Capitalism Guarantees Rising Inequality

[Bombur]

Show me proof that we would not be better off today if we did not implement all the bailouts. Bunch of crybabies, oh my look that bank is gonna fail and the press says they are to big to fail, we're all gonna die if we don't give them money. ROFL

Neither side can prove anything about a reality that never existed.

Either way the clear solution is to not get into that situation again and there are clear ways to do that.

Nevertheless, the Obama fluffers keep saying how the economy would have been worse without the so-called "stimulus." You just admitted that they are all full of shit.

No I didn't.

 

[Contumacious]

LOL

There is nothing to listen to but people repeating a lie about the CRA.

Yes or no, the CRA exists?

If you admit it does exist, explain it's purpose and what actions the government did to enforce it.

The presence of the CRA is not being debated. What is being debated is the impact the CRA had on the crash.

HTH

Why?

Are you a glutton for punishment?

.

 

[Andylusion]

And all the Cons REFUSE to see the jump on the graph from 2004.
Talk about being blinded by an ideology.

Because it's doesn't prove anything. No one denies that Bush, as well as all the others, supported more home ownership.

None that I know, denies that. All the politicians believed that "more home ownership" was 'good'. Bush supported the policies. All of them did.

The problem is, the housing bubble, had already started by the time Bush got to office.

You can see clearly that the bubble in housing prices started in 1997.

Yes, sub-prime mortgage slowed down in 2001, until 2003. There was a recession then, completely independent of the sub-prime mortgages, the housing bubble, or anything else.

Once that recession was over, the sub-prime rocket continued on.

But the bubble was already a done deal. Once there is a bubble, there is only one end.... it pops. The bubble bursts.

What exactly would you have had Bush do? Pop the bubble early? Bush would never have done that. First, I highly doubt that Bush even knew there was a bubble. Many people denied there was even a problem.

[ame=http://youtu.be/IyqYY72PeRM]Democrats in their own words Covering up Fannie Mae, Freddie Mac scandal - YouTube[/ame]

Democrats investigating Fannie and Freddie in 2004, denied there was any problem at all in the lending going on, and even suggested this was trumped up charges against Franklin Raines, 'appointed' to Fannie by Clinton.

[ame=http://youtu.be/x41prJ-X0xw]Barney Frank in 2005: housing is not a problem no bubble.mov - YouTube[/ame]

Here, Barney Frank 2005, is speaking on the floor of Congress, saying there is no bubble. Not a problem. You won't see a collapse like a bubble. And yet you think Bush should have done what?

Secondly, let's even pretend that Bush did pop the Housing Price Bubble in 2003, or 04, or 05. You know.... YOU KNOW... that if he had done that, you would be sitting here today talking about how there was absolutely nothing wrong in the housing market until Bush ruined sub-prime mortgages with his policies.

The bottom line is this.....

All the data clearly shows that the problem started in 1997. Before that time, there was no housing price bubble, and there was no growth in Sub-prime mortgages, and there were no Sub-prime Mortgage backed securities.

Now you want to complain about Bush, like children blame shifting, pointing their fingers at everyone they can..... fine. Ok, Bush supported these policies. I get it.

Doesn't change the fact that problem originated in 1997, based on legislation push by every president since the one who signed into law, Jimmy 'worst president ever' Carter.

You can scream all you want, and be mocking and sarcastic until the end of time, the facts still show conclusively, it started in 1997. End of discussion. Until you can show something.... anything... that suggests the information I just posted is wrong, you are barking in wind. And you bark about Bush, but the fact is the Democrats openly supported all these policies too.

 

[bripat9643]

No one has benefitted more from capitalism more than poor people. Their quality of life is a million times better than it used to be.

that's due to advances in technology, and before you say, oh, but capitalism caused the rise in technology, remember which country was the worlds most technologically advanced in the 1940's - Germany. not an Adam smith in sight.

So you think the USA was a capitalist country during the war?

 

[bripat9643]

Neither side can prove anything about a reality that never existed.

Either way the clear solution is to not get into that situation again and there are clear ways to do that.

Nevertheless, the Obama fluffers keep saying how the economy would have been worse without the so-called "stimulus." You just admitted that they are all full of shit.

No I didn't.

Sure you did. You just said you can prove anything about a reality that never existed. Is there a reality where Obumer's stimulus wasn't passed?

 

[P@triot]

The bubble would have burst eventually because home prices were artificially high for multiple reasons. Interest rate being low, the use of homes as financial instruments, incorrect information making the loans look less risky than they were, and no better place to put the capital from the standpoint of investors.

