Trump's Economy Still Unable to Rise above 3% Growth

Again no answer but only juvenile lashing out. What funds economic demand ?? A truthful answer will show that production always precedes consumption.

 

The last Republican deficit for FY2007 was $161B of which $88B was the special appropriation for the wars. Two years later the Democrats had it at $1,400B and never came close to the worst Republican deficit of $400B in 2004.

 

And?
The dot-com bubble in the United States

 

The housing bubble started under Clinton’s low income housing policy justified by his interpretation of the 1977 Community Reinvestment Act. That’s common knowledge.

 

And it was Clinton who allowed BOTH investment houses trading in mortgage-backed securities, AND former administration officials going immediately to work in the industries they regulated, which were ILLEGAL until Bill's executive orders.

Wall Street was FLOODED with Clintonistas at Citicorp, Morgan Stanley Chase, and all the other "deemed too big to fail" bailed out companies , bankrupted by the very MORTGAGE BACKED SECURITIES TRADING CLINTON ALSO ALLOWED.

 

Did you have anything relevant to my post? Or are you trying to say the housing crash was because of the dot.com bubble?

 

It's Clinton's fault?

[video]

No, as the chart clearly shows, there was no bubble during the Clinton administration.



Housing prices were within normal historical range throughout his presidency.

 

I was referring to this post:
Even after the dismantling of our armed forces...

I have no desire to watch you go thru your pretzel dance on Bush again.

 

Clinton's low income housing policy started the housing bubble as the chart clearly shows.


The housing bubble and financial crisis are actually two different things although the collapse of the housing bubble resulted in the financial crisis. The housing bubble was caused by the lowering of lending standards due to the HUD requirement that Fannie and Freddie make a set percentage of loans to low income borrowers. This policy was initiated by Bill Clinton and was based on an interpretation of the Community Reinvestment Act. At the end of Clinton's term that percentage was 50%. This was increased to 55% by the Bush administration. The lowering of the lending standards was used by unscrupulous mortgage lending firms like Countrywide and New Century to make many other high risk loans. Adding to the housing bubble was the easy money policy of the Fed which made loans easier to afford due to low interest rates. The housing bubble suddenly burst in 2008. This was similar to the dot.com bubble which burst in 2001 and recovered from by 2003 but why was the financial industry so terribly affected this time.


The financial crisis triggered by the housing bubble collapse was the result of a combination of financial and banking regulations going back to 1936 (See the list below). Mortgage backed securities have been around for years before the 00's. They are securities formed by conglomerating home mortgages and are a way for investors to earn a return through the housing market. They have historically been very safe investments. The HUD housing policies however resulted in a portion of the MBS's created in the 90's and 00's to consist of the subprime and other low standard loans. The Basel rules were based on the assumption that securities consisting of home mortgages were of very low risk. Therefore the reserve requirements for MBS's were set at a very low rate of 5%. This meant that for every $50K of MBS's that a commercial or investment bank had it could make loans totaling $1M. Since banks make money from loans they would use the investment vehicles with the lowest reserve requirement. And very many of them did. They bought AAA rated MBS's (the ratings were determined by the National Ratings Agencies - Fitch, Moodys, and Standard and Poors). This was required by gov regulation. But the ratings agencies were not doing due diligence on the make up of the MBS' which was unknown to the banks involved who trusted the ratings and Basel guidelines. Collapse of the housing bubble caused foreclosures in the subprime mortgages especially. This created fear and uncertainty in the value of the MBS's even though they were still paying ~ 90% of their returns. The market price dropped (in some cases a price could not be determined because no one was interested in buying). This is where the mark to market rule came in resulting large paper and consequently the banks reserves falling below the already low 5%. The bailout from the gov started out as TARP which was passed to buy up all these MBS's which had now large paper losses due to mark to market. It was quickly changed however to give money directly to the banks so that they could bring their reserves up to the 5% level. Bear Stearns was bailed out but Lehman was allowed to fail. This resulted in uncertainty and the credit markets froze (none of the banks wanted to lend to other banks who might not be bailed out). Some commercial banks like WaMu also had MBS's in reserve and ended up being taken over.



