The Note, 12/02/08: Handoffs & Handouts

Say HELLO to those tax hikes.

I liked the strong, elaborated, wry reporting and writing of the previous Note.

Today the state governors are meeting in Washington to ask for handouts. The not yet President elect believes there will be a need to shift more responsibility to the federal government,away from the states to accomplish needed infrastructure repairs and to meet state budget obligations. Governor Randel says the funding will create jobs, good jobs that can’t be outsourced. Here we go building the federal government and taking control away from the states. More government jobs= bigger national budget. We’re going in the wrong direction already and the watch hasn’t even changed yet.Looks like $126 billion is already targeted for immediate infrastructure repairs. The governors are expected to ask for another $400-500 billion. Our democratic congress throws trillions around as if we actually have money in reserve. Who’s going to foot the bill? The taxpayers. More pragmatism at work.

This new Note is a PIA to print.

Obama says HE will have the last word in discussions HOWEVER, he also said “after I discuss it with my advisors” – who will, in fact, make the final decisions but Obama will take credit for it!!! No change as far as I’m concerned.

So what is considered wealthy by barry O these days?? I certainly would consider him wealthy since he just purchased michelle a $30,000.00 ring.
Are you rich if you make $250,000 (as barry said throughout the beginning and middle of his campaign), or is it $200,000 (as he said throughout the end of his campaign) or $150,000 (as biden said AFTER THE CAMPAIGN)??
WHICH IS IT??
I want biden to clarify at what level of income does the gov’t expect people to be “more patriotic and pay higher taxes”? Even though the answer would be coming from a man who has earned $2,590,000 in the last 10 years and given $3,000 to charity (.001% of his total income)- NOW THAT IS WHAT I CALL PATRIOTIC!

Jock; In the end the only ones who got help (as always) were the Clinton cronies at Fannie Mae, Freddie Mac and on Wall Street. The poor people lost the homes they could suddenly afford and now have a bad debt record that will follow them for the rest of their lives. A home foreclosure or auto repo is a long term serious credit blem. But keep on voting for the Democrats ’cause they are dedicated to helping you. No, really. This time they mean it. sic

Dave come on the reason we are in this mess is because of Bush he has been in power for the last 8 years how can you say this isn’t his fault he is the president and has hurt so many people financially. He and his dad are in the oil business they don’t have to worry about retirement. My mom lost 30,000 dollars because of this recession he has caused she is 81 years old maybe the US government should bail out the taxpayors because its them that have worked there butts off and are losing big time. I’m 47 years young and I feel for the elderly again put the blame were its suppose to be. EJ

EJ
Do some research and look up what the worst president in HISTORY (jimmy carter) came up with, something called the COMMUNITY REINVESTMENT ACT.
After that ingenious idea, the last 20 years have been filled with democrat-controlled congress FORCING banks to reduce/erase their lending standards under the banner of making everything “fair”.
Liberals simply don’t like America. In America, our gov’t guarantees us the “pursuit of happiness”. Liberals are always trying to change America into the goverment “guarunteeing happiness”- which is why your mom lost 30,000.
Have you seen or been to any socialist, communist countries recently? It is nothing more than HUGE gov’ts, HUGE taxes, and wealthy elites at the top telling everyone else how to live. You can KEEP THE CHANGE BO.

Thank you for the print option. However, Blog format does not allow one to return to the original analysis and access other referenced materials later in the day. Not all have the luxury of reading the entire Note at once & also be in an environment to easily access or print referenced stories for future consumption. Please leave the entire analysis with links available somewhere.

dave
Simple answers are not always correct. Rarely, when the economy is the subject. Anyone, who cherry-picks one law, or one error, as the “cause of everything,” is just fooling themselves.
And take this “liberals hate America” bullsht and cram it up your ###. It is false. It is slander. And it is stupid.

dave et al.
The US economy is very complicated and it would take an unprecedented amount of coordination for any one party to screw it up! There’s plenty of blame to go around including democrats, republicans, Greenspan, uncreditworthy home buyers, and the banks. The present reality is the the damage is aleady done and all the back-n-forth bickering about who’s at fault is certainly not going to help. Like it or not, BO will soon be our president and he needs all our support. As a so-called “evil liberal,” I didn’t vote for Bush but I always wanted him to succeed. I just hope the right wing pundits can somehow do the same, but maybe I’m being too optimistic.

