The stock market dropped 800 points yesterday, the biggest one day drop ever in terms of points. It did recover to finish down 370 points, but it is down 30% from its high. Ordinary Americans are concerned. Liberals are popping champagne corks in celebration.
I have said on many occasions that for liberals, success requires failures. Bad news for ordinary Americans is splendid news for liberals.
Republicans control the White House, and if it will help get Barack Obama elected over John McCain, liberals would cheer the stock market dropping to 0.
http://www.ibdeditorials.com/IBDArticles.aspx?id=308185654524278
For the sake of full disclosure, I am not worried. I am well diversified, and thankfully young enough at 36 to be able to wait 20 to 30 years. Not everybody has that time horizon, but for those with 15 years or more of earning power, calm down. This is not 1929. No, it is not the Great Depression despite what the Jayson Blair Times says.
Before getting to the politics of this situation, let’s start with some hard core finance. Wake up, I can try and explain this without being boring. This problem was caused because people tried to remove risk from the markets, which always fails, and increases the damage in the long run.
The recently approved bailout package was a terrible piece of legislative garbage, and deserved to go down in flames as the previous package did four days earlier. The entire rationale for the package was that without it, financial markets would collapse. This argument is…(grabbing a megaphone)…
GARBAGE!
Doing nothing was the right thing to do. It is what George Washington and the Founding Fathers wanted. Governments cannot affect supply and demand. They cannot strong-arm financial markets. Markets do what they want, regardless of whether governments need to get reelected. Perhaps Barack Obama can call the situation “unacceptable,” and simply tell the markets to be more polite, as he wants to do with Armageddonijad in Iran. Even John McCain fell victim to the notion that “doing something” meant doing something helpful.
Yet Presidential candidates can be allowed the occasional pander bear moment. Congress aggressively pushed the bailout package, and every member who voted yes should be pushed out of an airplane without a bailout package of their own.
So how did we get in this mess? Was it conservatism and deregulation? Absolutely, if one has no grasp whatsoever of facts.
For those that think that because they “read stuff,” and therefore, “know things,” I do this for a living, and have been in the industry for 15 years. My opinion matters. Yours…well…enough said.
This problem was caused by excessive regulation. Companies like Fannie Mae and Freddie Mac should not even exist in America. They are like every other liberal parasite in America, from PBS to NPR. Nevertheless, leftists despise the private sector, and wanted government in the home lending business.
Businesses have criteria, and they exist to make money. They are not laboratories for social experiments. Yet Fannie and Freddie were ordered to make loans to more minorities, particularly black Americans. For some reason, even though Jews are a true minority in terms of world population percentage, Jews never get “minority” benefits. Perhaps we have not suffered enough, but that is for another time.
Anyway, leftists concluded that not enough black Americans owned homes, and therefore America was a racist nation as long as republicans were running the government. Therefore, to avoid having Jesse Jackson and Al Sharpton marching in the streets (this was before Jesse threatened to castrate a black man who wanted to succeed without preaching racism and victimhood), bad loans were made.
President Bush allowed this to happen, and the irony is that he never got the credit when black home ownership was at an all time high. Yet of course he got the blame when the housing bubble burst, even though every bubble bursts by sheer definition alone.
Irresponsible buyers were allowed to buy due to political correctness. While some would argue that helping blacks own more homes would be positive, I ask them to look at what is going on. Once again, the left has helped blacks reach levels of financial misery not seen since before conservatives passed welfare reform in 1996.
1996 was also the year that Phil Gramm, a politically incorrect former Senator and economics professor…one of the few people that actually does know what he is talking about…led the repeal of Glass Steagal. Repealing this law is not why we are hurting. It is what is preventing total financial armageddon. Bank Of America could not have bought Merrill Lynch if this law still existed.
So liberal do gooders figured out that even if black Americans suffered, a bad economy hurts everybody, so at least we are now closer to equality.
