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Gayle in MD
02-01-2010, 12:28 PM
President Bush's Vision of "The Ownership Society" & the GOP's Demands for Deregulation Are the Real Culprits

The right-wing meme machine has been promulgating the idea that President Bill Clinton and the Congressional Democratic Party are the true culprits in the current economic crisis. According to Wikipedia, "A meme consists of any idea or behavior that can pass from one person to another by learning or imitation. Examples include thoughts, ideas, theories, gestures, practices, fashions, habits, songs, and dances. Memes propagate themselves and can move through the cultural sociosphere in a manner similar to the contagious behavior of a virus."

The right-wing meme machine is claiming that the crisis is the result of Democratic efforts to expand homeownership among minorities and the white "lower middle-class" by expanding the market for risky sub-prime mortgages. Once holders of sub-prime mortgages began defaulting, the income stream that backed up the $55 trillion in financial derivatives that had been underwrriten with the mortgages dried up, triggering the financial crisis.

Many sub-prime mortgages were adjustable rate mortgages (ARMs), once known as balloon notes. (They were called balloon notes when this questionable practice was confined to minority communities.) A balloon note has easy terms in the early part of the loan, but eventually, the note resets, and the holder has to make a massive payment ("the balloon" having risen) to retain their property.

Other types of ARMs have low initial payments and/or interest rates, but reset after 2-5 years, and the mortgage holder has to meet a much higher payment. If they can't meet the payment, they will go into default.

Balloon notes used to be the province of predatory lenders, such as those serving the minority communities. They were very prevalent among lenders serving African American communities in the south. The idea is, from the lender's point of view, the balloon note holder is not going to be able to make that big payment when it comes due, as he or she will not be able to have bettered themselves financially in the meantime, due to discrimination. The lender then repossesses the property, finds another pidgeon, and the process begins again.


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<span style='font-size: 20pt'>The first thing that comes to mind when hearing the charges that it was Bill Clinton and the Congressional Democratic Party that caused the financial meltdown by promoting homeownership among the people is to remember that Rick Davis, the campaign manager for John McCain's 2008 Presidential campaign, was the chief lobbyist for Freddie Mac. Since the first administration of George W. Bush, Rick Davis and his lobbying firm have raked in over two million dollars from Freddie Mac.</span>
<span style='font-size: 20pt'>Freddie Mac installed Rick Davis as the head of its Homewonership Alliance, an organization lobbying for the expansion of homeownership via the expansion of subprime loans.</span>And then there was President George W. Bush himself. During his 2004 reelection campaign, Bush offered a vision of what he called the "ownership society." Bush's idea of the American Dream entailed American families owning a house and having a significant stock portfolio, with half of a taxpayer's retirement monies that normally would have gone to Social Security being invested in the stock market.
<span style='font-size: 20pt'>
President Bush proclaimed the virtues of the ownership society, which was more stability and prosperity. He proposed a "zero-down-payment initiative" to boost home-ownership via a government-underwritten program enabling people to obtain home mortgages with no down payments. </span>
<span style='font-size: 20pt'>"America is a stronger country every single time a family moves into a home of their own."

The huge onslaught of sub-prime mortgage lending followed. All constraints were taken off, and prudence was ignored in the interest of gaining big profits. For no people are as profitable to the looting class as the poor. You owe them no obligation.</span>The Anglo-Saxon System
<span style='font-size: 20pt'>
The housing bubble was just part of the economic instability caused by President George W. Bush and the Congressioanl Republican Party, which the talking heads at Fox News seem to forget controlled the U.S. House of Representatives from January 3, 1995 to January 3, 2007. The Congressional Democratic Party has had control of both houses of Congress (and the Senate, always by a paper-thing margin in the few times it was in the majority since 1995) for less than two years, less than the time it would take the most stringent adjustable-rate mortgage to readjust to its more stringent terms.</span>
Fox News and other cogs in the right-wing meme machine are liars.

It is important to realize that the idea of the balloon note is for the lender to gain back the property at the end of the period of easy terms. This type of lending is predicated upon repossessing the house, and selling it again. It is a huckle. The property remains in the hands of the lender, to be recycled endlessly. This is how substandard housing can prove to be so profitable to the unscrupulous lender.

<span style='font-size: 20pt'>When the people being exploited were minorities, no one other than the Barney Franks of the world and other pointy eggheads and liberals seemed to mind. Despite rightwing wet dreams to the contrary, minorities aren't really that politically powerful. But with the advent of the ARM, predatory lenders began targeting white folk, who are politically potent due to their sheer numbers.</span>ARMs Race

The new ARMs race that developed with the advent of the new millenium was just a facet of the pyramid scheme that America has become. The ARM-holder was to enjoy easy terms in the first part of the mortgage, which would reset in 2, or 5, or 7 years, imposing more onerous terms on the ARM-holder, who likely would be unable to meet those terms if he and she weren't part of the pyramid. For you see, house values were going to increase, according to the scenario that was the "Come on" for joining the pyramid.