dave: My friend. Love to debate with you, however, I must leave for work. You could start with the #1 website I use for my information. It’s called- http://www.senate.gov. , another is http://www.thomas.loc.com. If you’re not familiar with those, they are respectfully the United States Senate and Library of Congress website. You will find the actual floor debate, word for word. As far as the responsibility of the banking fiasco, start with the Gramm-Leach-Bliley deregulation act. You’ll find all the words, including the amendment introduced by Phil Gramm, The Commodities Futures Modernization Act,on the day the vote was taken, day before Christmas recess in 1999, with no chance to be run through a committee and tacked onto the Omnibus “must pass” budget bill. This surprise bill tacked on by Gramm had been considered dead. Again here’s a quick cut and paste from one of my archived files regarding the bill most responsible as the beginning for today’s fiasco. — “(In 1999, Gramm pushed through a historic banking deregulation bill that decimated Depression-era firewalls between commercial banks, investment banks, insurance companies, and securities firms—setting off a wave of merger mania.
But Gramm’s most cunning coup on behalf of his friends in the financial services industry—friends who gave him millions over his 24-year congressional career—came on December 15, 2000. It was an especially tense time in Washington. Only two days earlier, the Supreme Court had issued its decision on Bush v. Gore. President Bill Clinton and the Republican-controlled Congress were locked in a budget showdown. It was the perfect moment for a wily senator to game the system. As Congress and the White House were hurriedly hammering out a $384-billion omnibus spending bill, Gramm slipped in a 262-page measure called the Commodity Futures Modernization Act. Written with the help of financial industry lobbyists and cosponsored by Senator Richard Lugar (R-Ind.), the chairman of the agriculture committee, the measure had been considered dead—even by Gramm. Few lawmakers had either the opportunity or inclination to read the version of the bill Gramm inserted. “Nobody in either chamber had any knowledge of what was going on or what was in it,” says a congressional aide familiar with the bill’s history.
It’s not exactly like Gramm hid his handiwork—far from it. The balding and bespectacled Texan strode onto the Senate floor to hail the act’s inclusion into the must-pass budget package. But only an expert, or a lobbyist, could have followed what Gramm was saying. The act, he declared, would ensure that neither the sec nor the Commodity Futures Trading Commission (cftc) got into the business of regulating newfangled financial products called swaps—and would thus “protect financial institutions from overregulation” and “position our financial services industries to be world leaders into the new century.)”
I would love to post the words from the Senate debate, but it’s way too long for me to pull up and post now. If you care to know the facts, look it up. As far as Hannity goes, just look up Hal Turner. Limbaugh speaks for himself as does his record. If you can post a website that can refute the word for word dialog from the U.S. Senate as recorded in the Library of Congress, please do so. I’d love to read it.

