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mpr



Joined: 06 Jun 2009
Posts: 344

PostPosted: Wed Jan 27, 2010 6:40 pm GMT    Post subject: Reply with quote

john p wrote:
MPR:

I just reread the Statement of Paul A. Volcker before the Joint Economic Committee February 26, 2009 where he explains the financial crisis. Keep in mind, this guy is the "lion" that everyone seems to be lining up behind, including Obama.

He offers 4 basic reasons:
...

Now you accused me of being lazy for my positions (implying that government is responsible), do you think that Paul Volker is lazy as well? Look how many times he mentions government.....


It seems you are lazier than I thought (when I said "lazy" I meant in
the emotional and therefore intellectual sense of letting yourself
to be demagogued) since you apparently cant count the number of
times he mentions government.

He mentions just once that of specific governmental concern is
a failure of regulation. That I would completely agree with; it happened
mainly (but probably not exclusively) under Bush, and is not a big
surprise when the people in charge are profoundly anti-regulation
and appoint people with the same philosophy.

I think my answer "read a book" is very appropriate. Just finding
quick quotes and links *is* lazy. It doesn't substitute for a real understanding
of what happened. Even when you find someone reputable to quote - like
Volcker (who is ok, although I dont regard him as a gold standard) you
have to be able to understand what they are saying and referring to.

Its like someone who believes the earth is flat providing links to a technical
discussion of navigation.

Look, you're obviously a smart guy. Turn off the talk radio, take a deep breath
and read a book.
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Renting in Mass



Joined: 26 Jun 2008
Posts: 381
Location: In a house I bought in December 2011

PostPosted: Wed Jan 27, 2010 6:51 pm GMT    Post subject: Reply with quote

John, I think we can unite around Volcker. I agree with everything he said in excerpts you posted. Note that he didn't mention the CRA Wink

I also agree that Larry Summers sucks. It bothers me greatly that he's Obama's top economic advisor.
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john p



Joined: 10 Mar 2006
Posts: 1820

PostPosted: Wed Jan 27, 2010 8:04 pm GMT    Post subject: Reply with quote

What book?????????

What book do you want me to read?

Are you saying that the Internet isn't a valuable source of information? The sources I've posted are pretty reliable.

Who do you consider the gold standard? Who are you? What makes you such an expert? What books do you read? You sit back and say smug stuff but you have yet to offer ONE reference to refute ANY of my points OR SUPPORT YOUR OWN.

Talk about being led by emotion, you have offered NO FACTS, just your smug emotional bias.

The CRA Ammendments under Clinton allowed for the securitization of Subprime Loans. Fannie Mae and Freddie Mac guaranteed and bought subprime mortgage securities which increased the market value of them. The repeal of Glass Steagall (the deregulation) was signed by Clinton. The policy that significantly increased leverage limits and opened the door for credit default swaps and collateralized debt obligations was the Commodity Futures Modernization Act, and that was signed also by Clinton and was pushed by his Treasurary Secretary, Lawrence Summers, the guy who helped Harvard lose more money than it takes to operate a small nation and who is also one of Obama's chief advisors.

What regulation are you talking about? Bush and McCain tried to regulate Fannie Mae and Freddie Mac and were fought by Democrats, Barney Frank claiming that there was no housing bubble and it was a racist attempt to suggest such. I've shown you the actual footage of the Democrats in this endeavor.

MPR are you Barney Frank????

If you offer any more smug comments or opinions without backup my answer to you is that you're lazy and I am right.

Regarding Volker and Government:

In point one, he talks about an unsustainable imbalance in the United States and world economies - I'm asking you to read between the lines here but Clinton and others were pushing for NAFTA and trying to quickly globalize.

In point two, he talks about facilitating the modern alchemy of financial engineering. This alchemy was made possible by the Commodity Futures Modernization Act which was signed by Clinton.

In point three, he talks about credit rating agencies being weak. These entities have oversight from Government Agencies. Now Bush was in charge during much of the time when the oversight was needed, but the fundamental conflict of interest arrangment and business environment was created by Clinton in the repeal of Glass Steagal and the Commodity Futures Modernization Act. The CRA Amendments made subprime a sacred cow that couldn't be touched.

In point four it talks exclusively about government and failure to control the economy. When you look at how the Democrats fought the reform and regulations of Fannie Mae and Freddie Mac, it is clear that they are just as guilty as any.

Nice talking to you Congressman Frank.
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Renting in Mass



Joined: 26 Jun 2008
Posts: 381
Location: In a house I bought in December 2011

PostPosted: Wed Jan 27, 2010 8:26 pm GMT    Post subject: Reply with quote

Quote:
Regarding Volker and Government:


I think if Volker thought the things you describe were root causes of the financial crisis, he would have mentioned them in his description of the root causes of the financial crises.
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mpr



Joined: 06 Jun 2009
Posts: 344

PostPosted: Wed Jan 27, 2010 8:50 pm GMT    Post subject: Reply with quote

john p wrote:
What book?????????

