We are not in a recession. We may yet prove to be in a recession, but that is a strictly defined economic term that we have not satisfied. And we may not: you don't have recessions when you're having positive economic growth (just over 1% at last count) and low unemployment (5.5%).
Do you realize that at the end of the Carter admin we had negative growth of almost -5%, unemployment around 11%, and a trade deficit almost triple what it is today?!?!
All that being true, what else would you call the town criers ("Recession, recession! Woe be unto us!") but whiners. What is afflicting them other than a mental recession since there is no real recession. We forget just how good things are and how bad they can really be.
Yeah, he chose his words poorly during a campaign season, but he's right on the money.
I agree technically we are not in recession but people who are being foreclosed, losing their jobs, rising cost of groceries, and the increasing cost of gas, may think otherwise. So Dr. Phill may be right but his arrogance, elitist attitude, and insensitive comments were not necessary. The American people don't need its public officials to talk down to them.
You know what they say, if your neighbor is out of work it's a recession but when you are out of work, it's a depression.
I agree technically we are not in recession but people who are being foreclosed, losing their jobs, rising cost of groceries, and the increasing cost of gas, may think otherwise. So Dr. Phill may be right but his arrogance, elitist attitude, and insensitive comments were not necessary. The American people don't need its public officials to talk down to them.
You know what they say, if your neighbor is out of work it's a recession but when you are out of work, it's a depression.
Again, we don't realize how good we have it and how bad it can be. It's also hard to avoid talking down to people when you know more about something than they do. Again, I think he could have phrased it better...there's a reason he flamed out again and again as a candidate for prez...but there is no denying he's right.
And one of your neighbors is always out of work...full employment is considered 4% unemployment in economic terms.
Yeah, he chose his words poorly during a campaign season, but he's right on the money.
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I completely agree. I must respectfullu say that, in most cases, the mortgages crisis is the fault of homeowners and not the mortgage companies. Everyone knew that interest only and arm's are dumb in most cases. So, if a person was dumb enough to sign the contract, live with it. A close friend of mine has been effected by this. He live in Las Vegas and purchased a VERY expensive home with an interest only mortgage. His thought was that his home would appreciate so much that an interest only loan was 'smart. Well, in the short term, his home appreciated by several hundred K. Now, two years later, his home is worth less that his purchase price. He played with fire and got burned.
Most people don't describe the economy in highly technical Economic terms. They are reacting like we do on hot summer days when the "heat index" makes it "feel" hotter than the thermometer indicates. (On the "other end", you have the "wind chill factor" that makes it feel colder than the thermometer indicates.) People react according to what they are personally experiencing from the daily economy. Now if the prices stay up 3 or 4 years, we will get used to them like we did $1 or $2 per gallon gas. As we get accustomed to doing without things we used to have or do, we may feel better about the "new economy" just as we have done in the past once our income "catches up". For those whose only "sacrifice" is to trade in their new "SUV" for a new hybrid "green car", this economy is still good. For those on more modest or even static "fixed" incomes, the impacts are more pronounced, and for some, devastating. For those of us approaching the age 70, it is too late for a "do over" to get a better paying job or pension plan. We have what we will always have regardless of what path the economy takes-- we are just along for the ride.
Most people don't describe the economy in highly technical Economic terms. They are reacting like we do on hot summer days when the "heat index" makes it "feel" hotter than the thermometer indicates. (On the "other end", you have the "wind chill factor" that makes it feel colder than the thermometer indicates.) People react according to what they are personally experiencing from the daily economy. Now if the prices stay up 3 or 4 years, we will get used to them like we did $1 or $2 per gallon gas. As we get accustomed to doing without things we used to have or do, we may feel better about the "new economy" just as we have done in the past once our income "catches up". For those whose only "sacrifice" is to trade in their new "SUV" for a new hybrid "green car", this economy is still good. For those on more modest or even static "fixed" incomes, the impacts are more pronounced, and for some, devastating. For those of us approaching the age 70, it is too late for a "do over" to get a better paying job or pension plan. We have what we will always have regardless of what path the economy takes-- we are just along for the ride.
But I think the point is that to complain about unemployment when it is at 5.5% is whining. To complain about the economy being in "recession" when we had 1% growth last quarter is whining. You may truly have reason to feel bad about your personal economic circumstances, but to complain about the economy in general, or to blame the national economy, with the numbers we have right now is, undeniably, whining. It could be, and has been, much, much worse.