The analysis of what happened is contained in the book by Friedman and Kraus – “Engineering the Financial Crisis” – 2011. As can be seen these rules were issued over the years with no analysis on how they might conspire together to set up a catastrophic house of cards situation due to the homogenization of asset mix held by many of these investment houses. Collapse of the housing bubble which affected these assets including MBS’s (whose contained loans were still paying at ~ 80%) then lost value due to the market price dropping way below value triggering large paper losses due to mark to market accounting rules. This reduced the capital and lending capacity of the banks due to Basel I and the Recourse Rule (an adoption in the U.S. of part of what later became Basel II), which specify those capital requirements. The conflation of all of this resulted in the financial (really the banking) crisis. The authors also show that the repeal of Glass Steagal had nothing to do with the financial crisis. Glass Steagal prevented the mixing of private deposits with investments and that was not a factor. Here are the set of regulations:




1. SEC Regulations from 1936 requiring mandated minimum ratings for a growing number of institutional investments.


2. SEC decision in 1975 to confer NRSRO on the big three ratings agencies.


3. Basel 1 from 1978 which established favorable risk weighting for mortgages and GSE issued MBS’s.


4. Mark to market accounting established by FAS 115 in 1993 and refined by FAS 157 in 2006.


5. HUD targets for mortgages to low-income families in the late 1990’s resulting in reduction of down payment requirements for the GSE’s.


6. Recourse Rule issued by the FED, FDIC, and Office of the Comptroller of the Currency, and the Office of Thrift Supervision.






Here are some excerpts from an editorial from the WSJ:

http://online.wsj.com/article/SB10001424052970204468004577166723093578272.html


Google – The Meltdown Remains a Whodunit

 

There was no housing bubble when Clinton was president. As O'Reilly points out, he was out of office for years while the housing bubble grew to its absurd levels and then started imploding.

And during the entire time that happened, Republicans controlled Congress and the WH. Even O'Reilly recognizes how ridiculous it is to blame Clinton for that.

Abount the same level of ridiculousness as it is for donald to blame the Dems for his policy of unnecessarily ripping children away from their parents.

 

Your response to
" I only heard how Bush created the mess and the deficit "

You mean you still can't refute the facts as usual.

 

About as relevant as the picture you posted, bubbles. Republicans know how to deal with it when they pop, Democrats do not.

 

Completely wrong. I posted the housing bubble picture following your post implying the Democrats were at fault for the recession, because the recession was caused by the housing bubble and its collapse.

What is the relevance of your picture of the 2000 stock market?

Is that why you dodged the question: "Or are you trying to say the housing crash was because of the dot.com bubble?"

Because there is none.

Sure they do. We saw how the Republicans "dealt" with the housing bubble really well.

Because business can regulate itself, doncha know.

We also saw how well they "dealt" with the surplus we had with Clinton in office.

 

This

and this

 

Wait, wait.
But Newt did it.

 

lol, the only bill ever passed by congress to help regulate fanny and Freddie was killed by REPUBLICANS in 2005.

 

demand precedes all of this.

this is basic econ 101.

 

I'm sure that's coming.

 

because of the republican caused recession. You always leave that part out. lol

 

They'll get all a-twitter if you ask them to consider actual facts.

 

https://www.cnbc.com/2018/06/15/gol...s-to-4-percent-second-quarter-gdp-growth.html

 

Then prove it, your self-serving baseless declarations do not.

Supply side helped mitigate the damage of the 2001 recession and get us into a full recovery and in which record tax revenue increases and had a last Republican deficit of just $161B. Then the Democrats took back the Congress a year before the recession of 2008 and utterly failed to pass policies to help mitigate that and their policy to get us into a full recovery was an utter failure.

 

Because it would have made matters worse and not fixed the problems.

 

I didn't say they were at fault for the recession. Can't you get anything right?

The Republicans know how to handle such bubbles and recessions and recoveries while clearly Democrats do not as history bears out.