To strandy

[ajmccarrell]

http://biz.yahoo.com/ap/080918/wall_street.html

We were talking yesterday that if the government does anything, it should be that they separate the mortgages from the investments, and it appears that they did exactly that, only they did it without letting the banks fail. However, I suggested that the government do exactly the reverse, in that they let the banks fail and take on the investment. It's just quite interesting to see that not 24 hours later, the government ended up separating bad debt from investment in one fashion or another. Maybe Paulson is a ledgie!

[strandinthewind]

I saw that.

The R's had the plan from the last time the economy failed under them - so they just essentially are going to implement another RTC, which, as argued, is wildly cheaper to the taxpayers than letting the banks fail and the economy completely tank. What this also means is that many more banks will likely go into the RTC, suggesting we are at the tip of the proverbial iceberg.

[ajmccarrell]

Originally Posted by strandinthewind

I saw that.

The R's had the plan from the last time the economy failed under them - so they just essentially are going to implement another RTC, which, as argued, is wildly cheaper to the taxpayers than letting the banks fail and the economy completely tank. What this also means is that many more banks will likely go into the RTC, suggesting we are at the tip of the proverbial iceberg.

You can't exactly blame an entire party for the acts of CEOs and natural market forces. It would be as ridiculous as me saying that both times it happened, we had a democratic congress, which is true but entirely irrelevant. Truth be told, the housing bubble started about 15 years ago and there is very little that either President could really have done about it. Unless we want to go full-bore fascism and have the government give directives to private business, government isn't supposed to interfere. They could have set up certain lending laws, but that is congress's job, which the last 20 years of congresses failed to do and should have done after the S & L scandals. The tech bubble happened to happen under Clinton, but it was in no way his fault. In short, presidents don't "control" economies, collectively we all do. Presidents can only really set tax policy, which can restrict or increase monetary flow. The Fed can't even control the economy per se, they can set conditions, but the rest is up to us as consumers. It was our choice as consumers to buy houses that weren't really worth what we were paying and we were willing to do anything to get those bad loans. It was the fault of the banks for not properly scrutinizing the values of homes and for not self-regulating so that this didn't happen.