I agree with you both and I am aware of 3.5 - 4% being considered full employment (econ 101). Unfortunately, mobile, we all have to pay for the poor decisions of those borrowers. But as blazr said if you know more then you should be charged with enlightening others (creative liberty). The mortgage companies have to share in the responsibility of this mess. I am as much of a capitalist as the next person but you can't sacrifice long-term prosperity for short-term profits. I liken it to a salesperson who focuses on making a sale versus developing a client.
Yes the interest only and arms were not the best options, it allowed to many people to 'rent' what they couldn't afford. Thank God for Clark Howard.
The problem is that people with poitical agendas highjack terms like "recession." Now Americans believe we are in a recession because the American public is too ignorant to know what it really is (thanks public school system!). Recession is what we say in the late 70s early 80s. That was really bad. Is our economy great right now? Hell no. We need to be at 5% growth, not 1%. But the fact of the matter is that we are not is a recession. I saw a money guy on CNN a while back saying, "well, recession doesn't mean 2 consecutive quarters of negative growth anymore. The modern concept of recession has more to do with the general sentiment of the American people." Really? That's the first I've heard of that. When did all of the economists get together and decide that? Or, a better question, who died and made you the arbiter of economic terminology. The bottom line is there are people out there who want nothing more than for us to be in a recession so they can point fingers, and thats a bunch of bull. So, Gramm is right.
And, as un-PC as it may be, we are a country of whiners. We live in the greatest country in the world, yet we bitch and moan about everything under the sun. I'm being foreclosed on. Boo-hoo. Well, maybe you shouldn't have mortgaged that $400,000 house while making $35,000 a year. Mortgage companies whining, we need a bail out. We're going out of business! Well, maybe you shouldn't have given a jumbo loan to the guy riding on the back of a garbage truck who has a credit score of 4.
We live in the greatest country in the world, yet we bitch and moan about everything under the sun.
Allow, if you will, a complaint about your complaints. Living in the greatest country in the world is no excuse for putting blinders on problems one doesn't want to think about. Those problems that others are facing are going to make it back to you. What some are quick to label as needless pessimism, others are quick to note as an observable reality.
Bear Stearns, one of the financiers at the heart of both the mortgage and credit crises, got their federal 'assistance' (don't call it a bailout!) so it wouldn't fail. Now FannieMae and Freddie Mac are looking for similar help. If you've paid attention to the domestic automotive industry, you'd be making a smart bet that within five years, at least one of the "Big 3" automakers (Ford, GM, Chrysler) will be declaring bankruptcy. Hell, it could be more than one, and it could be less than five years. There's a lot of jobs tied up in those three, and not just the positions held by 'whiny' union workers, either. Oil and food commodities are both shooting up in price; one because of transportation of the other, and one through uses intended to replace the other. But, none of that worth raising big stink over, right?
Maybe there are some who haven't found the rosy pair of Oakleys many conservatives are wearing, but that doesn't make their complaints any less valid. Gramm's lack of concern for folks in a pinch didn't do anything to help his party's candidate--that's why his comments were stupid.
Yeah, ol' Phil's a great guy. He's been the brains behind McCain's economic planning and wrote and shaped the McCain campaign's banking policies. At the time he did so, he was (and continues to be) a vice charman of Swiss investment bank UBS, and he lobbyed for them until April 18, well after McCain had clinched as the Republican presidential candidate. UBS is up to their eyeballs in the subprime banking mess and is also under investigation for allegedly running a tax evasion arm out of their US branch. UBS recently ordered their international banking staff not to travel to the U.S. in order to prevent their being subpoenaed by the SEC.
He was also deep in Enron, wrote lots of helpful legislation for Ken Lay while he was still in the Senate. His wife was a director of Enron and got out with a nice fat golden parachute while all the little people were losing their retirement when it bellied up.
It may not meet the classical economist's definition of a recession, but food prices are way up, gas is up, fuel oil is going to be awful come winter. The Dow's below 11,000. Foreclosures are up over 50%. Teh cost of living is rising a damn sight faster than wages are.
It won't bother Phil though, no shortage of people who'll hire an ex senator to lobby for them.