"Artificially high prices" doesn't cause anything to "burst". People taking out loans that they were not qualified for and could not pay back is what caused the "burst" genius. And guess what happened when banks didn't get back the money they loaned out? They had to start laying off people. Which means those people then couldn't pay their mortgage. The entire thing starts to snowball. Finally, throw in a saturated market of cheap homes that the banks are simply trying to unload and recovere some of their lost investments in and you have the collapse.

 

[Doubletap]

“Every government interference in the economy consists of giving an unearned benefit, extorted by force, to some men at the expense of others. ”
― Ayn Rand

I agree...disband our military...NOW!

Ayn Rand is great for horribly stupid quotes. Hopefully he posts some more. How about that one about owning the sweat off your brow or whatever.

Wow. Another heavy rebuttal to the quote. Are u always so intellectual? lol

 

[Indeependent]

I agree...disband our military...NOW!

Ayn Rand is great for horribly stupid quotes. Hopefully he posts some more. How about that one about owning the sweat off your brow or whatever.

Wow. Another heavy rebuttal to the quote. Are u always so intellectual? lol

I apologize for being a Member of the Tribe.
You see, MY religion has a whole bunch of societal rules, some of which include taxation for infrastructure.

On one side we have Ayn Rand, self-hating Jew, one the other side, we have God.
Think I'll go with God.

 

[Bombur]

Freddie Mac is not the only one that was fooled by the rating of the MBS created by private institutions. The ratings agencies were fooled too as were the originating institutions and those who were buying them.

The idea that the min wage change caused the recession is ridiculous. The idea that the financial crisis didn't ripple through the economy is even more ridiculous.

The fact is that the recovery was weak and largely built on the housing boom which was destined to hit the wall. Once it did the weakness is the labor market was exposed. The effective supply of money shrunk drastically. The ability of consumption to be supported by debt was finally exposed.

Ok, I had thought we already posted all this, and established the facts. Someone seems to have missed the memo, so here it goes again.

Before 1997, there were no Sub-prime Mortgage Backed Securities. There were loans, but they were a niche market, but no MBS with sub-prime loans. If you think that there were, by all means provide the evidence of them.

According to Insider Mortgage Finance, it was only in 1997 that Sub-prime mortgages started shooting off.

As you can clearly see, sub-prime was a niche, flat line market before 1997 to 1998. So something must have happened in 1997 to 1998, to cause the Sub-prime loans to take off.

What was it? Two things. It was the carrot, and the stick.

First, the Carrot. This press release was made by First Union, which later became Wachovia.

First Union Capital Markets Corp. and Bear, Stearns & Co. Inc. have priced a $384.6 million offering of securities backed by Community Reinvestment Act (CRA) loans - marking the industry's first public securitization of CRA loans.
The affordable mortgages were originated or acquired by First Union Corporation and subsidiaries. Customers will experience no impact - they will continue to make payments to and be serviced by First Union Mortgage Corp. CRA loans are loans targeted to low and moderate income borrowers and neighborhoods under the Community Reinvestment Act of 1977.
"The securitization of these affordable mortgages allows us to redeploy capital back into our communities and to expand our ability to provide credit to low and moderate income individuals," said Jane Henderson, managing director of First Union's Community Reinvestment and Fair Lending Programs. "First Union is committed to promoting home ownership in traditionally underserved markets through a comprehensive line of competitive and flexible affordable mortgage products. This transaction enables us to continue to aggressively serve those markets."
The $384.6 million in senior certificates are guaranteed by Freddie Mac and have an implied "AAA" rating.​

Now again, who made this deal? Freddie Mac did. The government did. This was backed by the CRA. And who gave the senior certificates guaranteed by Freddie Mac an implied AAA rating? Freddie Mac did. The Government did.

Freddie Mac was not "fooled by the rating agencies". Sorry, YOU ARE WRONG. Freddie Mac MADE THE DEAL. Freddie Mac GAVE THEM THE RATING. You are wrong sir. Sorry.

Second, the stick.

[ame=http://youtu.be/Lr1M1T2Y314]How The Democrats Caused The Financial Crisis: Starring Bill Clinton's HUD Secretary Andrew Cuomo And Barack Obama; With Special Guest Appearances By Bill Clinton And Jimmy Carter - YouTube[/ame]

The Clinton Administration directly sued banks to make sub-prime loans. Cuomo in this footage, at 3 minutes, even admits openly that they are higher risk, and will have a higher default rate.