What book do you want me to read?


I dont get it. Is "read any recent book on the financial crisis" too
complicated an instruction ? Just go to Amazon enter "financial
crisis" in the search field. Pick a book which strikes your fancy.
(Or go to the library or whatever.)

If you really want me to name one try

"The origin of the financial crisis" by Cooper.

I'm not invested in this one in particular. There are many choices.

john p wrote:

Are you saying that the Internet isn't a valuable source of information? The sources I've posted are pretty reliable.

Who do you consider the gold standard? Who are you? What makes you such an expert?


Of course you have to find quality sources, but even more important is
being able to interpret the information in a reasonable way. If you must
start with the internet read the wikipedia entry on the financial crisis.
It seems to cover some of the relevant ground and even has a discussion
of your favorite subject, the CRA.

You admit that you are "reading between the lines" in Volcker's comments,
but you are just misinterpreting his comments to suit your own preconceived
notions. You admit he doesn't literally say what you at first claimed,
and I challenge you to find one reputable non-partisan source who literally
says what you claim (not just your interpretation).

I dont especially claim to be an expert, in the same way that I am not
an expert in navigation. I do however know the earth is more or less round,
has a magnetic field and so on. So if someone tells me its flat, I dont
really need to "do research" to establish it isn't

john p wrote:

MPR are you Barney Frank????


Well thats actually quite flatterring. Barney Frank is a very smart guy.
Its a testament to MA that he gets elected here. Of course its completely
consistent that you think this is an insult ...
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john p



Joined: 10 Mar 2006
Posts: 1820

PostPosted: Wed Jan 27, 2010 9:26 pm GMT    Post subject: Reply with quote

He wasn't specific about anything, it seems that he was just giving an overview to a joint committee.

Volcker is trying to overturn Clinton's Repeal of Glass Steagal:

http://www.nytimes.com/2009/10/21/business/21volcker.html?_r=1

MPR, is the New York Times ok with you?

Regarding the Commodity Futures Modernizatio Act, which allowed the creation of credit default swaps and collateralised debt obligations:

http://www.freerepublic.com/focus/f-news/2403764/posts

from above:

Quote:
Mr Volcker told delegates who had been discussing how to rebuild the financial system to "wake up". He said credit default swaps and collateralised debt obligations had taken the economy "right to the brink of disaster" and added that the economy had grown at "greater rates of speed" during the 1960s without such products. When one stunned audience member suggested that Mr Volcker did not really mean bond markets and securitisations had contributed "nothing at all", he replied: "You can innovate as much as you like, but do it within a structure that doesn't put the whole economy at risk."
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john p



Joined: 10 Mar 2006
Posts: 1820

PostPosted: Wed Jan 27, 2010 9:49 pm GMT    Post subject: Reply with quote

How's your buddy Barney doing:

http://www.boston.com/bostonglobe/editorial_opinion/oped/articles/2008/09/28/franks_fingerprints_are_all_over_the_financial_fiasco/

http://www.businessandmedia.org/articles/2008/20080924145932.aspx

http://www.pbs.org/nbr/blog/2010/01/a_call_to_end_fannie_mae_and_f.html
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Renting in Mass



Joined: 26 Jun 2008
Posts: 381
Location: In a house I bought in December 2011

PostPosted: Wed Jan 27, 2010 10:17 pm GMT    Post subject: Reply with quote

Quote:
He wasn't specific about anything, it seems that he was just giving an overview to a joint committee.


I'm saying that if he thought the CRA was the lynchpin, he probably would have mentioned it.

Let me know if you find anywhere where he points to the CRA as a root cause.
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mpr



Joined: 06 Jun 2009
Posts: 344

PostPosted: Wed Jan 27, 2010 10:18 pm GMT    Post subject: Reply with quote

john p wrote:

Volcker is trying to overturn Clinton's Repeal of Glass Steagal:

http://www.nytimes.com/2009/10/21/business/21volcker.html?_r=1

MPR, is the New York Times ok with you?

Regarding the Commodity Futures Modernizatio Act, which allowed the creation of credit default swaps and collateralised debt obligations:

http://www.freerepublic.com/focus/f-news/2403764/posts
from above:

Quote:
Mr Volcker told delegates who had been discussing how to rebuild the financial system to "wake up". He said credit default swaps and collateralised debt obligations had taken the economy "right to the brink of disaster" and added that the economy had grown at "greater rates of speed" during the 1960s without such products. When one stunned audience member suggested that Mr Volcker did not really mean bond markets and securitisations had contributed "nothing at all", he replied: "You can innovate as much as you like, but do it within a structure that doesn't put the whole economy at risk."


