How Exactly Did Bush Cause This recession?

Discussion in 'Political Opinions & Beliefs' started by kenrichaed, Feb 13, 2012.

  1. kenrichaed

    kenrichaed Banned

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    I admit that I do not know much about economics so could someone explain this to me? I know people blame the two wars he created as one of the reasons but I don't understand how fighting wars causes a recession and massive job loss in this country.

    I also know that people say the tax cuts were to blame and once again i'm not seeing how that translates into job loss.

    So if anyone with some solid economics knowledge would care to help me out with this I'd appreciate it.
     
  2. akphidelt2007

    akphidelt2007 New Member Past Donor

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    In reality, he didn't cause the recession. People who blame Obama or Bush for the current mess we are in and were in are just simply playing partisan politics.
     
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  3. Lex Naturalis

    Lex Naturalis New Member

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    He didnt. This created the recession.

    [ame="http://www.youtube.com/watch?v=y4A0RuXhnQA"]Democrats Fighting Regulation of Freddie & Fannie - YouTube[/ame]

    [ame="http://www.youtube.com/watch?v=63siCHvuGFg"]McCain's Early Recognition of Fannie/Freddie Crisis - YouTube[/ame]
     
  4. AJ98

    AJ98 Well-Known Member

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    The truth is that its not an easy answer. There were MANY things at work that Bush deserves blame for, but also many other things that happened outside of his control. I'm not an expert either but there is enough information out there that the public can understand.

    Most importantly though we have to understand that its not just Bush sending us to war. Its also Congress who control where money goes in our government. For many years they have been taking money out of social security to pay for things. Its also Congress spending money on pork, continuing to raise the debt limit. But its also normal economic trends that have been happening for a long time such as our jobs going overseas or the American dollar losing its value.

    As for who to blame for the economic crisis, you could look to individuals such as Alan Greenspan. Many claim he pressured banks to do things such as to jack up their interest rates on customers. Others claim he deliberately said things in public to mislead Americans about the housing bubble.

    There was also the commodities crisis as well. Basically investors began hoarding goods such as food and oil. By hoarding so much these people were able "speculate" the price of goods. In other words, they were deliberately driving up the price of goods that everyone depends on on a daily basis. There were measures put in place to prevent things like this happening, but of course a lot of it was deregulated by Congress several years ago.

    And roughly 10+ years ago Congress also began repealing certain legislation such as Glass Steagall. Glass Steagall was responsible for keeping certain financial institutions separate in order to prevent things such as speculation. Many argue that scaling back legislation such as this is what directly allowed Wall Street to lie about mortgages.

    The housing market itself was a giant scam that all the major banks in our country took part in. Basically giving mortgages to people who couldn't afford them. Then bundling those bad mortgages and turning them into securities (Think of it like owning stock in a company). Those who bought the securities would be expecting to receive the monthly mortgage payments from the homeowners. When the homeowners couldn't pay up, those who owned the securities no longer received money and most didn't earn back the principle of what they paid for it. And who bought these securities you might ask? Other banks bought them. These banks were selling each other bad securities but were making a ton of money in the short run. After several years of this happening, the banks could no longer continue the ruse and Lehman Brothers went into bankruptcy. Thus kicking off the 2008 economic crisis we are still suffering from.
     
  5. Lex Naturalis

    Lex Naturalis New Member

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    I find this helps.

    [ame="http://www.youtube.com/watch?v=ih4Itl0PmaE"]Thomas Sowell - The Housing Boom and Bust - YouTube[/ame]
     
  6. ModerateG

    ModerateG New Member

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    Bush didn't help. He intensified it.

    Clinton made some big mistakes with allowing a few regulations to be destroyed that shouldn't have been. This caused the housing market decline.

    Bush's problem was that he was inept at recognizing and fixing the problems, and actually intensifying them through idiotic actions. Clinton caused certain aspects of the recession. Bush caused more and was unable to fix Clinton's problems. Bush was completely unable to deal properly with 9/11 and these wars in an economically sound fashion. Everything he did literally intensified the problems instead of fixing them.
     