Yet there is a more sinister reason why liberals love this shared misery. George W. Bush is President, and the entire Democratic Party platform is hatred of George W. Bush.
This is a man who has freed millions of people and given two nations in the Middle East a chance at humanity and dignity. This is a man who healed the nation after the worst terrorist attack on American soil.
This is a man that is gracious to people who want to destroy him and grind him into dust. His own supporters are frustrated by his refusal to verbally bash their skulls in.
The left hates him. They would rather destroy this economy than risk giving up the chance to destroy this President.
They would rather lose a winnable war than allow George W. Bush to win anything.
They would rather lose an American economy and a war than lose an election.
Am I saying that many on the left do not care about what is best for America?
I do not have to say this. They say it themselves.
Ask conservatives what they want for America. They want to win the War on Terror. The left wants to end it, and the right wants to win it.
Conservatives also want to lower taxes for everybody, regardless of race, religion, gender, or sexual orientation. Whether one is gay, black, or Jewish, tax cuts help them all, especially if they are small business owners.
So what do liberals care about? Mainly abortion.
Without taking sides in the culture wars, ask most feminists in this country if they truly care about anything besides abortion. They will try to think of something else, but that is what they care about. Occasionally they care about animals and trees, provided that those animals and trees do not bring new animals or trees into the world.
So for those who care about more than just trees, bunny rabbits, and zygotes, here is the plain truth.
If the economy collapses, that hurts everybody. That means fewer abortion doctors. If terrorists attack, and kill everybody in a multi-hundred mile radius, they may end up blowing up abortion clinics, animal shelters, and yes, innocent trees (Although I maintain the trees and animals may not be innocent, and had it coming).
Liberals live in a black and white world where everybody on the left is virtuous and everybody on the right is evil.
Kwame Kilpatrick extends the misery of Detroit for decades, and the left blames George W. Bush, when not blaming Ronald Reagan.
Ray Nagin and Kathleen Blanco fall apart in New Orleans, and the left blames the President.
Black home ownership rises, and President Bush gets no credit. The bubble bursts and he gets all the blame.
Perhaps the left might want to blame Franklin Raines, the former CEO of Fannie Mae and advisor to Barack Obama. Yes, he is an advisor, despite protests to the contrary.
Now we have Nancy Pelosi and Harry Reid ramming the mother of all disasters down American throats. House republicans tried to stop it, but did not have the votes.
What did the market do? It dropped anyway. Why? Because it wants to drop. Markets care about functioning properly, even if it affect elections.
The left needs to win this election. Optimism is not allowed anywhere. Once Barack Obama is elected, if this does happen, everything will be fine. The markets will recover and he will get the credit, even though he will have contributed nothing. This is the 1992 Bill Clinton economic plan. Be in the right place at the right time, get lucky, and take all the credit.
If Obama were to win, there would also be no homelessness in America. It might exist, but the media would not write about it. According to a chart I read, homeless people disappeared in 1993 and reappeared in January of 2001.
http://hughhewitt.townhall.com/blog/g/4b5f9fcb-1adc-42bb-9af0-eb28a08dfa69
If the stock market rises with John McCain as President, it will be because of the bailout package that democrats will claim is theirs and theirs alone. If Obama is elected and the market rises, it will be solely because of him. If the market collapses with John McCain, it is because he is George W. Bush’s twin brother. If the market collapses under Obama, it will be because he inherited a mess. The market hit an all time high under George W. Bush, but that will be discounted.
The left controls the cultural institutions in America, including the schools. They will teach that George W. Bush destroyed America. They will cite Oliver Stone, Michael Moore, and the Jayson Blair Times as evidence. The children will not learn that those that use government to control markets are repeatedly wrong, and those that let free markets reign benefit.
Yet truth is not what motivates the left. They want to win elections. That is the end, not even the means. Even if what they create fails, such as the Great Society, they will just claim success anyway. Even if Ronald Reagan creates an 18 year bull market thanks to lowering tax rates, the left will say he is wrong anyway.
