"Without mortgage equity withdrawals, there is no way George Bush would have been re-elected"
- John Mauldin, president of Millennium Wave Advisors, December 2008
(video here)
(and now you know everything you need to know)
December 6, 2008
Soot and Ashes Quote of the Day
"Without mortgage equity withdrawals, there is no way George Bush would have been re-elected"
- John Mauldin, president of Millennium Wave Advisors, December 2008
(video here)
(and now you know everything you need to know)
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8 comments:
Yeah well, without a total economic catastrophe Obama would have never been elected.
Oooooh this just burns me up. If we had just been producing our own energy and goods all along, that graph would look completely different.
That might be the most relevant chart to the economic crisis of '08 in America. Jaw-dropping.
You are correct, without a complete and total meltdown of the world financial system, Americans would have been stupid enough to put the guys who caused the complete and total meltdown of the world financial system back in for four more years.
At least it came in Fall 2008 and not Spring 2009.
Where did this chart come from? I have been hearing that MEW was about 20% of GDP for a while now. If this chart is the new truth....yikes!
Also, this is not just an American issue, not just Bush. Remember Bush and McCain tried to rein in Barney Frank and Frannie and Freddie. Frank did not think there was a problem. That said, Bush is still a big spender who has put our nation into debt.
The worldwide banking system has a lot to answer for. My opinion is that we can blame an elite cadre of Ivy League educated bankers and their international equivalents who answer to no one. Banking is now global, as well are many other businesses. The rules are not clear in a global economy, cultural differences abound. It seems not one of them had a moral compass. There used to be a moral component to the education of our elites; clearly that is now gone. They did not even consider the immorality of handing out money which could scarcely be repaid. Those who got "liars loans" are further evidence of moral turpitude and the traders who sliced, diced and repackaged this offal into derivatives are a bunch of non-productive wankers!
My understanding is that bank liability as a percentage of GDP is much higher elsewhere, especially in the UK. Europe has the same problems, especially in areas where real estate has climbed exponentially. With family in London, Spain, Boston and DC, I have heard all the stories firsthand.
We need to get back to actually producing things, instead of this masturbatory maneuvering of money.
The seeds for this crash were as follows:
(1) US Corporations increasingly moved their manufacturing to other countries as well as outsourced jobs to lower wage countries . In part this was a response to perhaps unreasonable demands from Unions.
(2) The US did not regulate the inflow of funds to Wall Street from around the World .The excess liquidity provided to much funds and it created bubbles ,if you combine it with faulty
lending . Wall Street along with deregulation of long standing laws set the stage for this excess liquidity that was misdirected into the stock market and the housing bubble and lending .
(3)Lack of proper regulations on the carry-trade as well as proper import taxes . How stupid for the Government to allow cheap foreign goods to destroy the American market that was more costly to produce because of higher wages .
(4) Apparently regulators, Politicians , and law enforcement were sleeping on the job and were not aware of widespread loan fraud . The USA was riding on its pass good record regarding the defaults rates on home loans ,in spite of the game changing and the risk factors being changed . Wall Street made up new rules of risk, that had not really been tested ,in part because of unregulated leverage lending . Credit default swaps were a Joke because the insurer was just making a casino bet without ability to pay .Hank Paulson was part of the group that pushed for more allowance of greater leverage for the Investment Banks while he was at Goldmans .
So the removal of long standing laws regarding the regulations of leverage and lending was the biggest mistake . To think that arrogant bribed Politicians had the nerve to do away with the prudent laws that were developed after the Great Stock Market crash of 1929. Wall Street finally got their way around 1998 ,along with Clinton signing into law that there would be no capital gains on home capital gains up to 500k every 2 years .
(5) Greenspan held the rates down to long and did not respond quickly enough to a market that was clearly going into a heated up bubble .
(6) The Real Estate industry was allowed to market a ponzi-scheme with no regard to borrowers really qualifying ,or the fact that they were giving investment advice based on myths . Appraisers were black-balled if they didn't conform to the ponzi-scheme ,in spite of Appraisers going to Congress and 10 thousand signing a Petition ,yet they were ignored by Congress .
(7) Greenspans low rates punished savers and made it more favorable to invest in leveraged assets ,especially since they were appreciating at the rates they were .
(8) Corporations benefited by the boom years ,yet wages did not increase accordingly to that sort of increase in production and profit . Wage earners compensated by going into debt buying and a false sense of wealth by the fake real estate bubble prices .What are Corporation profits going to look like now ?
To correct this mess we would need to undue all the mistakes that were made . I just don't know if it can be done or not .
Well this confirms it, we're fucked.
There used to be a moral component to the education of our elites
Yeah, too bad it all came from the Skull and Bones society.
Bush's 8-Year Presidential Plan:
The Vision Thing
The Corporate Agenda Thing
The Campaign Thing
The Tax Cuts Thing
The War Thing
The Stay-The-Course Thing
The Re-Election Thing
The Oil Price Spike Thing
The Tie-Up Loose Ends & Pardon Accomplices Thing
The Legacy Thing
The Library Thing
The Book Deal Thing
The Move-To-Paraguay Thing...etc
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