They all knew exactly what they were doing, and they did it anyway.

And you want to tell me that government was "fooled by the credit agencies"? Bull crap dude. They knew back in 1998 they were pushing loans that would have a higher default rate. Even Obama, if you watch the video to the end, said "the idea was a good one". He knew what he was doing when he was a lawyer for ACORN suing Citigroup to make bad loans.

They all knew.

So let's review huh? They sued banks to make bad loans. Community activist groups sued banks based on the CRA, to make bad loans. Freddie Mac, and later Fannie Mae, guaranteed and bought sub-prime loans, and gave those loans a AAA rating.

And you think the CRA had nothing to do with it? Remember First Union, which became Wachovia, after signing that deal with Freddie Mac?

Read this press release:

Wachovia has earned an "Outstanding" Community Reinvestment Act (CRA) rating, the highest possible, from the Office of the Comptroller of the Currency (OCC). Only 14 percent of banks regulated by the OCC achieve the "Outstanding" rating.
Regulators from the OCC analyzed Wachovia's lending, investing and service activities for the period of Oct. 1, 2000 to June 30, 2003. The merger of First Union National Bank and Wachovia Corp. occurred during this time. "I'm proud that we earned the highest possible rating for our active involvement in the community," said Ken Thompson, Chairman and CEO.

Its high levels of community development lending. During the assessment period, Wachovia supplied more than $3.3 billion in community development loans.
* Its extensive use of Low Income Housing Tax Credits (LIHTC). LIHTC are complex investments that provide equity financing for affordable housing projects. Uniquely, Wachovia makes LIHTC investments directly, rather than through third party intermediaries.
* Its leadership role in the creation of the Section 8 Rental Housing Choice Voucher Program, which allows low-income families to apply Section 8 rental vouchers toward mortgage payments for up to 15 years. Wachovia partnered with Fannie Mae to develop and pilot this innovative mortgage program, which seeks to increase homeownership among low-income families.

In 2004, Wachovia:
* Provided $25 billion in community loans and investments to revitalize neighborhoods.
* Helped an average of 475 lower-income families buy a home each week.
* Originated almost $25 billion in mortgage loans, with nearly $6 billion in loans directly benefiting lower-income families and neighborhoods.
* Received the Fannie Mae Community Lending Hero award for leadership and creativity in addressing low- and moderate-income homeownership issues.
* Worked with 176 community mortgage partners to provide homeownership counseling and mortgages to more than 1,000 first-time homebuyers.
* Invested $223 million in equity to create more than 5,000 affordable rental-housing units.
* Pledged more than $75 billion over five years in community loans and investments to serve communities affected by the SouthTrust merger.
​

And what happened after doing all these low-income Community investment loans, under the CRA, working with Fannie Mae?

They went bankrupt, just like Bear Stearns did.

I'm sorry... but if you believe that the CRA had no involvement in the crash, when there is tons of direct evidence to the contrary, then you are just denying reality, just like you have in other posts where you accuse me of "hate". Empty argument. Empty claims. Denying clear cut facts. Living in a hole of ignorance. Time to come out into the light. See how the world really is.

F&F are not ratings agencies.

Not all sub-prime loans are CRA loans.

The crisis is a result of a lot of contributing factors but the mere presence of CRA loans doesn't equate to investors not understanding the risk of a CRA loan or sub-prime loans in general.

The problem wasn't with the CRA loans or really the sub-prime loans themselves but in the MBS that hid the risk inherent in the loans backing those MBS and the miscalculation of the risk inherent in the underlying mortgages. The financial institutions packaged the MBS and F&F and the rating agencies and the buyers of the MBS all thought they were AAA and they were all wrong.

Underlying these mistakes was a housing bubble brought out by changes in interest rates. Since people buy houses based on what they can afford per month lower interest rates meant they could afford to pay more for a house. This meant higher home prices.

This surge in home prices resulted in a lot of profit for a lot of financial institutions which attracted investors who were fleeing US treasuries which were offering very little return. To these investors they were buying AAA debt instruments. Some even considered them to be backed by the Federal government because of the involvement of F&F. This influx of capital just fueled the bubble. There were a lot of financial institutions making a lot of money on these MBS.

So I have to wonder how these financial institutions are able to earn massive amounts of money but are not the ones responsible for making financial decisions? Isn't that what they are paid for?