The left will blame Ronald Reagan, George W. Bush, Dan Quayle, Sarah Palin, and John Ashcroft, who has nothing to do with economic policy.
So as the market drops, liberals can take comfort in knowing that they now have more reasons to convince people about the evils of George W. Bush. After all, who cares about making society better when the left can invest their money in voodoo dolls of republicans?
The left will now hold hearings to determine how to blame President Bush for a crisis that the left perpetuated. The left will rial in front of the cameras about greedy CEOs an crooked lenders, when the truth is that Christopher Dodd should be sitting in jail, and Barney Frank should be investigated thoroughly as well.
I just worry that John McCain may win this election. The rage that has engulfed the left will spread like colon cancer, or as we call it in failed neighborhoods, community organizers. The left will need to prove that McCain is a failed President before he is even sworn in. They will have to destroy Sarah Palin the way they did Dan Quayle.
The left will have to destroy this economy and cripple us militarily because American success cannot be allowed if conservative republican success comes with it.
Conservatives benefit when we all benefit.
Liberals benefit when people remain trapped in a downward spiral of dependency on government.
This is why liberals cannot govern, win a war, or help an economy.
They cannot fix things, because they only know how to destroy. Their existence depends on it.
I would rather crush liberalism than crush America itself.
eric
Eric,
J.B. White, Addresses why Sarah Palin is the prescription for what is ailing U.S. His last three post are excellent if you get a chance to read them.
http://rattlergator.typepad.com/rattlergator/2008/10/the-sarah-palin-political-earthquake-recognized.html
McCain needs to hammer home his attempts three years ago that could of averted this meltdown.
Dodd, Frank, Obama all voted for less regulation as McCain was trying to bring some attention to Fannie and Freddies bizzare lending habits.
Facts is, McCain tried to do something about this while the 3 above mentioned did nothing.
If he doesnt confront Obama on this tonight and make him actually answer up to it he’ll be making a serious mistake.
Sorry , guess I should really say “oversight” instead of regulation
This is the oldest game in the Book of Underhanded Punditry. If something your side did goes awry, say your oppoent is glad for it. War your side started not going well? Say your opponent wants to lose the war! Economic policies flying back in your side’s face? Say your opponent is glad the economy is a mess! It’s like when you tell your kid to wear a helmet when he’s bicycling, he falls down and hits his head, you tell him that he should have worn a helmet, and he says, “Oh, so you’re glad I fell down and hit my head!” Nonsense.
No one I know of is celebrating the collapse of the economy. It’s not good for anyone. We liberals realize that it does mean the GOP is in serious trouble, and rightly so, but we see it as no more than the old “close one door, open another” theory. Out of bad things sometimes good things emerge. Child falls down and hits his head, next time child wears a helmet. Humans, like all the other little critters of the world, don’t learn without making mistakes. The trial and error method of learning is by far the best teaching tool nature has to offer.
Now that the policies of the Right have failed, they are forced to either change the subject or blame the starving cows for not making milk. The right puts the onus of this failure on the likes of Dodd and Frank, while niether had the power to prevent this – they were in the minority when all the policies and law that led to this mess were put in place. It’s hard for people to take the blame for their mistakes, and when they refuse to accept mistakes they learn nothing from them. I see we have another example of this in action.
There is plenty of blame to go around though, and much of it goes back to the nineties. Bill Clinton, the Blue Dog that he is, often played on the same team as the Republican Congress. This puts to myth that Clinton was a “leftie.” And not all of this mess is the fault of greed and stupidity on the part of the politicians who left these markets de- and un- and non-regulated. The ideal that as many Americans should be homeowners as possible is quite laudable. The trust that the markets would properly make that so was misplaced.
