I have nothing to do with this

[cema]

As I am not an expert in finances or economics, I defer any judgment on the bailout and its failure.

But we are all experts in politics, aren't we. Do I understand it correctly that the basic driving force behind the current financial troubles is a failure of a socialist experiment in the housing market? Or is it only part of the problem?

And the politicians, as usual, will blame someone else. (And everybody else will blame politicians.)

It is interesting to note, too, that more Americans are reported to trust Obama's team on economics than McCains' team. Whereas one would think that it would be the other way.

Update. A bit heated in the comments. Chill out, the world is not going to end right now.

Comments

[ira-k.livejournal.com]

"Do I understand it correctly that the basic driving force behind the current financial troubles is a failure of a socialist experiment in the housing market?"

my understanding was the opposite.

[shvarz.livejournal.com]

+1
It is a failure of a capitalist experiment in unregulated free market.

[birdwatcher.livejournal.com]

Где-то пузырь должен быть надуться. Это следствие провалившегося социалистического эксперимента по отказу от золотого доллара и сочетания FDIC и банков с частичным резервированием. То, что на этот раз он надулся именно в недвижимости -- довольно-таки неважно.

[scholar-vit.livejournal.com]

От золотого стандарта отказался коммунист Никсон - так как не хватало денег на войну во Вьетнаме.

[gera.livejournal.com]

Комменты жгут.

[eta-ta.livejournal.com]

aga. The first subthread

[eta-ta.livejournal.com]

more Americans are reported to trust Obama's team
Reported by whom?

Remember the polls right before the election'04? They all predicted Kerry's win.

[cema.livejournal.com]

I know. That's why I said "reported".

define "before"

[saccovanzetti.livejournal.com]

Remember the polls right before the election'04? They all predicted Kerry's win.




http://www.pollster.com/blogs/convention_bumps_in_context.php

[art-of-arts.livejournal.com]

You're 100% correct.
The socialist element had been introduced into the market system - Barney Frank & Co.'s idea, that funds ought to be lent to poor people, who're unable to repay their mortgages - and the system has burped this moronic idea out.
Now the Congress is playing with the next phase of the socialist crap - that all those who have money must pay for the sins of those who have already failed!

It's called "sending smart money after the stupid one"

[eta-ta.livejournal.com]

или "с больной головы на здоровую"

[trurle.livejournal.com]

Пузырь на рынке недвижимости, как и прошлый пузырь на рынке акций интернет компаний, как и позапрошлый пузырь на рынках emerging markets эти симптомы, а не причины проблем.

[calypso72]

I don't follow your reasoning. The failure of the overly exhuberant and under-regulated FREE MARKET is now proposed to be SOLVED by a socialist solution proposed by the advisers to the president of the same party as McCain. So, I think Obama is clearly more trustworthy in the economics department at this point.

[cema.livejournal.com]

Well, there are questions about the extent to which the market was free. Because I am not an expert on this, and because everybody else seems to be an expert, I was wondering how it all falls together.

[avva.livejournal.com]

Do I understand it correctly that the basic driving force behind the current financial troubles is a failure of a socialist experiment in the housing market?

What? No! You were being fed some insultingly low-grade bullshit.

[cema.livejournal.com]

As you can see, there is a variety of opinions here.

[geish-a.livejournal.com]

eh... my thought exactly (with all due disclaimers about my not being an expert)

[eta-ta.livejournal.com]

it's not so much a matter of trust, in my opinion, as matter of record.
For your research:
http://fskrealityguide.blogspot.com/

[scholar-vit.livejournal.com]

The author of this article: http://www.prospect.org/cs/articles?article=did_liberals_cause_the_subprime_crisis provides interesting arguments that CRA is basically a scapegoat. His numbers, if you trust them, show that failed loans were exactly the loans NOT promoted by the govt regulations.

[cema.livejournal.com]

Good, I will take a look at it when I have more time. Is the author biased or has an agenda of some sort?

[gera.livejournal.com]

Из рекомедаций Бостонского Банка Федерального Резерва:

Special consideration could be given to applicants with relatively high obligation ratios who have demonstrated an ability to cover high housing expenses in the past. Many lower–income households are accustomed to allocating a large percentage of their income toward rent...
Down Payment and Closing Costs: Accumulating enough savings to cover the various costs associated with a mortgage loan is often a significant barrier to homeownership by lower–income applicants...
Credit History: Policies regarding applicants with no credit history or problem credit history should be reviewed. Lack of credit history should not be seen as a negative factor...

Эта замечательная книжечка полна ссылок на федеральные законы и регуляции, а также цитат такого рода:
“The regulatory issues in the 1990s will not be limited to safety and soundness, but will increasingly emphasize fairness: whether or not banks are fulfilling the needs of their communities.”
Lawrence B. Lindsey Member Board of Governors of the Federal Reserve System Address to the California Bankers Association May 11, 1992

Внимание, вопрос: как вы думаете, какого рода ссуды давали людям в результате таких рекомендаций - prime или subprime?
И два вытекающих отсюда дополнительных вопроса:
1) как вы думаете, что стало сегодня с этими ссудами
2) как вы думаете, тот автор, на которого вы выше ссылаетесь, пытается разобраться в ситуации или навешать читателю лапшу на уши?

[e2pii1.livejournal.com]

А почему His numbers и их не-тенденциозности можно доверять ? Там написано сверху "liberal intelligence" и статья направлена против консерваторов-антилибералов.

То что CRA - главный виновник кризиса мне на данный момент представляется недоказанным. Но то что CRA сам по себе вещь плохая и принесшая больше вреда чем пользы представляется весьма вероятным.

А вы как считаете, нужен ли CRA ?

Socialist or capitalist

[msmolyak.livejournal.com]

My understanding is opposite to that of Cema. The necessary condition behind the mortgage were the historically low interest rates. This lead the financial institutions (trying to satisfy investors hungry for yield) to seek any possible ways to come up with investments generating interest above and beyond the treasury bonds.

Sub-prime mortgages proved to be such an instrument. I do not disagree that politicians (probably from both parties) only welcomed the fact that more American families can realize the "American dream" of owning a house and did little if anything to stop the abuses in the mortgage market.

The next factor in the current crisis was the securitization of the mortgages. An ability of banks to resell the mortgages (including sub-prime) to institutional and individual investors (remember those yield-hungry investors?) was what created such a supply for sub-prime mortgages. The borrowers were happy to oblige and so were the investors buying the mortgages from the bank (which incidentally meant that the banks had no incentive to manage the risk of the borrowers).

Yet another big factor in the present situation is another financial instrument, Collaterized Debt Obligations. Those were insurance policies (which were not regulated as such) sold by the likes of AIG to investors buying the securitized mortgages. The CDOs promised the buyer to pay in case the underlying debt obligation default. AIG considered this a risk free (or nearly so) exercise in premium collection and did not keep capital reserves adequate to cover potential losses.

I do not see much of a socialist aspect in this chain of events. This is the capitalists sorely miscalculating the investment risk at many different levels.

Misha

Re: Socialist or capitalist

[msmolyak.livejournal.com]

And here is the socialist aspect of the whole mess:

http://online.wsj.com/article/SB122298982558700341-email.html

[gera.livejournal.com]

У меня тогда не было времени влезать в подробности, но сегодня я как раз на эту тему высказался.