a jaundiced eye towards them. It's possible....just possible...that their
analysis is imperfect.

Spoiler: Example of statistics getting it wrong.

Remember back a few years when all the polls were predicting a guaranteed Hillary
victory over Trump? Experts wielding advanced laser calculus statistics said it with
numbers, so it must be true, eh. But the odd thing I saw traveling around the country
was that the yard sign metric told a different story. Trump signs vastly outnumbered
Hillary's.

Now, on to the housing bubble crash....
You & other experts say speculators were the problem.
I was & still am in the real estate business....development, home owning, property
management, investment (residential & commercial). Of all those I associate with, no
one buys property for speculation, ie, to buy & briefly hold for later resale at a higher price.
Why don't they speculate?
Unless one has inside knowledge of a zoning change, appreciation typically isn't fast
enuf to justify the carrying costs (taxes, insurance, interest, maintenance, opportunity)
& sale costs (transfer taxes, income taxes, legal & commissions run around 10% of price).
This is a lot of overhead. Those I know who actually make money in real estate buy
investments to hold onto. If the value increases, refinancing is the better way to turn
increased equity into cash than a sale.

I saw many homeowners (who weren't speculators) discover that reduced wage income
made their homes unaffordable. And with reduced property values resulting from the
crash, they owed more than their homes were worth. They couldn't sell because that
would mean coming up with cash to cover the principal shortfall & closing costs.
So they get foreclosed upon....often by Fannie Mae & Freddie Mac, who don't renegotiate
with troubled borrowers. Essentially, the federal government tells them "Screw you!".


Just last nite, I heard another expert on NPR discuss the crash & causes. The guy
made sense to me...no real disagreement between us. But the interesting things was
what he did not address, ie, federal policy which incentivizes housing bubbles.

Let's consider value.....
What should the price of housing be?
One might expect it to be priced based upon the utility of having a home. Essentially,
you'd pay an amount every month which reflects the value of living there. Renters
view things from this perspective.
But for homeowners, it's a different picture for several reasons.....
- Monetary inflation (government created) means that your home's value increases
in dollars, while your loan balance is unaffected by inflation. One gets to make a
profit in dollars even when there's no increase in economic value. This makes
one's home an investment which is a hedge against inflation. This return increases
with greater spending & borrowing, thereby encouraging borrowing more money to
buy more house than one actually needs.
- The cost of home ownership is reduced by income taxes avoided due to deductions
for property taxes & mortgage interest paid. The savings are greatest the more money
one borrowers, & the spendier a house one buys.
- When one later sells one's primary residence, the IRS doesn't tax this gain (some
limitations apply to high value homes).

These heavy subsidies cause housing market inflation to prices above the value
of a home's actual utility, thus creating bubbles. So the problem isn't due to
villains....it's the system itself which creates instability. This is something the
"experts" don't notice.

 

[1robin]

It was low but it lasted for his entire presidency of 8 years. I like charts and data because, IMO, it paints the overall picture much better than the speculations you, I, and others are offering.

I like charts, data, statistics as well but they take time to provide and to investigate so I like to hover around the edge of a debate and try to determine if the extra time necessary to spend producing and evaluating the data is really worth it. That is why I kept asking you to provide your exact position. I don't spend tone of time on debates I don't think are important, challenging, and where the two participants disagree significantly.

The overall production of his 8 years could have been more than others even if previous economies had a better recovery. It is the aggregate of the full presidency that we have to consider. If any recoveries is followed by a recession or depression, than that needs to be considered also during a presidency. Bush's recovery was suggested to be better than Obama's. This was used as a comparison to prove that Obama's was low. But we know, that Bush created one of the worst financial bubble with the ensuing crash and crisis. So, that article didn't consider the overall sum of Bush's entire economy.

You keep forgetting that it was Carter that created the housing mess and Clinton who doubled down on it. I think Bush just happened to be the president when it imploded. It's like blaming the existence of the Vietnam war on LBJ.

As I noted before, we have to consider that a bursting economy is in more danger of bubble because the value of cash is not correctly backed by it's physical collateral or asset. IMO, we simply cannot suggest a bigger slope or burst is a better economy. The bigger burst places our economy more at risk. It is the steady rate of gain that I would argue creates a long lasting good economy. Consider how this parallels the various forms of investment. The bigger the potential, the more risky of loss. Bonds and CDs have the lower risks but have steady gains. Stocks have the highest risk because the collateral is more of ideal or confidence of the company or product.[/quote[ Let me be sure I understand you. You claim that recovering from an economic blowout slowly is better than doing so fast? Regardless I don't think a slow recovery was Obama's intent.

IMO, if the overall first order differential of a presidency's economy is positive then I will consider that a good economy. The higher the number, the better the economy.

And this number is produced by what equation?

Again, I disclose fully that these are my speculations and opinions.

You sound at least competent to make personal opinions about the subject. I am much more qualified to make theories concerning theology, philosophy, science, textual integrity, and history than politics. All I know about this subject is:

1. Obama's recovery was very slow.
2. It was slow despite how fast he was spending money on the recovery.
3. Trump's job numbers are historic.
4. The housing bubble (root cause of recession) was caused by Carter and Clinton not Bush.

If you don't have any great pushback against any of this then we are not far from an agreement.

 

[metis]

One key for understanding what happened to cause the Great Recession is what are called "credit-default swaps" and how that also encouraged over-speculation. One might google "AIG" in order to see the role they played in the shadow-banking system that went berserk.

It essentially created a house-of-cards that could take minor hits but not the big one that we saw starting in 2007. The two women who devised the system abandoned it and sent warnings out prior to that date because they realized it was too unstable, but too many people were making too much money, so their warnings got ignored.

BTW, my pension was tied to AIG, but fortunately the state guaranteed it security. However, had the economy gone "south" significantly enough, even the state might not have been in a position to protect our pensions. It's unbelievable how close our entire economy came to "the edge of the table" in 2008.

 

[Anthem]

Trump is also doing things to potentially harm the economy, eg, increasing mid east tensions could result in war.

I insist there already is war.

 

[Revoltingest]

I insist there already is war.

Could be much worse than it is.

 

[Anthem]

I support President Trump sometimes and not at others.

Not much of a supporter then, are you?

 

[Anthem]

Could be much worse than it is.

Yes. But to say it could result in war is just wrong.

 

[Anthem]

Next up will be yet more elimination of business stifling red tape and reworking trade agreements. Which will continue to improve the economy.

Can you make that more specific if you can?

 

[Anthem]

Then my apologies.

Who did you vote for? Assuming an independent?

I would love to know too, but I bet he isn't a citizen and never took part in the voting.

 

[Anthem]

Actually Fox News isn't that bad according to pew. It falls somewhere in the middle of the pack.

CNN however it's pretty abysmal.

Fox hates arabs

 

[Anthem]

Because if a historically anti- (insert politician here) source is giving positive press on that person, it is probably because they felt they needed to. It would be much like FOX news praising Obama or Hillary for something they had done.

I'm sorry, but that doesn't answer the question - at all.

 

[Revoltingest]

Yes. But to say it could result in war is just wrong.

So you say.
We each have our opinions about whether the risk of war has increased.

 

[Anthem]

So you say.
We each have our opinions about whether the risk of war has increased.

Risk of war. Ok ok. Over and out.

 

[metis]

Apparently Trump's sabre-rattling doesn't count with some.