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Politics : View from the Center and Left -- Ignore unavailable to you. Want to Upgrade?

To: Dale Baker who wrote (105237)	3/1/2009 1:28:51 PM
From: epicure	Respond to of 541006

I really do think this decision, "Tearing Down the Walls"- had it been changed, might have kept all this from happening. Perhaps I'm wrong. And yes, that is a nice bipartisan look at it. Many folks had a hand in this debacle- we can spread the blame around (if we want to be fair, that is. If we don't, we can just blame our favorite scapegoat party.)

To: Dale Baker who wrote (105237)	3/1/2009 2:22:44 PM
From: JohnM	Read Replies (1) \| Respond to of 541006

Here is a good bipartisan look at how it all evolved: Capitalist Fools A terrific piece. Worth posting every month as a reminder. Or putting a link to it in the thread header. Or otherwise privileging it. We are going to continue to get piecemeal histories, very biased ones, politically so. It's good to get some serious accounts where we can all get to them when needed.

To: Dale Baker who wrote (105237)	3/1/2009 5:08:33 PM
From: quehubo	Read Replies (2) \| Respond to of 541006

Yes really balanced. Like the war in Iraq was a large factor with oil prices over the last 8 years. Perhaps the war in Iraq drove up all commodities? How does he know the Bush tax cuts did not stimulate the economy? What would the economy have been otherwise? Overleverage by financial institutions and the american consumer seems to be the primary cause. Greenspan provided too much fuel and no one in government was ready to force the reduction of leverage. Roads around here are dead, I dont know where all the gasoline is getting consumed because I doubt there is much spending on at the retail stores.

To: Dale Baker who wrote (105237)	3/9/2009 11:19:09 PM
From: TimF	Respond to of 541006

I suppose since it blames both Republicans and Democrats it is in a sense bipartisan, but I wouldn't exactly call it good, and in blaming tax cuts and deregulation its playing the Democratic tune pretty well. It does have a good point about Volker doing what a central banker has to do, and that Greenspan didn't do as good of job. It also makes on of the few clearly valid points where what could be seen as deregulation is at fault - "to allow big investment banks to increase their debt-to-capital ratio (from 12:1 to 30:1, or higher) so that they could buy more mortgage-backed securities". But it doesn't really develop any argument for Gramm-Leach-Bliley even being relevant, let alone a major issue. The only real attempt is "if a company whose shares had been issued by an investment bank, with its strong endorsement, got into trouble, wouldn’t its commercial arm, if it had one, feel pressure to lend it money, perhaps unwisely", and that's a bit thin, to say the least, as a basis for arguing the repeal of these barriers as a major cause, or even a cause at all, of the problems with the banks. He basically just accepts that it is a cause while doing nothing to support the idea. For the opposing view see Message 25478689 The cut in the tax rate on capital gains contributed to the crisis in another way. It was a decision that turned on values: those who speculated (read: gambled) and won were taxed more lightly than wage earners who simply worked hard. But more than that, the decision encouraged leveraging, because interest was tax-deductible. If, for instance, you borrowed a million to buy a home or took a $100,000 home-equity loan to buy stock, the interest would be fully deductible every year. The tax deductibility of mortgage interest and also the special exemption from capital gains tax for most owner occupied housing (a point he doesn't directly address, and a much better candidate for a cause to blame on Clinton, than signing Gramm-Leach-Bliley), did provide incentive to over invest in housing, but that extra incentive is reduced when capital gains taxes are cut. Special breaks for housing that you don't get for other investments, encourage investment in housing, but when you lower the rate for other investments you reduce that distortion. Lowering ordinary income tax rates reduces the gain from the special deduction for mortgage interest, so it also helps to reduce the effect of how the tax code tilts investment toward housing. As long as you leave these special breaks in place the higher tax rates are the more you distort spending and investment and borrowing towards houses. He also unreasonable downplays the CRA, and Fannie and Freddie, while also missing the point on how regulation of reserve requirements encouraged over securitization of loans. (Not that reserve requirements can be a matter where there is no regulation, the point here wasn't too much or too little regulation, but rather bad regulation)