There is a lot of blame to go around and F&F played their part as did the Federal Reserve. The blame doesn't stop there (and neither did the profit) but the CRA mortgages by themselves had little to nothing to do with it. They didn't create the bubble and they didn't pop it either.

 

[Bombur]

Nevertheless, the Obama fluffers keep saying how the economy would have been worse without the so-called "stimulus." You just admitted that they are all full of shit.

No I didn't.

Sure you did. You just said you can prove anything about a reality that never existed. Is there a reality where Obumer's stimulus wasn't passed?

Are you really trying to act like there is some "gotcha" moment here because I made a distinction between being able to prove something and predicting something?

Obama can never prove what the world without a stimulus would look like. Are you equating that to being full of crap? Are you under some impression that Obama was claiming to have traveled to a future without a stimulus and knows the only way to stop it?

 

[Bombur]

The bubble would have burst eventually because home prices were artificially high for multiple reasons. Interest rate being low, the use of homes as financial instruments, incorrect information making the loans look less risky than they were, and no better place to put the capital from the standpoint of investors.

"Artificially high prices" doesn't cause anything to "burst". People taking out loans that they were not qualified for and could not pay back is what caused the "burst" genius. And guess what happened when banks didn't get back the money they loaned out? They had to start laying off people. Which means those people then couldn't pay their mortgage. The entire thing starts to snowball. Finally, throw in a saturated market of cheap homes that the banks are simply trying to unload and recovere some of their lost investments in and you have the collapse.

What I said is far more accurate with regards to the cause of the price increases and the reason why the bubble eventually popped. I agree there would be a snowball effect. Was anyone arguing otherwise?

 

[bripat9643]

No I didn't.

Sure you did. You just said you can prove anything about a reality that never existed. Is there a reality where Obumer's stimulus wasn't passed?

Are you really trying to act like there is some "gotcha" moment here because I made a distinction between being able to prove something and predicting something?

What you did is admit that Obama fluffers are full of shit whenever they claim the economy benefitted from the stimulus.

Obama can never prove what the world without a stimulus would look like. Are you equating that to being full of crap?

Since Obama and his fluffers are constantly claiming that the world would have been much worse without his porkulus bill, yes, that is the equivalent of being full of crap.

Are you under some impression that Obama was claiming to have traveled to a future without a stimulus and knows the only way to stop it?

He constantly claims that he knows what the future would have been.

 

[IlarMeilyr]

OP GeorgiePorgie's REAL problem with Capitalism and "income inequality" is that capitalism yields a MARKEDLY higher base level for the poor (notwithstanding that they don't have income "equality" with the rich) than socialism can produce.

 

[Indofred]

Capitalism produces inequality because some people are better than others.
Some people are lazy whilst others work hard.
Some people are bright but some are stupid.
Some fuck about in school but others do every homework.

The bright and hard working tend to get paid more or run business.
The rest are toilet cleaners or whatever.

Live with it.

 

[gnarlylove]

Bill Gates dropped out of Harvard.

I knew this would be said by some lazy thinker. EVERYONE FUCKING KNOWS. The point is Bill Gates HAS ACCESS to these places of learning, growth and networking.

For fucks sake if you think the average person in the "parasite class" has the same opportunity and drive instilled in him through public education (esp. struggling inner-city schools who sometimes have low quality teachers) then you are living on another planet.

Until access to opprtunity and education becomes similar to that of upper middle class and beyond then we can expect more parasites at McDonalds or unemployed, not millionaires. Of course there's an exception or 100 but don't act like those 100 success stories means everyone can do it. A lot of factors need to line up and typically don't--and it's not a matter of merely trying harder, it involves a slew of well-adjusted skills and motivators. Having a shattered family can hurt the support of dreaming big. People like you telling them they are shitty people is exactly the sort of shit they hear all the time, do you think that helps motivate? Maybe in your world where hate and aggression define your motivations, but people tend to look for support, not harassment.

Of course people can succeed in spite of adversity but you are ruefully ignorant if you think this is the answer for everyone. No, its a fundamental flaw in our precious capitalist economy, that is, if you think having poor people you yell at is a flaw.

 

[gnarlylove]

I have to confess, the core impulse of striving for 'equality', either in opportunity or outcome, seems somewhat pointless. Everyone gets a different deal. No amount of meddling will change that. Equal rights under the law is vital. Freedom to decide for ourselves what to strive for is vital. But all these discussions of what people 'deserve' falls flat (for me). We should be free to distribute economic decision making power to those who do the things we like. If that means a few people get most of the power, why is that bad thing? As long as our freedom to make the call, as individual consumers and producers, is preserved we can always change our minds and give our money to someone else.