So yes, there’s plenty of blame to go around, and it’s pretty bipartisan. After all, what politician doesn’t want to be able to pronoucne that his constituency is owning more homes than ever? For Bush, it was a primary selling point – the “ownership society.” The trouble is that most “homeowners” do not own their homes – just an equity stake in it.
Of course, history shows that that liberals will not destroy the economy or cripple the military. They never have. In fact, liberals as a group have hardly ever had any real power in America. What should happen is Americans will move niether to the left or the right but rather the sensible. They will simply conclude that for markets to perform there must be rules to the game, otherwise all contracts – money, stocks, mortgages, employment, whatever – won’t be worth the paper they’re printed on. It’s time sensibility was restored. Americans are beginning to wake up and realize that government of the people is only the problem, or the solution, when the people make it so.
JMJ
Bla bla bla.
Liberals came as close as they ever have to almost putting a soup kitchen on my corner.
But hey, Obamas a great community organizer, I’m sure he would of set one up.
Careful comparing Sarah to Dan. You might believe he was the greatest thing since sliced white bread and it could even be true, but the bad perception of him has taken hold and you aren’t going to shake it on this blog. Dan is damaged goods. Associating Sarah with him damages her. Rather compare her to H.W. Bush. A Vice-President who succeeded the President and was where he needed to be when the world had to toss Saddam out of Kuwait. Sure, not as conservative or whatever. As for comparisons, though. I’m just sayin’.
[…] This problem was caused because people tried to remove risk from the markets, which always fails , and increases the damage in the long run. The recently approved bailout package was a terrible piece of legislative garbage, and deserved …[Continue Reading] […]
“My emails come infrequently, so please cherish them.”
You are a piece of work, my blog acquaintance friend and fellow displaced Long Islander.
;-}
Happy New Year.
Cavuto said it well today – this all goes back to the Clinto administration but that just happens to b where it all started, everyone’s hands are dirty.
Okay, I’ll bite. What exactly was F&F’s “bizarre lending habits” and what did McCain propose to do about it and how exactly does this all fit into this collapse? I don’t think you have a clue here. try turning off the Fox Kool Aid and figuring it out for yourself.
JMJ
I’m not gonna play along with your intentional ignorance Jersey.
Its not FOX koolaid. Its just a bunch of facts that could very well cost Obama the election.
http://www.newsbusters.org/blogs/john-stephenson/2008/09/22/why-doesnt-media-report-facts-where-blame-belongs-financial-crisis
Just because other info comes into an arena doesnt mean that people are clueless. Enough of that sh*t outta you and I wish Eric would do something about it.
It his blog but I still dont see where you think have the right to call people idiots with you’re little subtleties.
I own a freaking 460,000.00 house (not anymore)and have my own business and two 401 ks between my wife and I that have lost about 20,000 and we have watched this and studied it for weeks now.
You could say F&F to anyone these days and they would pretty much be hip to Frank and all these guys were part od the problem securing these bogus loans.
You and I even had this debate last week when you accused me of racism.
So knock off the crap by saying my claim is clueless.
You just dont want to admitt what a miserable failure your brand of government is
JMJ:
“what did McCain propose to do about it ”
http://politicalticker.blogs.cnn.com/2008/09/30/fact-check-did-mccain-warn-about-fannie-and-freddie-2-years-ago/
The Facts: In May 2006, McCain was speaking on the Senate floor in support of the Federal Housing Enterprise Regulatory Act of 2005, a plan he had co-sponsored. In the speech, he cited a federal report, saying that “Fannie Mae employees deliberately and intentionally manipulated financial reports to hit earnings targets.” He also noted a $3.8 million fine Freddie Mac had recently paid to the Federal Elections Commission over problems with disclosure of its political lobbying.
“These are entities that have demonstrated over and over again that they are deeply in need of reform,” McCain said in the speech. He urged senators to support changing how the institutions were overseen by the government. “If Congress does not act, American taxpayers will continue to be exposed to the enormous risk that Fannie Mae and Freddie Mac pose to the housing market, the overall financial system, and the economy as a whole,” McCain said in the speech.
