(I posted this in an email to some friend/family:)
Both Obama and McCain (as well as their running mates) attack each other on how the economic meltdown was caused by the other party. The news stations provide small details here and there, but there is no full picture from ANYBODY on why and how this whole thing went crashing down. So, which bills killed our economy?
http://en.wikipedia.org/wiki/Gramm-Leach-Bliley_Act
First, the Gramm-Leach-Bliley Act. The GLBA, enacted in 1999, repealed parts of the Glass-Steagall Act, a post-Depression-Era law designed to promote safeguards after that generation's economic apocolyse. Specifically, the Glass-Steagall Act prohibited a bank from offering investment, commercial banking, and insurance services. This was the critical part that was repealed. This was also a critical safeguard that prevented banks from diving into potentially risky industries, such as mortgage loans. Without that safeguard, we have ended up with the current situation of banks taking on bad mortgage loans, and the banks, who normally take part in daily overnight loans with the rest of the banking world to balance out surplused banks with debted banks, now no longer trust each other to accept interbank loans. The banks in debt end up going bankrupt, as we've seen in the past week.
Who participated in this law? Well, the bill was introduced by three Republicans, Phil Gramm being the most important of the three. Gramm is the top economic advisor of the McCain campaign, and might be a pick for Secretary of the Treasury if McCain was elected. (Though, McCain recently dumped him as an advisor after his "a nation of whiners" gaff. Also, Gramm was almost single-handedly responsible for the Enron loophole.) The Senate passed the bill with a 54-44 vote (mostly Republican, including a Yea from McCain), and the House passed it 343-86 (both from Democrats and Republicans). Some will point out that Bill Clinton signed the bill into law, but as the bill was now veto-proof (over a 2/3rd majority in the House), Clinton couldn't object to it even if he wanted to.
http://engram-backtalk.blogspot.com/200 ... tgage.html
The second part is the rise of subprime loans. Not only do subprime loans give money to people who can't afford to pay it back, they often are very predatory in terms. According to the US Government Accountability Office, several factors contributed to the rise of subprime loans during the 90's, including "changes in tax law that increased the tax advantages of home equity loans." (Unfortunately, I can't pinpoint the exact tax law here. Could be 1986 or 1996...)
http://www.slate.com/id/2182709/
During the early 2000's, four states tried to create laws to curb predatory lending. (This is also detailed in that GAO report, on page 58.) These passed the states and worked for a few years, but the Treasury Department's Office of the Comptroller of the Currency (OCC) stepped in and essentially invalidated those laws in 2004. (Bush's administration, mind you. FEMA's Katrina, Dept of the Interior's sexual relations with the oil industry, the Office of Special Plans, the Justice Department's unlawful firing of US attorneys, the Dept of Defense's War on Iraq, the Dept of Homeland Security, and four Press Secretaries paid to lie to your face. Is there any department that isn't tainted by Bush's stink of corruption and incompetence? When do I see a scandal involving the Dept of Agriculture?)
-----
So, there it is in a nutshell. Loans to people who can't afford it created a massive economic debt, and deregulation from Congress spread the damage outside of the home loan sector. Some states tried to prevent some of the damage, but the current administration stopped that cold.
Capitalism is nice and all, but the macro-organism that is the private sector is an instinctual creature. It feeds off of greed because it is the nature of its evolution. You cannot blame corporations as a whole for being greedy no more than you can blame a snake for trying to choke your neck. As much as right-wingers want to create a completely "free" market and remove as much regulation as possible, a totally "free" market is total anarchy. The abuse of monopolies are against the law, a government regulation, but you don't want to remove that safeguard. The police, post office, fire departments, etc. are all funded by the government, but you certainly don't want to turn that over to the private sector. So, putting some shackles on the bloodthirsty beast isn't such a bad idea, and the American public shouldn't be so mindless with the "regulation BAD, taxes BAD, money GOOD" mantra.
At the same time, subprime loans were, and still are, a horrible idea. NINJA loans (No Income, No Job, no Assets) are idiotic. Interest-only loans are f--king stupid. Reverse mortgages are rip-offs to the elderly. Debt consolidation are quick fixes that turn into long-term problems (like killing your credit and home equity). When it comes down to it, if a person can't afford a house, they shouldn't be shopping for a house! There are plenty of apartments and rental houses to live in, so owning a house isn't a requirement to live. As much as left-wingers want to give the poor the opportunity to do everything that the other classes can do, sometimes it's just not a good idea, and sometimes they don't really deserve any government help, anyway. Certain mistakes are painful for a reason.
Weigh this against the candidates as you like, but remember that nothing this complex can be reduced to a sound byte, and problems like this are usually the fault of both parties, anyway. Which party should carry the most blame, and which candidate is going to fix this mess, is up to you to decide.
