FACTS on Dubya's great recession

You said: " knows that short term rates and long term rates are not independent and that yields tend to move together - i.e. upward and downward shifts in the curve."

How is that not saying they are correlated?

Unless you were trying to argue that the Fed's ST rate have a direct causal effect on LT rates.

It's really irrelevant. Brokers and lenders hid the cost of higher interest rates by using ARMs and "teaser" rate loans.

I don't disagree that there were huge fundamental flaws in the residential mortgage market at all.

 

YOU said THIS earlier

"The banks did. They need to put food on the table too. And like you said, they were pressured into lending to subprime borrowers with the whole initiative to increase homeownership."

http://www.politicalforum.com/showthread.php?t=394878&page=53&p=1064787427#post1064787427

CARE TO BACK IT UP? GSE'S WERE FORCED, BY DUBYA. NOT BANKS IN GENERAL, AND DEFINITELY NOT MORTGAGE COMPS AND WALL STREET AT THE HEART OF DUBYA'S REGULATOR FAILURE!!

YOU also stated this:

"The problem is that you had plumbers and construction workers trying to buy large houses they couldn't afford and they weren't educated enough to understand the risks they were undertaking. They simply wanted to buy a home and finance it in the cheapest way possible (ARMs are typically cheaper than fixed rate mortgages.) "

http://www.politicalforum.com/showthread.php?t=394878&page=52&p=1064786694#post1064786694


WAS THAT GOV'T POLICY ALSO???? lol

 

Again, in case your reading comprehension skills are weak, I said Clinton era policies contributed to the financial melt down. Virtually all economists agree.

- - - Updated - - -

Again, no supply sider has ever said, "taxes incentive actions". If you disagree please show where I'm wrong.

 

They'd be wrong though. And IF they were correct, it's a small percentage of the problems since mortgages taken out 2004-2007 had default rates 450%-600% times more than ANY other period...




November 27, 2007

A Snapshot of the Subprime Market



Dollar amount of subprime loans outstanding:

2007 $1.3 trillion

Dollar amount of subprime loans outstanding in 2003: $332 billion

Percentage increase from 2003: 292%

Proportion of completed foreclosures attributable to adjustable rate loans out of all loans made in 2006 and bundled in subprime mortgage backed securities: 93%


Subprime share of all mortgage originations in 2006: 28%


Subprime share of all mortgage origination in 2003: 8%

 

It's not correlation because "tends to" allows for divergence between the two variables (and then subsequent convergence between the two to a long run mean.) That's cointegration.

And no, you wouldn't use a regression to test for a casual relationship. Regression only tests for correlation, not causation. It's cointegration that implies causation - or at least some form of causality called "Granger causality." The theory states that there is at least one Granger causal flow in a cointegrated system (though this breaks down when both variables are driven by a third process.)

They weren't hiding the costs. The entire purpose of an ARM is to lower the initial payments with the condition that you are undertaking interest rate risk (in case they rise.) This is one of the reasons people preferred this type of contract.

 

"Pressured into" in the sense that they would have lost market share had they not gone into that market. Subprime loans provided by GSEs performed well at the time so private lenders decided to get in on the fun. There was an initiative at the time by the govt to increase homeownership at any cost, and Bush even urged low-to-no doc mortgages and the elimination of downpayments.

 

Nonsense. The VAST majority was to get people into homes they couldn't afford so the Banksters could make money on loans that should've NEVER been given and then bundled and sold to investors!!!!

 

You mean market share they didn't have? And that was overtook by wall street banks who were NOT covered by Dubya's bad initiatives aimed at HUD,type loans? You know MOST mortgage brokers AND wall street banks weren't under those initiatives right?


And NO, SUBPRIMES DIDN'T PERFORM THAT WELL UNDER F/F THAT'S WHY IN 2000 CLINTON RESTRICTED F/F USE TO MEET AFFORDABLE HOUSING GOALS., Though Dubya took THAT restriction off in 2004 AFTER he required F/F to purchase $440 billion in MBS's from the secondary markets!