Home-values would increase, freed from the business cycle that historically saw real estate the last sector of the economy to go bust. Since your home value was going to increase, you could sell your home and buy a new one, meanwhile reaping a huge profit and being able to avoid the new terms of the now-adjusted ARM, as you had gotten rid of it. In this scenario, you likely have moved into a new, better home with the benefit of a new ARM, or you have made so much money due to the boom in housing prices, you can afford a traditional mortgage.

The proliferation of ARMs caused a bubble in real estate prices. The "money" (all on paper) that flooded into the market from the ARMs race boosted home prices, fulfilling the pitch that was the basis of the pyramid, that home prices would increase by leaps and bounds forever.

But nothing lasts forever. And the real estate market is not immune from the reality of the business cycle.

The Looters


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President Bush's Vision of "The Ownership Society" & the GOP's Demands for Deregulation Are the Real Culprits

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In the economy as a whole, the Bush 43 Administration weakened or abandoned international programs such as capital adequacy standards, improving transparency, etc., that the United States had been committed to and played a key role in promoting during the Clinton years. One of the first
things the Bush 43 Administration did after it took office was to terminate an international push, spearheaded over several years time by the Clinton Administration and the Jean Chrétien government in Canada, to force anti-money laundering regulations on the offshore banking industry in the Caribbean. The Clinton and Chrétien governments had been trying to stop the abuses of North American corporations using domiciles like the Cayman Islands to avoid taxes and to launder money.

Major North American corporations have an economic incentive to offshore their legal domiciles to avoided paying taxes. However, that wasn't the chief reason for the push: although the financial chicanery of corporations was a major factor in the crackdown, more imperative was the key role that offshore banks in the Caribbean played in the international narcotics trafficking industry. These banks played a key role in laundering drug money, turning it into capital to be reinvested in North America and elsewhere.

To the corporate moneybags and financiers supporting George W. Bush, the Caribbean and its fast and loose financial regulation regime offered a great deal of opportunity. In the area of financial derivatives, the riskiest instruments routinely were rolled into offshore companies domiciled in places like the Cayman Islands to avoid too much scrutiny.

Even before the financial meltdown in the Singapore market in the 1990s, there was a perceived need for more transparency in the international financial system and a push to promote it via accounting regulatory reform. The "Anglo-Saxon" model of transparency was being promoted, to become the standard for the world. For there to be rational capital movements, there had to be rational accounting and regulatory standards.

It was felt that imposing stricter accounting standards, the "Anglo-Saxon System" prevalent in the Australia, Britain, Canada and the U.S., on the markets of the developing world would prevent another blow-out, such as the Asian Tigers experienced. Their financial accounting standards were too opaque, making it difficult to accurately assess the value of a stock.




Bi-Partisan Support for Deregulation\

This was a decade ago, before the onslaught of deregulation that began with the Republican Congress in the Bill Clinton administration, which became a tsunami in the Bush 43 Administration. These are two different eras. Who can now say that the Anglo-Saxon system is a better system, or is
now even viable in the United States or other first world countries? <span style='font-size: 20pt'>The loosening of financial regulation during the Bush 43 Administration has been a major part of sowing the seeds of the current meltdown.</span>
It is true that President Bill Clinton signed off on deregulation of the financial industry, but it must be assumed that Clinton did so on the proviso some ground rules were going to be put in place. <span style='font-size: 20pt'>The Clinton Administration was a force for promoting stricter financial accounting regulations internationally. It was not Bill Clinton's fault that the Bush 43 Administration hamstrung any efforts to enforce sane business practices in the United States.</span>
Allowing riskier investment vehicles banned for nearly three-quarters of a century as destabilizing speculation that turns a stock market and a financial system into a casino would require more transparency, stricter financial accounting standards. The Bush 43 Administration complimented the new, riskier environment by heightening the risk by allowing accounting regulation to lapse.

Bill Clinton likely envisioned deregulation of the financial markets happening hand in hand with the enforcement of better accounting and disclosure standards to ameliorate the heightened risk inherent in the financial industry being allowed to use new financial products. George W. Bush, a mental and moral midget dedicated only to the obtaining and keeping of political power, who was deeply committed to deregulation in all its forms (such as destruction of the Food & Drug Administration, the Occupational Safety & Health Administration, etc.), did nothing to ensure that the financial industry heightened its transparency or improved its accounting standards; rather, he did the opposite.


That the Bush 43 Administration heightened the already snowballing risk inherent in the new products by interpreting deregulation not simply as allowing new, riskier products, but by simultaneously loosening federal regulation. (The destruction of the regulatory environment on Wall St. is
ironic, as George W. Bush's father took the opposite tack when he was President, tightening up standards after the laxity of the Reagan years. Many a financier who started an audacious scheme during the latter Reagan years wound up in jail during the Bush 41 Administration, such as Mike Milken.)