The nytimes is fine with me. I think whether one should reintroduce
Glass-Steagal or something like it is a reasonable subject of discussion
although its clear its repeal wasn't the main driver of the crisis.
For example, Lehmann, Bear and AIG weren't subject to it anyway and the main damage to the big banks was from securities which everyone
considered plain vanilla and totally safe (that was the problem).

I am very sympathetic to the notion that all the "innovation" needs to
be reigned in for the soundness of the system.

You do realize though that all your republican friends would just
jump up and down screaming that regulation is going to stifle
"innovation".

Anyway none of these links is objectionable. They just dont support
any of your claims that this was mainly the fault of CRA and other
goverment distortions, except for a failure to regulate during Bush.
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Renting in Mass



Joined: 26 Jun 2008
Posts: 381
Location: In a house I bought in December 2011

PostPosted: Wed Jan 27, 2010 10:25 pm GMT    Post subject: Reply with quote

Quote:
Volcker is trying to overturn Clinton's Repeal of Glass Steagal.

Regarding the Commodity Futures Modernizatio Act, which allowed the creation of credit default swaps and collateralised debt obligations.


Nobody here is arguing that repealing Glass Steagal wasn't a bad idea or that the CDOs weren't a big part of the problem. I think we all agree with Volker on that. Where we (and Volker) disagree with you is the idea that these things wouldn't have been a problem if it wasn't for the CRA.
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Renting in Mass



Joined: 26 Jun 2008
Posts: 381
Location: In a house I bought in December 2011

PostPosted: Wed Jan 27, 2010 10:27 pm GMT    Post subject: Reply with quote

Quote:
Anyway none of these links is objectionable. They just dont support
any of your claims that this was mainly the fault of CRA...


Or what he said.
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balor123



Joined: 08 Mar 2008
Posts: 1204

PostPosted: Wed Jan 27, 2010 11:00 pm GMT    Post subject: Reply with quote

john p wrote:

MPR are you Barney Frank????


Wouldn't it be awesome if we could get Barney Frank to participate on this board? I mean, he sure sounds and looks like an idiot on TV but I'd love to see his opinions on the stuff that gets posted here. I wonder if there's a way to make this happen, even if just a brief visit. Admin?
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balor123



Joined: 08 Mar 2008
Posts: 1204

PostPosted: Wed Jan 27, 2010 11:04 pm GMT    Post subject: Reply with quote

Renting in Mass wrote:

Nobody here is arguing that repealing Glass Steagal wasn't a bad idea or that the CDOs weren't a big part of the problem. I think we all agree with Volker on that. Where we (and Volker) disagree with you is the idea that these things wouldn't have been a problem if it wasn't for the CRA.


There's not enough drama here so I think I'll jump in: repealing Glass Steagal was a great idea. At least I'm presuming because I have yet to hear a politician say that we should bring it back.
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john p



Joined: 10 Mar 2006
Posts: 1820

PostPosted: Thu Jan 28, 2010 12:13 am GMT    Post subject: Reply with quote

http://www.pbs.org/wgbh/pages/frontline/shows/wallstreet/weill/demise.html

Quote:
Oct.-Nov. 1999
Congress passes Financial Services Modernization Act


After 12 attempts in 25 years, Congress finally repeals Glass-Steagall, rewarding financial companies for more than 20 years and $300 million worth of lobbying efforts. Supporters hail the change as the long-overdue demise of a Depression-era relic.

On Oct. 21, with the House-Senate conference committee deadlocked after marathon negotiations, the main sticking point is partisan bickering over the bill's effect on the Community Reinvestment Act, which sets rules for lending to poor communities. Sandy Weill calls President Clinton in the evening to try to break the deadlock after Senator Phil Gramm, chairman of the Banking Committee, warned Citigroup lobbyist Roger Levy that Weill has to get White House moving on the bill or he would shut down the House-Senate conference. Serious negotiations resume, and a deal is announced at 2:45 a.m. on Oct. 22. Whether Weill made any difference in precipitating a deal is unclear.


The banks wanted their piece and the CRA folks wanted their piece. The person that got screwed was the taxpayer.
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Xenos



Joined: 24 Jun 2009
Posts: 31
Location: Western Mass

PostPosted: Thu Jan 28, 2010 12:33 pm GMT    Post subject: Reply with quote

[quote="john p"]http://www.pbs.org/wgbh/pages/frontline/shows/wallstreet/weill/demise.html

[quote]

The banks wanted their piece and the CRA folks wanted their piece. The person that got screwed was the taxpayer.[/quote]

True. But the CRA portion is relatively quite minor compared to the derivatives fiasco. Their inception was linked by the political process, but that linkage does not support your implication that the effects are comparable.
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