I like your point. It highlights the finished product of capitalism: inequality to the core.

The question is, do we want to make it our goal to better the lot of those struggling? Welfare helps but is not the answer. So do we want inequality (at varying levels) or not? The answer from those who are on a laptop in a warm house tends to be "I'm good with where I'm at, so the way it is works for me." Yet the billions of people without income or shelter we never see (or at least communicate with) because of well placed social strata. It's way easy to ignore their concern and listen to yours. If anyone possess empathy, this is not a hard gap to bridge and we thus understand capitalism results our success at their defeat.

I'm not accusing that you operate this way, dblack. It's merely a note and nothing more.

Again, for you lovers of capitalism, I am well aware of its shining light and how its benefits billions.

 

[Wyatt earp]

I love this new liberal talking point "income inequality" it is like im 4 years old and watching big bird all over again.
Hey "girls and boys can you say I n c o m e i n q u e l ty?"
First of all Obama' team plagiarized it from the pope
Second of all like it is anything new..
It is the Chicago way... take the voters mind of of obama care.

 

[gnarlylove]

Capitalism produces inequality because some people are better than others.
Some people are lazy whilst others work hard.
Some people are bright but some are stupid.
Some fuck about in school but others do every homework.

The bright and hard working tend to get paid more or run business.
The rest are toilet cleaners or whatever.

Live with it.

It's like Republicans think there's no reason people are smart or stupid. It's an inborn trait (that is inherited?). Believe it or not people can be trained to be smart or stupid. It largely depends on their surroundings and esteem, less so on raw "mental giftedness."

Socrates wanted to prove this point. He took an illiterate and "dumb" Athenian and spent the day with him. In the sand he tried to get the slave to derive basic mathematical conclusions (geometrical in nature) without direct help. End of the day the slave had made several deductions with minimal prodding. Socrates notes this shows mankind understands universal principles if brought into a setting that awakens that epistemology. This has application for today: treat people similarly with similar education and we'd see very different world than we see today in America.

For Rightwingers, it's a matter of overcoming hatred for a certain class of people that are exactly like you except they were born into different circumstances that discouraged human flourishing and skill development. By the luck of the draw you could have been born into the poor family who is despised by all Republicans.

Disclaimer: I disagree with Obama/Democrats as much as I do any Republican official.

 

[dblack]

I have to confess, the core impulse of striving for 'equality', either in opportunity or outcome, seems somewhat pointless. Everyone gets a different deal. No amount of meddling will change that. Equal rights under the law is vital. Freedom to decide for ourselves what to strive for is vital. But all these discussions of what people 'deserve' falls flat (for me). We should be free to distribute economic decision making power to those who do the things we like. If that means a few people get most of the power, why is that bad thing? As long as our freedom to make the call, as individual consumers and producers, is preserved we can always change our minds and give our money to someone else.

I like your point. It highlights the finished product of capitalism: inequality to the core.

The question is, do we want to make it our goal to better the lot of those struggling? Welfare helps but is not the answer. So do we want inequality (at varying levels) or not? The answer from those who are on a laptop in a warm house tends to be "I'm good with where I'm at, so the way it is works for me." Yet the billions of people without income or shelter we never see (or at least communicate with) because of well placed social strata. It's way easy to ignore their concern and listen to yours. If anyone possess empathy, this is not a hard gap to bridge and we thus understand capitalism results our success at their defeat.

I'm not accusing that you operate this way, dblack. It's merely a note and nothing more.

Again, for you lovers of capitalism, I am well aware of its shining light and how its benefits billions.

"The question is, do we want to make it our goal to better the lot of those struggling?"

No, I don't think that is the question. Or at least, that's not where much disagreement lies. Of course we want to help out people in need. The question is, do we want to employ the coercive power of government in pursuit of that goal? Are we willing to resort to violence to make it happen?

"So do we want inequality (at varying levels) or not?"

Economically, yes we most certainly do want inequality. Wealth represents economic decision making power, the power to allocate labor and resources toward activities the benefit society. We want the people who do that well to have more of that power, and those who squander it to have less.

 

[gnarlylove]

My use of inequality there was loose at best. Inequality will exist as long as individuals do. However, what degree of inequality is acceptable? And inequality is on variety of levels, income is just one (and one that I care less about than education gaps or how many citizens view and treat poor humans--akin to a caged chicken you demand production from or you eat it rather than a human).