Phil Gramm wrote legislation that paved the way for the mess that banking is in today. He removed safeguards that had been in place since the Depression to prevent exactly the kind of over leveraged and undercapitalized financial shenanigans that have put the whole banking and mortgage industry at risk of imploding.
"As a member of the Senate Finance Committee and the recipient of enormous banking contributions, Gramm did an even bigger favor for the financial industry in 1999 when he sponsored the Financial Services Modernization Act allowing banks, securities firms, and insurance companies to combine. The bill weakened the Community Reinvestment Act, which requires banks to help meet the credit needs of low- and moderate-income neighborhoods. Gramm described community groups that use the CRA as "protection rackets" that extort funds from the poor, powerless banks. The bill is also a disaster for the privacy of bank customers and weakens regulatory supervision. As Gramm proudly declared, "You're not going to find a single bank, insurance company, or securities company that will say they were hurt financially by this bill." ~ Hat tip to the late great Molly Ivins
You wanna talk about individuals who bought a $300,000 home on a 35k income? What about banks and investment houses (theoretically financial professionals, mind you) who packaged all kinds of dubious debt as investments, then used the money to leverage yet more dubious financial instruments, layer on layer of paper profits until the whole thing came crashing down? Billions of dollars worth? Their answer? Run to the government for a bailout. Oh, and fire the CEO and give him a 200 million dollar payout for running the company into the ground.
Pffft.
As a fiscal conservative, I wish there weren't these bailouts. Companies succeeding and failing is a part of the free market. If Bear Stearns et al gave a bunch of ****** investments, then they, as well as the people who signed on the dotted line, should be held accountable for their crappy business practices.
And yes, this country is full of whiners who complain because their lives aren't all peachy and perfect. I see this at work, when I was in school, etc. A lot of the post-baby boom generation (I guess generations X & Y) seem to think that someone else is supposed to fix their problems for them. When my friends complain about something negative in their life going on, I normally tell them to stop whining and look at what they did to get in their crappy situation. Unfortunately some of them see this as me attacking them instead of constructive criticism.
As a fiscal conservative, I wish there weren't these bailouts. Companies succeeding and failing is a part of the free market. If Bear Stearns et al gave a bunch of ****** investments, then they, as well as the people who signed on the dotted line, should be held accountable for their crappy business practices.
And yes, this country is full of whiners who complain because their lives aren't all peachy and perfect. I see this at work, when I was in school, etc. A lot of the post-baby boom generation (I guess generations X & Y) seem to think that someone else is supposed to fix their problems for them. When my friends complain about something negative in their life going on, I normally tell them to stop whining and look at what they did to get in their crappy situation. Unfortunately some of them see this as me attacking them instead of constructive criticism.
Perhaps your delivery needs some work....
Well played. I let that one lay.
As a fiscal conservative, I wish there weren't these bailouts. Companies succeeding and failing is a part of the free market. If Bear Stearns et al gave a bunch of ****** investments, then they, as well as the people who signed on the dotted line, should be held accountable for their crappy business practices.
And yes, this country is full of whiners who complain because their lives aren't all peachy and perfect. I see this at work, when I was in school, etc. A lot of the post-baby boom generation (I guess generations X & Y) seem to think that someone else is supposed to fix their problems for them. When my friends complain about something negative in their life going on, I normally tell them to stop whining and look at what they did to get in their crappy situation. Unfortunately some of them see this as me attacking them instead of constructive criticism.
Perhaps your delivery needs some work....
Not going to argue that one.
Bear Stearns primarily failed because of counterparty risk. They were no longer able to get the overnight loans that they needed to run day-to-day operations and it didn't help that a lot of rumors got started to help strike fear in their counterparties so they would pull away from Bear. This all occurred because the two hedge funds they ran began taking huge losses on bets that went wrong with financial products tied to subprime mortgages. This forced investors to withdraw cash and then it was a domino effect from there.
At the end of the day, EVERYONE is to blame for the housing mess. The homebuyer, the appraiser, the real estate agent, the mortgage brokers/loan officers, the wholesale lenders and banks, then the investment banks, then the rating agencies, then individual states for having pathetic loan officer/mortgage broker certification requirements, then the speculators, the developers who flooded the market, and then everyone else who had a hand in the cookie jar.