The point is, the financial industry's rocket scientists were virtually given a green light by Bush, Senator Phil Gramm (Chair of the Senate Banking Committee), and Senator John McCain (chairman of the Senate Commerce Committee), so they went on a rampage. Why not? They did nothing illegal. Everything was within the rules. For there were no longer any rules.


Inadequate President, Inadequate Oversight

The inadequate oversight of the economy is rooted in the inadequacy of the Chief Executive of U.S.A., Inc., who -- ironically -- is the only President to ever have a Masters of Business Administration degree. (As Oliver Stone's new movie W points out, "Junior" as he was then called got into Harvard Business School due to his powerful father's connections.)

When assessing the role of President Bill Clinton and the Congressional Democratic Party in the recent crisis, it is important to remember that Clinton anticipated that Vice President Al Gore would take the baton from him in 2001. Due to the prestidigitation of a reactionary Supreme Court ignoring 200 years of precedent dating back to the Election of 1800, George W. Bush became Chief Executive of U.S.A., Inc.


George W. Bush, two-time bankrupt and all-around failure, reportedly the only man ever to drill not one but two dry holes in Saudi Arabia, concessions given to him to curry favor with his father. George W. Bush, who was given a major stake in a baseball team that made him a multimillionaire in order to curry favor with his father, the President. George W. Bush, who grew up in the shadow of his grandfather (U.S. Senator Prescott Bush, a partner in Brown Bros. Harriman), his father (George H.W. Bush, war hero, successful businessman, two-term Congressman, Chair of the Republican National Committee, head of the C.I.A., first ambassador to the People's Republic of China, Vice President and President of the United States), and even his brother Jeb (Phi Beta Kappa, Yale University, where "W" got his gentlemanly C's). A man whose real dream was not to be President of the United States, but to be the Commissioner of Baseball, a position historically whose position-holder essentially is a dupe for baseball team owners.

W did beat his brother Jeb to the governor's mansion: IN 1994, when Jeb lost his bid to become governor of Florida, W won his gubernatorial bid in the Lone Star State. However, the governor of Texas is a virtual figurehead position, like the President of Israel. The Texas legislature is run by the Lieutenant Governor. As governor, W proved to be an amiable boob who allowed the lieutenant governor, a Democrat, "make him look good."

Jeb Bush, the more likely Presidential timber, finally got elected governor of Florida in 1998, the year his brother W won reelection. By the time the 2000 Presidential season was coming around, the Powers-that-Be in the Republican Party were looking for a consensus candidate. And they turned to the amiable boob from Texas, George W. Bush. It was felt that he could span the blocks of the Grand Old Party, the Eastern Establishment aristocracy and Sun Belt patriciante -- two camps that his father, George H.W. Bush, had had a foot in, and the reactionary Evangelical Christians that he, as someone who had been publicly "Born Again," could appeal to. Along with a boost from a reactionary Supreme Court, it worked.

This is the man that did not put airports on high alert in the first weeks of September 2001, though the #2 al Qaeda operator in the world had been busted in Toronto at the end of August and CIA (which likely had been in on the operation with the Canadian secret services) told the Office of the President a major terrorist strike was imminent. Yet, Bush did not act as it would have put a financial burden on the airport operators, who had lobbied his administration for a loosening of security regulation because the heightened operating expenses were reducing profits. If brains were electricity, George W. Bush couldn't spark a firefly's arse!


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President Bush's Vision of "The Ownership Society" & the GOP's Demands for Deregulation Are the Real Culprits
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'''Official Presidential Portrait of United States President Bill Clinton, Number 42'''
Credit: Official White House Portrait | © Public Domain (Wikipedia Commons)
Think of this: In the late 1990s, the financial press was full of stories about the poor, poor Arabs, and how their oil revenues were falling and their populations were increasing, and how they had overextended themselves with massive infrastructure projects. OPEC wondered if it could boost the price of a barrel of oil to north of $30. They were threatening Europe throughout the 1990s that if they imposed a carbon tax, and threatened to cut their oil consumption, OPEC would make their lives hell in the short-term by boosting prices artificially. (This was something OPEC never could due, except for very short periods, due to quota-busters.)

<span style='font-size: 20pt'>George W. Bush has seen the most massive diversion of assets to the Arabs and other OPEC producers in history. Russia's economy has ballooned from $900 billion in annual GDP to $1.7 trillion, spawning a plethora of oil billionaires overnight and a resurgent Cold Warrior nation, that has boosted its military budget by a factor of four. If the Arabs had actually programmed Bush as a Manchurian candidate, they could not have done better.</span> http://www.associatedcontent.com/article/1124508/is_bill_clinton_the_democratic_party.html?cat=9

pooltchr
02-01-2010, 12:45 PM
Do you actually read all this crap you cut and paste here? I seriously doubt it.

Steve

LWW
02-01-2010, 02:19 PM
She reposts talking points from her handlers.

LWW