The legislation, which never became law, would have moved oversight of Fannie and Freddie from the department of Housing and Urban Development to an independent Federal Housing Enterprise Regulatory Agency.”
[…] This problem was caused because people tried to remove risk from the markets, which always fails , and increases the damage in the long run. The recently approved bailout package was a terrible piece of legislative garbage, and deserved …[Continue Reading] […]
Well, I’m not going to accept blogs and pseudo-news outlets like newsbusters. You’ll have to do better than that. Yes, F&F were horsing around. but to put the entire onus on them is just plain stupid and wrong and shows a complete lack of unserstanding of this mess. I can clearly see that watched absolutely none of the hearings on Hill regarding this and are relying completely on rightwing opinion for your “facts.” try a little harder, Micky. You don’t even know what F&F do.
JMJ
Spare me Jersey you’re the clueless one.
Even McCain mentioned it in the debate, and it went uncontested.
Dont BS, I did not put the “whole” thing on F&F.
The hearing times and dates are there.
Y O U L O S E
McCain spoke forcefully on May 25, 2006, on behalf of the Federal Housing Enterprise Regulatory Reform Act of 2005 (via Beltway Snark):
Mr. President, this week Fannie Mae’s regulator reported that the company’s quarterly reports of profit growth over the past few years were “illusions deliberately and systematically created” by the company’s senior management, which resulted in a $10.6 billion accounting scandal.
The Office of Federal Housing Enterprise Oversight’s report goes on to say that Fannie Mae employees deliberately and intentionally manipulated financial reports to hit earnings targets in order to trigger bonuses for senior executives. In the case of Franklin Raines, Fannie Mae’s former chief executive officer, OFHEO’s report shows that over half of Mr. Raines’ compensation for the 6 years through 2003 was directly tied to meeting earnings targets. The report of financial misconduct at Fannie Mae echoes the deeply troubling $5 billion profit restatement at Freddie Mac.
The OFHEO report also states that Fannie Mae used its political power to lobby Congress in an effort to interfere with the regulator’s examination of the company’s accounting problems. This report comes some weeks after Freddie Mac paid a record $3.8 million fine in a settlement with the Federal Election Commission and restated lobbying disclosure reports from 2004 to 2005. These are entities that have demonstrated over and over again that they are deeply in need of reform.
For years I have been concerned about the regulatory structure that governs Fannie Mae and Freddie Mac–known as Government-sponsored entities or GSEs–and the sheer magnitude of these companies and the role they play in the housing market. OFHEO’s report this week does nothing to ease these concerns. In fact, the report does quite the contrary. OFHEO’s report solidifies my view that the GSEs need to be reformed without delay.
I join as a cosponsor of the Federal Housing Enterprise Regulatory Reform
{{{{ Act of 2005, S. 190, }}}}
to underscore my support for quick passage of GSE regulatory reform legislation. If Congress does not act, American taxpayers will continue to be exposed to the enormous risk that Fannie Mae and Freddie Mac pose to the housing market, the overall financial system, and the economy as a whole.
I urge my colleagues to support swift action on this GSE reform legislation.
In this speech, McCain managed to predict the entire collapse that has forced the government to eat Fannie Mae and Freddie Mac, along with Bear Stearns and AIG. He hammers the falsification of financial records to benefit executives, including Franklin Raines and Jim Johnson, both of whom have worked as advisers to Barack Obama this year. McCain also noted the power of their lobbying efforts to forestall oversight over their business practices. He finishes with the warning that proved all too prescient over the past few days and weeks.