Both Obama and McCain (as well as their running mates) attack each other on how the economic meltdown was caused by the other party. The news stations provide small details here and there, but there is no full picture from ANYBODY on why and how this whole thing went crashing down. So, which bills killed our economy?
http://en.wikipedia.org/wiki/Gramm-Leach-Bliley_Act
First, the Gramm-Leach-Bliley Act. The GLBA, enacted in 1999, repealed parts of the Glass-Steagall Act, a post-Depression-Era law designed to promote safeguards after that generation's economic apocolyse. Specifically, the Glass-Steagall Act prohibited a bank from offering investment, commercial banking, and insurance services. This was the critical part that was repealed. This was also a critical safeguard that prevented banks from diving into potentially risky industries, such as mortgage loans. Without that safeguard, we have ended up with the current situation of banks taking on bad mortgage loans, and the banks, who normally take part in daily overnight loans with the rest of the banking world to balance out surplused banks with debted banks, now no longer trust each other to accept interbank loans. The banks in debt end up going bankrupt, as we've seen in the past week.
Who participated in this law? Well, the bill was introduced by three Republicans, Phil Gramm being the most important of the three. Gramm is the top economic advisor of the McCain campaign, and might be a pick for Secretary of the Treasury if McCain was elected. (Though, McCain recently dumped him as an advisor after his "a nation of whiners" gaff. Also, Gramm was almost single-handedly responsible for the Enron loophole.) The Senate passed the bill with a 54-44 vote (mostly Republican, including a Yea from McCain), and the House passed it 343-86 (both from Democrats and Republicans). Some will point out that Bill Clinton signed the bill into law, but as the bill was now veto-proof (over a 2/3rd majority in the House), Clinton couldn't object to it even if he wanted to.
http://engram-backtalk.blogspot.com/200 ... tgage.html
The second part is the rise of subprime loans. Not only do subprime loans give money to people who can't afford to pay it back, they often are very predatory in terms. According to the US Government Accountability Office, several factors contributed to the rise of subprime loans during the 90's, including "changes in tax law that increased the tax advantages of home equity loans." (Unfortunately, I can't pinpoint the exact tax law here. Could be 1986 or 1996...)
http://www.slate.com/id/2182709/
During the early 2000's, four states tried to create laws to curb predatory lending. (This is also detailed in that GAO report, on page 58.) These passed the states and worked for a few years, but the Treasury Department's Office of the Comptroller of the Currency (OCC) stepped in and essentially invalidated those laws in 2004. (Bush's administration, mind you. FEMA's Katrina, Dept of the Interior's sexual relations with the oil industry, the Office of Special Plans, the Justice Department's unlawful firing of US attorneys, the Dept of Defense's War on Iraq, the Dept of Homeland Security, and four Press Secretaries paid to lie to your face. Is there any department that isn't tainted by Bush's stink of corruption and incompetence? When do I see a scandal involving the Dept of Agriculture?)
-----
So, there it is in a nutshell. Loans to people who can't afford it created a massive economic debt, and deregulation from Congress spread the damage outside of the home loan sector. Some states tried to prevent some of the damage, but the current administration stopped that cold.
Capitalism is nice and all, but the macro-organism that is the private sector is an instinctual creature. It feeds off of greed because it is the nature of its evolution. You cannot blame corporations as a whole for being greedy no more than you can blame a snake for trying to choke your neck. As much as right-wingers want to create a completely "free" market and remove as much regulation as possible, a totally "free" market is total anarchy. The abuse of monopolies are against the law, a government regulation, but you don't want to remove that safeguard. The police, post office, fire departments, etc. are all funded by the government, but you certainly don't want to turn that over to the private sector. So, putting some shackles on the bloodthirsty beast isn't such a bad idea, and the American public shouldn't be so mindless with the "regulation BAD, taxes BAD, money GOOD" mantra.
At the same time, subprime loans were, and still are, a horrible idea. NINJA loans (No Income, No Job, no Assets) are idiotic. Interest-only loans are f--king stupid. Reverse mortgages are rip-offs to the elderly. Debt consolidation are quick fixes that turn into long-term problems (like killing your credit and home equity). When it comes down to it, if a person can't afford a house, they shouldn't be shopping for a house! There are plenty of apartments and rental houses to live in, so owning a house isn't a requirement to live. As much as left-wingers want to give the poor the opportunity to do everything that the other classes can do, sometimes it's just not a good idea, and sometimes they don't really deserve any government help, anyway. Certain mistakes are painful for a reason.
Weigh this against the candidates as you like, but remember that nothing this complex can be reduced to a sound byte, and problems like this are usually the fault of both parties, anyway. Which party should carry the most blame, and which candidate is going to fix this mess, is up to you to decide.
Rosalina: But you didn't.
Robert: But I DON'T.
Rosalina: You sure that's right?
Robert: I was going to HAVE told you they'd come?
Rosalina: No.
Robert: The subjunctive?
Rosalina: That's not the subjunctive.
Robert: I don't think the syntax has been invented yet.
Rosalina: It would have had to have had been.
Robert: Had to have...had...been? That can't be right.
Robert: But I DON'T.
Rosalina: You sure that's right?
Robert: I was going to HAVE told you they'd come?
Rosalina: No.
Robert: The subjunctive?
Rosalina: That's not the subjunctive.
Robert: I don't think the syntax has been invented yet.
Rosalina: It would have had to have had been.
Robert: Had to have...had...been? That can't be right.