Housing Crisis: Fannie, Freddie and Democrats
The Democrats in Congress believe no one can own a home without government involvement. They believe everybody, whether they can afford it or not, should own a home.
The Democrats used two quasi government agencies to buy up fraudulent mortgages to create a market for more fraud. This started in 1977, under the Carter administration—Carter has lived his life as a guilty party to slavery. Jimmie used his presidency to beg forgiveness, with your money and the dignity of millions.
The Free Market Works. Government Destroys. That is the lesson from the last 30 years. The destruction of the US economy was started by the policies of Carter—and the Democrats refused to fix the problem when confronted with the evidence of the impeding crisis. Of course Obama lies about it—he blames McCain, when it was McCain who wanted to stop the bigotry and economic disaster of the Democrat/Obama policies. What do you expect—Obama knows he can never tell the truth.
Pass this along, let your friends understand how we got into this mess and who is responsible.
When Fannie And Freddie Opened The Floodgates Misdiagnosing the causes of the crisis could lead both to regulatory overkill and to more reckless risk taking.
by Stuart Taylor, National Journal, 10/18/08
President Bush, his Securities and Exchange Commission appointees, other free-enterprise dogmatists who have stood in the way of regulating risky and opaque financial manipulations, and greedy Wall Streeters deserve the blame heaped on them for the financial meltdown that has so severely shaken America.
But the pretense of many Democrats that this crisis is altogether a Republican creation is simplistic and dangerous.
It is simplistic because Democrats have been a big part of the problem, in part by supporting governmental distortions of the marketplace through mortgage giants Fannie Mae and Freddie Mac, whose reckless lending practices necessitated a $200 billion government rescue last month. It is dangerous because misdiagnosing the causes of the crisis could lead both to regulatory overkill and to more reckless risk taking by Fannie, Freddie, or newly created government-sponsored enterprises.
Fannie and Freddie aside, it’s worth pointing out that many, if not most, of those greedy Wall Street barons are Democrats. And that the securities and investment industry has given more money to Democrats than to Republicans in this election cycle. And that opposing regulation of risky new financial practices by private investment banks and others has been a bipartisan enterprise, engaged in by the Clinton and Bush administrations alike.
But the roles of Fannie and Freddie are my focus here. Powerful Democratic (and some Republican) advocates of affordable housing, including Senate Banking, Housing, and Urban Affairs Committee Chairman Christopher Dodd, D-Conn.; Sen. Charles Schumer, D-N.Y.; and House Financial Services Chairman Barney Frank, D-Mass., have been the GSEs’ most potent and ardent champions in recent years. Meanwhile, the agencies and their employees have orchestrated a gigantic lobbying effort (costing more than $174 million between 1998 and 2008). They have also made campaign contributions of more than $14.6 million between the 2000 and 2008 election cycles, with some of the largest going to Dodd and Barack Obama.
A leading illustration of this Democrat-GSE symbiosis came in summer 2005. The Senate Banking Committee adopted a bill to impose tighter regulation on Fannie and Freddie, with all Republicans voting for it. But the Democrats voted against it in committee and killed it on the floor.
Also in 2005, Fannie and Freddie began buying vast amounts of subprime and “alt-A” mortgages with, in many cases, virtually no down payments, that had been taken out by people with low credit scores and low incomes relative to their monthly payments. To finance more and more affordable housing, as leading Democrats, and some Republicans, had urged, the GSEs dramatically lowered their traditional underwriting standards.
Between 2005 and 2007, Fannie and Freddie “sold out the taxpayers” by financing almost $1 trillion in such highly risky mortgages, according to “The Last Trillion Dollar Commitment: The Destruction of Fannie Mae and Freddie Mac,” a carefully researched essay posted on the conservative American Enterprise Institute’s website by Peter Wallison of AEI and Charles Calomiris of Columbia Business School.
They base their trillion-dollar figure, which is much higher than most published estimates, on detailed analysis of what they call “accounting practices that made it difficult to detect the size of those exposures.”
Fannie and Freddie appear to have played a major role in causing the current crisis, in part because their quasi-governmental status violated basic principles of a healthy free enterprise system by allowing them to privatize profit while socializing risk. That is, their special privileges as GSEs — created decades ago to promote homeownership by buying mortgages from banks, which could then use the cash to make more loans — enabled them to lend at high rates to reap enormous profits for their private stockholders and executives and to borrow at low rates based on the government’s implicit promise to rescue them from any failure, as it has now done.