What was this bill? The act would have done the following:
(1) in lieu of the Office of Federal Housing Enterprise Oversight of the Department of Housing and Urban Development (HUD), an independent Federal Housing Enterprise Regulatory Agency which shall have authority over the Federal Home Loan Bank Finance Corporation, the Federal Home Loan Banks, the Federal National Mortgage Association (Fannie Mae), and the Federal Home Loan Mortgage Corporation (Freddie Mac); and (2) the Federal Housing Enterprise Board.
Sets forth operating, administrative, and regulatory provisions of the Agency, including provisions respecting: (1) assessment authority; (2) authority to limit nonmission-related assets; (3) minimum and critical capital levels; (4) risk-based capital test; (5) capital classifications and undercapitalized enterprises; (6) enforcement actions and penalties; (7) golden parachutes; and (8) reporting.
It never made it out of committee. Chris Dodd, then the ranking member of the Banking Committee and now its chair, was in the middle of receiving preferential loan treatment from Countrywide Mortgage, one of the companies gaming the system in the credit crisis. Meanwhile, Barack Obama took hundreds of thousands of dollars from the lobbyists McCain mentions in this speech, making him the #2 recipient of Fannie/Freddie money:
————————————————————————————
Do you own a house Jersey ? Or you’re own business ?
Are you as invested in the market as I am ?
I doubt it, you said you rent.
I can read, and did a lot of research in order to buy my house.
JMJ:
“I can clearly see that watched absolutely none of the hearings on Hill ‘
Are you trying to say that just because you didnt witness McCain attempting to pass a bill he co sponsored it didnt happen ?
I hope not, because in that case I must say that the koolaide you claim I’m drinking is a hell of a lot safer than what you’re drinking.
This is fact holmes and you just cant be man enough to live up to it.
Micky, I get it. Really. We should all know by now that privatizing Fannie and allowing shareholders in was a huge mistake. Fannie’s mission was supposed to be backing the secondary mortgage market, not pandering to the greed of shareholders. And that pandering is what got Fannie into trouble. If Fannie didn’t have to answer to shareholders then the corruption would never have happened. But Vietnam, evil murderous enterprise that it was, had to be funded somehow, so for America’s first “war on the cheap” selling off Fannie was a politically expedient way of funding it. Yet another disaster still lingering from national disgrace that was the Vietnam war.
Just the same, the cooking of the books at Fannie has little or nothing to do with the financial disaster we have today. Anyone who knows anything about finance and economics knows that. McCain is just scapegoating Fannie because it’s unpopular among uneductaed Republicans.
JMJ
Oh and the FHERR might have prevented the 10 bil (a drop in the bucket of this mess) in in improper reporting at Fannie, but would have done nothing to keep this financial meltdown from occuring.
You buying into a biat ‘n switch, Micky.
Try to keep your eyes on the prize. Don’t get distracted by cheap political tricks.
JMJ
If you take a couple components like F&F being given such an absurdly long leash along with the rise in costs of food, fuel etc recently, it makes perfect sense that alot people were put in a position to either eat and make it to work, or screw the banks.
And we all know how I feel about ethanol being a componenet in our failed market so you cant blame me for looking back on Carter and seeing him as having a good deal of influence on whats happening today.
Theres no doubt in my mind that had McCain passed this act and was able to bring to light what was going on we would not of seen this today.
Because mind you, I’m a multidimensional thinker and by no means am I blaming any one componenet. I can see from looking closer in the last couple of weeks that a lot of this is simply due to an entitlement minded group of democrats who believe that people should be offered more than what they can pay or deserve.
No, McCain did just not single out F&F in his statement, I can read.
But they were the largest column supporting this foundation.
I could of opted for F&F guaranteeing a loan in buying my house 12 years ago.
I waited and put together a bigger down payment because I looked at the numbers and said theres no way I can make these payments in peace not being able to lock in on a stable rate.
I know how it works. I’ve also manged a handful of restaurants and opened two that are still running, I get it, believe it or not.
And it actually doesnt take a finacial genious to see that money was being given away for decades, only in the hopes of reciving votes on election day
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