  7. darckriver

    darckriver New Member Past Donor

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    Exactly. Anyone who tries to blame the 2008 recession on ANY single specific person, activity, or political ideology has never really studied the dynamics of how it happened. There were some people more culpable than others though. People like Greenspan, Summers, ..., and... well, why waste the effort...
     
  8. kenrichaed

    kenrichaed Banned

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    Thanks for the great reply's. I had no idea it was such an involved issue. This will take a lot more research for the paper I have to write so thanks for pointing me in the right direction.
     
  9. thediplomat2.0

    thediplomat2.0 Banned

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    I agree. Ironically, Bush's actions were rather unimportant to the implosion of the United States economic system in 2008. It was a sequence of financial deregulation/overregulation (whatever term fancies you), bad monetary policy, and financial innovation that led to the economic downturn. However, I would not solely consider Lex Naturalis' claims as valid on these matters. Fannie and Freddie played a role in the financial crisis, but it is hard to pin just their actions in regards to financial innovation when private investment banks were engaging in the same or similar practices.
     
  10. Lex Naturalis

    Lex Naturalis New Member

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    Everything you need to know can be found here>>> [ame="http://www.amazon.com/Housing-Boom-Bust-Thomas-Sowell/dp/0465018807"]Amazon.com: The Housing Boom and Bust (9780465018802): Thomas Sowell: Books[/ame]
     
  11. Phoebe Bump

    Phoebe Bump New Member

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    As I see it, Bush (and the entire Republican brand and more than a few Dems) had a "build it, they will come" mentality. But you don't win elections by deliberately putting brakes on an economy.
     
  12. thediplomat2.0

    thediplomat2.0 Banned

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    I would also recommend the following movies/books:

    1. HBO's Too Big to Fail
    2. Charles Ferguson's Inside Job
    3. Andrew Ross Sorkin's Too Big to Fail: The Inside Story of how Wall Street and Washington fought the Financial Sector-and Themselves
    4. Michael Lewis' Boomerang
    5. Michael Lewis' The Big Short: Inside the Doomsday Machine.
     
  13. darckriver

    darckriver New Member Past Donor

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    Well, I'd love to pin the blame on all the liberals and their Fannie/Freddie "Affordable Housing" crap, etc - but, the real list of contributors to the fiasco reads like a Who's Who in America - both Liberal and Conservative - including all the millions of Joe and JaneYuppies that went into hock up to their ears because they were stupid enough to think that they really somehow could afford that $450,000 p.o.s. home on a 1/4 acres of nothing ("it's an investment") by doing a balloon mortgage, or..., well, you get the picture. We won't even get into the OTC derivatives market.
     
  14. Swamp_Music

    Swamp_Music Well-Known Member

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    Paragraph 8 of full Obama speech 5-19-09

    As has been widely reported, it started in the housing market. During the course of the decade, the formula for buying a house changed: instead of saving their pennies to buy their dream house, many Americans found they could take out loans that by traditional standards their incomes just could not support. Others were tricked into signing these subprime loans by lenders who were trying to make a quick profit. And the reason these loans were so readily available was that Wall Street saw big profits to be made. Investment banks would buy and package together these questionable mortgages into securities, arguing that by pooling the mortgages, the risks had been reduced. And credit agencies that are supposed to help investors determine the soundness of various investments stamped the securities with their safest rating when they should have been labeled "Buyer Beware."

    http://www.huffingtonpost.com/2009/04/14/obama-economy-speech-majo_n_186559.html

    In his speech nearly 3 years ago Obama tells the truth as “…it started in the housing market.” Democrats created the CRA which sought to FORCE banks to make risky loans to high risk low income borrowers who tend to vote for Democrats in 1977.

    The CRA had little to no effect since it was such ill conceived legislation the banks simply ignored it. Then Democrat Clinton came along and changed the enforcement of the law making (or FORCING, favorite Democrat word :wink: ) banks show real risky loans in real bad neighborhoods in real FDIC audits. If the banks did not show such loans they would flunk the audits, and have trouble getting government approval for expansions, and be labeled a “raciest lender” by Democrat backed groups like ACORN (and sued by people like Obama like he sued Citibank for not making risky loans). People say the banks were acting irresponsibly be lending money to those who could not pay it back, but that is not true. If it were there would be no need for Democrat Clinton to change the enforcement of the 1977 Democrat Carter law.