Unbeknownst to the investment banks, the experts at Fannie and Freddie knew very well that their bosses were taking reckless risks.
Many conservatives have gone so far as to blame Fannie, Freddie, and their Democratic sponsors for the entire meltdown. Some (not including Wallison and Calomiris) also blame the Community Reinvestment Act of 1977, which forced banks to lend and invest more in minority and low-income areas.
This accusation has spurred furious rebuttals by Democrats and their media friends. Some have been well reasoned. Some — especially a July 14 column by New York Times columnist Paul Krugman, who was awarded the Nobel Prize in economics this week — have been flat-out incorrect.
As Wallison and Calomiris demonstrate, Krugman was egregiously wrong in writing that “Fannie and Freddie had nothing to do with the explosion of high-risk lending.” He was wrong again in stating that “they didn’t do any subprime lending, because they can’t … by law.” He was further wrong in writing that the GSEs were “tightly regulated with regard to the risks they can take.”
Others in the don’t-blame-Fannie-and-Freddie camp reasonably point out that private Wall Street investment banks and others financed even more of the $3 trillion in substandard mortgages than Fannie and Freddie did, and that these investment banks and many of the mortgage lenders who made (and then sold) the loans were not covered by the Community Reinvestment Act.
Wallison agrees that the 31-year-old law does not appear to have been a major cause of the current crisis. He also notes that although the Clinton administration pushed the GSEs to finance more affordable housing by purchasing subprime mortgages, it was not until 2005 that the GSEs began financing risky loans in huge amounts.
Why did Fannie and Freddie dive into the subprime mortgage market? And were their practices just one facet — or the most important cause — of the crisis? The questions are related and the answers debatable.
Freddie and then Fannie had been ravaged in 2003 and 2004 by accounting scandals that led to the departures of top executives, including Fannie Mae CEO Franklin Raines, a former Clinton administration official who had collected $90 million in compensation from 1998 through 2004. The scandals brought warnings from Alan Greenspan, then the powerful chairman of the Federal Reserve Board, that the government should restrain the mortgage giants’ growth. Meanwhile, three Fed economists published a study casting doubt on whether Fannie and Freddie had much effect on mortgage interest rates. All of this put the two agencies on the defensive in Congress.
By the time Daniel Mudd succeeded Raines in 2004, according to an in-depth New York Times article on October 5 by Charles Duhigg, “his company was under siege. Competitors were snatching lucrative parts of its business. Congress was demanding that Mr. Mudd help steer more loans to low-income borrowers. Lenders were threatening to sell directly to Wall Street unless Fannie bought a bigger chunk of their riskiest loans.
“So Mr. Mudd made a fateful choice,” Duhigg wrote. “Disregarding warnings from his managers that lenders were making too many loans that would never be repaid, he steered Fannie into more-treacherous corners of the mortgage market, according to executives.
“For a time, that decision proved profitable. In the end, it nearly destroyed the company and threatened to drag down the housing market and the economy.”
(So much for Krugman’s analysis.)
Duhigg added, “The ripple effect of Fannie’s plunge into riskier lending was profound. Fannie’s stamp of approval made shunned borrowers and complex loans more acceptable to other lenders, particularly small and less sophisticated banks.” The banks had little incentive to avoid risky loans as long as they could sell them to the GSEs and others long before any defaults.
Duhigg also implies, however, that Fannie and Freddie joined the junk-mortgage binge, rather than led it, to avoid losing business to private companies such as Bear Stearns, Lehman Brothers, and Goldman Sachs. Other analysts plausibly argue that what started the ball rolling was an August 2004 decision by the big bond-rating agencies, Moody’s and Standard & Poor’s, to loosen their guidelines for rating mortgage-backed securities.
Wallison and Calomiris disagree. “The most plausible explanation for the sudden adoption of this disastrous course [by Fannie and Freddie] is their desire to continue to retain the support of Congress after their accounting scandals in 2003 and 2004,” they argue. In an October 15 Wall Street Journal op-ed, Wallison adds, without qualification, that this was “the source of the financial crisis we are wrestling with today.”
But why would investment banks take foolish risks with their own money, as well as that of investors, just because Fannie and Freddie were doing so? In an interview, Wallison theorizes that the companies wrongly assumed that these must be sound investments because the leading experts on the mortgage market — Fannie and Freddie, with their vast databases and sophisticated computer programs — thought so. But unbeknownst to the investment banks, the experts at Fannie and Freddie knew very well that their bosses were taking reckless risks.
Perhaps a congressional investigation will someday sort out the extent to which Congress itself — by pressuring Fannie and Freddie to take such risks — brought about the current crisis.