In terms of "bail outs", well, it wasn't the company who got bailed out, it was the overall financial system. Had Bear Stearns truly collapsed it would have sent one nasty financial tsunami throughout the United States and our problems would be a lot worse right now.
Bear Stearns primarily failed because of counterparty risk. They were no longer able to get the overnight loans that they needed to run day-to-day operations and it didn't help that a lot of rumors got started to help strike fear in their counterparties so they would pull away from Bear. This all occurred because the two hedge funds they ran began taking huge losses on bets that went wrong with financial products tied to subprime mortgages. This forced investors to withdraw cash and then it was a domino effect from there.
At the end of the day, EVERYONE is to blame for the housing mess. The homebuyer, the appraiser, the real estate agent, the mortgage brokers/loan officers, the wholesale lenders and banks, then the investment banks, then the rating agencies, then individual states for having pathetic loan officer/mortgage broker certification requirements, then the speculators, the developers who flooded the market, and then everyone else who had a hand in the cookie jar.
In terms of "bail outs", well, it wasn't the company who got bailed out, it was the overall financial system. Had Bear Stearns truly collapsed it would have sent one nasty financial tsunami throughout the United States and our problems would be a lot worse right now.
You act like you have a finance degree or an MBA or something.
If Fannie Mae and Freddie Mac continue to crater we're going to have a bailout that makes the Savings and Loan thing in the eighties look tiny.
Well, the government has stepped in and will increase their credit lines from the current $2.25 Bn to around $3 Bn also giving them access to the emergency discount window.
Everything is now in place in case of a true emergency. It will be interesting to see how the market reacts to this news, if they take it as just a precautionary measure or if they take it as a forecast of a lot more trouble in the very near future.
You wanna talk about individuals who bought a $300,000 home on a 35k income? What about banks and investment houses (theoretically financial professionals, mind you) who packaged all kinds of dubious debt as investments, then used the money to leverage yet more dubious financial instruments, layer on layer of paper profits until the whole thing came crashing down? Billions of dollars worth? Their answer? Run to the government for a bailout. Oh, and fire the CEO and give him a 200 million dollar payout for running the company into the ground.
Pffft.
+1. There were many less-than-savvy home buyers who got greedy. But there was major greed at the investment level to start this mess. And like UBD said, they had the business degrees and MBAs.
So, just who are we calling irresponsible again?
---------------------
"My Bank Failed on Friday"
http://www.midlifebachelor.com/articles/...ailed.html
What a whiner, dude expected his money to be safe in a bank.
Oh please. Banks and investment houses specialize in financial products. Over that course of time the flavor of the day was products tied to mortgages. EVERYBODY HAD A HAND IN THE COOKIE JAR. If anybody owned a home in that time they all benefited from those times. Everyone from the highest levels at investment banks, to municipalities that benefited from the increase in tax flow, to the sellers who made a lot of money selling their home, to the real estate speculators. AGAIN, there is not one single person or group to blame because everyone is guilty.
I think I gotta point the finger of blame back upstream at the lawmakers who made this all possible.
Whatever the final number is, it will represent in stunning red ink the cost to this society of financiers who are greedy and shortsighted and regulators who don't regulate. Taxpayers weren't supposed to be left holding defaulted mortgages and abandoned homes while executives who presided over balance sheet implosions walk away with millions.
We reward people for bad behavior then act surprised when it happens again.
"Republicans lead by Sen. Phil Gramm of Texas and the accounting industry's trade group are working to kill a Democratic measure that would impose new rules on auditors, companies and investment banks in the wake of Enron's collapse," reports The New York Times. That would be the same Phil Gramm who got $101,350 in contributions from Enron and $927,055 from the financial industry while chairman of the banking committee. (By way of contrast, the late Henry B. Gonzalez of Texas, a populist, accepted no contributions from the financial industry while serving as chair of the House banking committee.)
Gramm's wife served on the board of Enron, but a spokeswoman for Gramm announced the reform bill has nothing to do with Enron and is therefore not a conflict of interest. The entire purpose of the bill, by Paul Sarbanes of Maryland, is to prevent precisely the abuses that led to the collapse of Enron.
http://freepress.org/columns/display/1/2002/267
Graham operates on the guiding principle that what's good for Phil Graham is good for the USA.