YOU MEAN BANKSTERS GO BY URGINGS NOW? THEY DON'T HAVE UNDERWRITING STANDARDS??

 

What you said is a matter of record, not what you now pretend you said behind your insult:

Again, I just quoted it in the very post to which you responded. "This theory focuses on the effects of marginal tax rates on the incentive to work and save ...",

I'll pass on playing your infantile little semantics game about "work and save" not being "actions."

 

And my comment was 100% correct. You have a problem with complete accuracy?

 

" You have a problem with complete accuracy? " WITHOUT CONTEXT. There fixed it for ya...

 

I disagree with your opinion. Again, I'll pass on playing your infantile little semantics game about "work and save" not being "actions."

And I stand by my statement: "Supply siders" have told us for years that taxes incentive action. It is the whole basis for their theory -- that cutting taxes will induce more effort.
So why should anyone be surprised that since we have slashed investment tax rates to less than half of tax rates on earnings, we've seen two massive, speculative investment bubbles in less than a decade while business investment languished?

Which we've now established you have no response to except for silly infantile semantic games.

 

It's not my opinion. It's fact. You disagree with the facts..... Ok.

 

Your apparent belief that "work and save" are not "actions" is not a "fact," sorry. Just silly semantics.

 

It did because, even assuming mortgage lender was completely forthwith and honest in making oral representations (a very big if) and assuming the borrower was sophisticated enough to understand the true cost of the mortgage obligations they undertaking and that such costs could or would rise significantly, because the payment obligation were "artificially" lowered by the teaser and/or ARM rates meant that millions of borrowers erroneously believed they could cover the cost either by increases in incomes or by flipping the house -- neither of which were very viable options when the market crashed and the economy went into the dumpster in 2008.

 

What in the world are you babbling about? Do you even know?

 

So this is you bobbing and weaving around the facts. You don't know what you're talking about, and your injecting your idiotic partisan agenda into the matter.

I've gave you links about dems blocking regulations on f/f, I gave you Barney Franks on words. I gave you a link on how the repeal of glass-Stegal affected the sub-prime mortgage bubble. There's nothing else I need to do, you're trying to move goal post because you're ignorant of this subject, and really have no business lecturing other people on this issue. Stop embarrassing yourself.

 

Got it, you'll stick to the usual right wing talking points and NOT be honest. I'm shocked.

DEMS COULDN'T BLOCK A SINGLE BILL IN THE GOP MAJORITY HOUSE 1995-JAN 2007. ONLY ONE BILL MADE IT OUT ON F/F REFORM, HR 1461, DUBYA OPPOSED IT, lol

Yep Barney had super powers in the GOP Majority House 1995-Jan 2007, lol

Btw your G/S was OPINION and the opinion was BS from the get go...

 

Now wait a minute how exactly does Clinton not share any blame in this? He signed the deregulation.

 

Because it WASN'T a regulation problem. PLENTY of regulations to stop what Dubya cheered on. In fact Dubya fought ALL 50 states who wanted to stop the predatory lending practices, invoking a civil war era rule. DUBYA'S REGULATOR PROBLEM

 

Ok, so not only do you not know how the housing collapse came about, you don't know how congress works either.

It's obvious you don't know what you're talking about, but do keep repeating yourself. I gave you links and Barney Franks own words, I'm not going to bother spending any more effort on you, because no matter what you're going to stick to the assignine point that everything was Bush's fault, which completely exposes your ignorance.
You're a partisan, and you're only interested in spin and not truth.

 

No kidding?

 

Obviously the guy never took political science 101. And this is the problem, they expect Obama to be a regulator, king, and emperor; no matter how much they want it, "it's not Camelot Stupid!"

 

No kidding. Which leaves us to wonder why your response talked out the graph that wasn't direct to your post.

 

Another civics major who never heard of the president's veto power or regulatory authority under agencies established by Congress.