liberalshateAmerica
“jockstrap?” This is how you want to begin your arguments? With 10-year-old potty insults? (and then claim it is those “liberals” who are hateful?
Comgratulations. You picked out several liberals who have said things you don’t like. Therefore, “all liberals hate America.” Huh?
1906? Ben Tillman was a conservative.
Cindy Sheehan is a nut. Liberals were extremely dismissive of her (after this became apparent).
Do you claim that America is NOT run by greedy rich white folk (as an over-generalization)?

jock59801
jockstrap was a rebuttal to your “cram it up my ###” comment.
But you are right, name-calling was way too liberal of me to do and I apologize.

Especially when the author is spewing rhetoric crap…

I feel if Republicans or Democrats are staying in an ideological/partisan mind set during these times (2 wars /recession), they focus not on what is right for America or its citizens, but their own policies preparing for senate, governor,congressional, and presidential elections every 2-4 years. Also, when you refer to history to push blame without learning from it or creating a solution for now or the future; its just rhetoric nothing we can really use substantively to fix or stabilize our situation.
I feel confident in the new administration not because Democrats control the Congress/Senate or that Prez-elect Obama was elected; I am confident because of the new presidents vision and his ability to place persons in his cabinet that reflect competence, intelligence, and experience not just yes people. I will give everyone the benefit of the doubt until they fail (badly). Republicans must be willing to work with Democrats to fix our current situation; they should not continue the same old-school political low-balling that has given politics a bad name and has kept them in control so long. I am a Constitutionalists but mostly lean conservatively, but I understand during times of crisis we must work together as one nation. If we ask citizens to do this, our politicians should lead by example.

Obama is not yet in office but he is already spreading the wealth around our wealth to thos ewho should not be getting anything.Now is the time that those who were STUPID enough to vote for Obama will see exactly what they are going to get and what they deserve for putting a SOCIALIST Wannabe in the White house.GOD I pray will help those SMART enough not to vote for Obama while he is living at the White House.

Jock59801; Good morning and merry Christmas. Following up on your heated discussion from yesterday. Liberals in general don’t hate America, with the exception of some extremists who openly condemn our nation. The major difference between liberals and conservatives is the vision they have for America, their perception of what is right and wrong, what they think the government is responsible for. Everyone wants freedom but how is freedom defined? It means different things to different people. My observation is that freedom which carries a heavy weight of personal responsibility and accountability has been interpreted to mean we can do whatever we want to do. The concept of right and wrong is defined for us all in the laws of our land. These laws restrict our freedom and should be minimized in my opinion. However, rather than adhering to the law many seem to make a game of finding ways to get around the laws or to use the laws to their advantage so the laws are evertightening to hedge against the corrupt nature of man. More laws mean more administration which means bigger government and bigger government budgets which necessitate higher taxes. Unfair taxes are the factor that brought about both the American Revolution and the War Between The States. So how big should our government be? My opinion is that the government should never grow beyond whatever level of financial commitment it can comfortably afford without overstressing the taxpayers. Our government is obviously already overstressed financially even as commitments are being made to increase the dependence for government support in our personal lives through increased benefits which means higher taxes for an already financially overburdened workforce.

P.S. Thank you Chris for a post with insight and a little faith. It is people like you who at least are willing to give PE Obama and the incoming Administration a CHANCE. This country AND the world is facing the biggest challenges we’ve ever known and “United we Stand,Divided we Fall”.
If I knew where you are, I’d shake your hand.
In the midst of all the hate-mongering, I at last can smile a little!!!

Dave,
This in response to your request for an example of hannity or limbaugh saying something racist or nazi-like.
Just a few, selected Great moments of Limbaugh….
“The Clintons have a cat, but their nanny has a dog,” during a tirade against the Democratic National Convention, 8/28/96. Limbaugh had referred to Chelsea Clinton as the “White House dog” in 1993. Apparently, he liked the remark so much he decided to repeat it.
“… If you want to know what America used to be — and a lot of people wish it still were — then you listen to Strom Thurmond,” 9/1/93.
Limbaugh once told an African-American caller to “take that bone out of your nose.”
“The NAACP should have riot rehearsals,” he announced on another occasion. “They should get a liquor store and practice robberies.” When Sen. Carol Moseley-Braun’s name was mentioned on his program, Limbaugh played the theme song, “Movin’ On Up,” from the 1970s black sitcom, The Jeffersons.
“Have you ever noticed how all newspaper composite pictures of wanted criminals resemble Jesse Jackson?” he once asked listeners.

Blogs are good for every one where we get lots of information for any topics nice job keep it up !!!