    The banks started making loans they knew would never be paid back, and had to pass along all that worthless mortgage paper to someone so they took a page from the book of unconstitutionally Democrat created Freddie and Fannie (specifically created to manipulate the free housing market for political purposes from day one), and started packaging that worthless mortgage paper into MBSs or Mortgage Backed Securities along with sound mortgage loans. Everyone knowledgeable know that eventually all would collapse so financial institutions stated “betting” when the house of cards would collapse in the derivative market.

    In the meantime, the qualification for getting loans was far less, and much new money entered the housing market creating price inflation from the shack to the mansion. The bubble eventually popped (that started during the Democrat Clinton administration after he changed the CRA enforcement and after people like Obama started suing banks like Citibank for not making risky loans) and it took a huge part of the American economy with it.
    Had Democrats not violated the Constitution repeatedly there would have been no bubble, and no crash. :puke:
     
  15. A Common Anomaly

    A Common Anomaly New Member

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    The tax cuts, wars, and out of control spending added substantially to our debt. However, they didn't cause the recession. Anyone who claims this is wrong.

    At best, Bush is responsible for ignorance. He was ignorant that there was a housing bubble and an out of control financial industry that would not cause great economic calamity when the house of cards fell.

    Even worse, Bush was neglectful. He knew that the housing bubble and toxic derivative trading and disingenuous credit agencies were going to cause an economic catastrophe, but decided to do nothing until it was too late.

    At worse, Bush is responsible for pushing an Ownership Society and taking a hands off approach to regulation. While he wanted to overhaul and increase regulations on Fannie and Freddie, he was met with Democratic opposition (and some Republican opposition).

    However in 2003, when Fannie and Freddie cooked the books, a new CEO took reigns of Freddie Mac, Richard F. Syron. Syron disregarded internal memos that the firm was financing questionable loans that threatened its financial health. In late 2004m Syron aggressively stepped up subprime lending.

    Syron told the Boston Globe that he had no choice. ‘‘If you’re going to take aid to low-income families seriously, then you’re going to make riskier loans,’’ he said. ‘‘We have goals to meet.’’

    More recently, Syron told the Washington Post he had miscalculated the risk of the loans as he sought to please policymakers eager to see expanded homeownership. “What this organization is all about is balancing among the different missions,” Syron said a month before the federal takeover of Freddie last September. “It makes the job almost impossible.”
    http://www.commonwealthmagazine.org...nk-Richard-Syron-and-the-mortgage-crisis.aspx

    Even then, it is contentious if Fannie and Freddie were behind the housing mess. They certainly played a role, but it is debatable about how large a role. Most of the subprime mortgage loans came from private financial institutions and Bush sat idly by regarding regulations of the private financial institutions.

    However, the dangers of toxic derivative trading was first brought to attention under Clinton, by Brooksley Born who Clinton dismissed. Then Greenspan, Summers, Giethner, Gensler who found nice jobs under Obama (besides Greenspan) ran her out of DC and her chairperson's role at CFTC. After all, the free market mantra that banks would regulate themselves operating in a black box reigned at the time.
     
  16. akphidelt2007

    akphidelt2007 New Member Past Donor

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    It will be the most studied financial crisis for decades. It is very complicated and can not be explained by a YouTube video of someone saying the housing market is alright, lol. If you want a detailed official report on the crisis read this.

    http://fcic.law.stanford.edu/report

    If you don't want to read the whole thing jumped to the conclusions section.

    If you want a good book that goes in to details on Wall Street firms and their actions read "The End of Wall Street".

    Very fascinating stuff. It basically all boils down to a miscalculation in home values.
     
  17. francoHFW

    francoHFW Banned

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    Blaming F+F is ridiculous. Pub deregulation, cronyism in the SEC and financials led to 80% of toxic mortgages being handled by Private institutions from 2003-6. Sold around the world, they destroyed the wor;d economy too...
     