Graham operates on the guiding principle that what's good for Phil Graham is good for the USA.
Isn't that the same for 99.9% of politicians?
99.9% of them didn't get to write banking laws though. Graham was a particularly egregious offender when he was still in the Senate.
99.9% of them didn't get to write banking laws though. Graham was a particularly egregious offender when he was still in the Senate.
Fair enough.
We should know that laws are always behind the crimes. It takes forever for FASB to respond to creative accounting that goes on over the years.
Either way, EVERYONE IS TO BLAME.
Oh please. Banks and investment houses specialize in financial products. Over that course of time the flavor of the day was products tied to mortgages. EVERYBODY HAD A HAND IN THE COOKIE JAR. If anybody owned a home in that time they all benefited from those times. Everyone from the highest levels at investment banks, to municipalities that benefited from the increase in tax flow, to the sellers who made a lot of money selling their home, to the real estate speculators. AGAIN, there is not one single person or group to blame because everyone is guilty.
Then you'll excuse me if I lay most of the blame at regulators and the financial officers who knew better, but didn't do better. The individual irresponsibility expressed by homeowners was practically fueled by those at the top (who may have lost shirts, but probably didn't lose houses).
This ain't quite the same as blaming McDonald's for your obesity and Coca-Cola for your rotten teeth. 'Everyone' certainly wouldn't be to blamed for those.
Oh please. Banks and investment houses specialize in financial products. Over that course of time the flavor of the day was products tied to mortgages. EVERYBODY HAD A HAND IN THE COOKIE JAR. If anybody owned a home in that time they all benefited from those times. Everyone from the highest levels at investment banks, to municipalities that benefited from the increase in tax flow, to the sellers who made a lot of money selling their home, to the real estate speculators. AGAIN, there is not one single person or group to blame because everyone is guilty.
Then you'll excuse me if I lay most of the blame at regulators and the financial officers who knew better, but didn't do better. The individual irresponsibility expressed by homeowners was practically fueled by those at the top (who may have lost shirts, but probably didn't lose houses).
This ain't quite the same as blaming McDonald's for your obesity and Coca-Cola for your rotten teeth. 'Everyone' certainly wouldn't be to blamed for those.
I'd hold them equal, if not shift some of the blame to the buyers.
Oh please. Banks and investment houses specialize in financial products. Over that course of time the flavor of the day was products tied to mortgages. EVERYBODY HAD A HAND IN THE COOKIE JAR. If anybody owned a home in that time they all benefited from those times. Everyone from the highest levels at investment banks, to municipalities that benefited from the increase in tax flow, to the sellers who made a lot of money selling their home, to the real estate speculators. AGAIN, there is not one single person or group to blame because everyone is guilty.
Then you'll excuse me if I lay most of the blame at regulators and the financial officers who knew better, but didn't do better. The individual irresponsibility expressed by homeowners was practically fueled by those at the top (who may have lost shirts, but probably didn't lose houses).
There is an old expression in law enforcement that many victims in "confidence rackets" get "taken" because of larceny in their own hearts. They want to believe they can get "something for (nearly) nothing" and so lay themselves bare for some kind of retribution when the "scheme" collapses. Politicians don't worry about who's at fault, they worry about who is going to win votes in the "fall out".
This ain't quite the same as blaming McDonald's for your obesity and Coca-Cola for your rotten teeth. 'Everyone' certainly wouldn't be to blamed for those.
I'd hold them equal, if not shift some of the blame to the buyers.
No surprise that he resigned because now he's a POLITICAL liability. I guess neither he nor MyCane has political integrity or conviction.
I wish one of these candidates would show they have principles and are willing to stand on them. But neither has done it, both seem to CHANGE with the wind.
I may not always agree with a person's morals, convictions, or principles but I can respect those who have them.
Nice and topical links, dfarr.
"Excellent articles" are the rule, not the exception, with Sowell-sensei.
I only have one beef with him this time, and that is that he should have lead with this bit...
Meanwhile, the Federal Reserve System brought interest rates down to such low levels that "creative financing" with interest-only mortgage loans enabled people to buy houses that they could not otherwise afford.
...and used his lead as the "meanwhile".
The price of money stayed too cheap for too long. It's not rocket surgery people. And it isn't some Vast Rightwing Conspiracy ( 
), Band Dad... 