  18. darckriver

    darckriver New Member Past Donor

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    Good starter list. And don't forget that Front Line episode - "The Warning". Tom Sowell's Housing Boom and Bust was mentioned - excellent. There's a huge list of sources...

    The crucial thing is this. Anyone that really wants to get a handle on the contributing factors MUST move outside of their own preferred political ideology. Most folks are only looking for materials to justify their own particular political position and use for ammo to attack their opponents. Fair enough. We all do that. But in this case we would be doing ourselves a huge injustice to take that approach. It just won't "get it" in this case. A truly interested person has to look at the whole picture as much as possible. I can't emphasize the importance of this enough. Maybe that isn't an easy thing to do but it's an absolute imperative for this particular subject. Later, going beyond one's own political preferences (biases) will pay rich dividends in understanding.
     
  19. A Common Anomaly

    A Common Anomaly New Member

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    If anything, Bush increased financial regulation, not decreased it. What deregulation under the Bush administration are you talking about?
     
  20. Swamp_Music

    Swamp_Music Well-Known Member

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    Freddie and Fannie have no constitutional right to exist, and were BOTH created by Democrats to warp the free housing market. At one point the unconstitutionally Democrat created Freddie and Fannie OWNED ONE out of every TWO mortgages, or half of all US mortgages; :omfg: a lot of power for two entities that should not exist and operate under POLITICAL marching orders ignoring free market principals. It is impossible to argue such a large player in the game had very little to do with the price bubble. Besides Freddie and Fannie actively sought to buy subprime mortgages to make their political goals, loans that by definition were easier to get because the bank lowered the standards, again to please their largest customers; unconstitutionally Democrat created Freddie and Fannie. :puke:
     
  21. thediplomat2.0

    thediplomat2.0 Banned

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    I agree. I particularly liked Sorkin's book because although it was dry in terms of the narrative, it was well balanced. Sorkin covered almost every conceivable cause in the book, and did so with highly accurate quotations by the CEO's, policy-makers, bankers, and other important figures that were working before the crisis hit to prevent it from happening in the first place. For example, he delved into the problems with Fannie Mae and Freddie Mac, a cause that Republicans like to cite. At the same time, he delved into the problems with derivatives and securities among private investment banks, a cause that Democrats like to cite.

    At this point, I should start to get a more partisan perspective on the crisis. I have been privileged to have studied it through the eyes of relatively balanced authors/directors. It would be nice to better understand the rationale of the far-right wing perspective and far-left wing perspective.
     
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  22. thediplomat2.0

    thediplomat2.0 Banned

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    While that may be true, whatever policies Bush himself implemented were ineffective in changing the course of the downward spiral to the crisis. You have to look to his cabinet to find the real perpetrators.
     
  23. A Common Anomaly

    A Common Anomaly New Member

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    I addressed this concern in my previous post and do not run away from this fact.
     
  24. Swamp_Music

    Swamp_Music Well-Known Member

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    The following video tell it like it is. ;)
    [ame="http://www.youtube.com/watch?v=NU6fuFrdCJY"]Burning Down The House: What Caused Our Economic Crisis? V2 - YouTube[/ame]
     
  25. darckriver

    darckriver New Member Past Donor

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    Right. I always know when I'm getting the partisan brain-whack from an author and Sorkin wasn't out to do a whack. In retrospect, I think the 2008 meltdown was probably one of the more bipartisn efforts ever undertaken. Both political ideologies were doing the wrong things to an amazingly high degree. But, the problems weren't confined merely to what politicians did or didn't do. The dynamics that pushed many of the largest financial institutions in the world toward bankruptcy are much the same as those that animate the high rolling Vegas gambler. There were huge profits to be made quickly and sometimes even the CEOs of the BIGGEST banks (not to mention AIG) had no idea they were holding such lousy hands and a call was immanent. Fascinating study... absolutely fascinating. And, the arena where the games of carnage were playing out extended outside the domain of the politicians and bankers, finding suitable grounds right at the doorstep and in the minds of the average American home buyer. And now we all, libs and cons alike, better start asking what has actually changed since those days and what still needs to be done.


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