Tigers X - Number one Source to Talk Auburn Tigers Sports
The Library => The SGA => Topic started by: AUChizad on August 15, 2012, 04:45:51 PM
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http://news.yahoo.com/economic-recovery-weakest-since-world-war-ii-152031546--finance.html
Economic recovery is weakest since World War II
Associated PressBy By PAUL WISEMAN | Associated Press – 3 hrs ago
WASHINGTON (AP) — The recession that ended three years ago this summer has been followed by the feeblest economic recovery since the Great Depression.
Since World War II, 10 U.S. recessions have been followed by a recovery that lasted at least three years. An Associated Press analysis shows that by just about any measure, the one that began in June 2009 is the weakest.
The ugliness goes well beyond unemployment, which at 8.3 percent is the highest this long after a recession ended.
Economic growth has never been weaker in a postwar recovery. Consumer spending has never been so slack. Only once has job growth been slower.
More than in any other post-World War II recovery, people who have jobs are hurting: Their paychecks have fallen behind inflation.
Many economists say the agonizing recovery from the Great Recession, which began in December 2007 and ended in June 2009, is the predictable consequence of a housing bust and a grave financial crisis.
Credit, the fuel that powers economies, evaporated after Lehman Brothers collapsed in September 2008. And a 30 percent drop in housing prices erased trillions in home equity and brought construction to a near-standstill.
So any recovery was destined to be a slog.
"A housing collapse is very different from a stock market bubble and crash," says Nobel Prize-winning economist Peter Diamond of the Massachusetts Institute of Technology. "It affects so many people. It only corrects very slowly."
The U.S. economy has other problems, too. Europe's troubles have undermined consumer and business confidence on both sides of the Atlantic. And the deeply divided U.S. political system has delivered growth-chilling uncertainty.
The AP compared nine economic recoveries since the end of World War II that lasted at least three years. A 10th recovery that ran from 1945 to 1948 was not included because the statistics from that period aren't comprehensive, although the available data show that hiring was robust. There were two short-lived recoveries — 24 months and 12 months — after the recessions of 1957-58 and 1980.
Here is a closer look at how the comeback from the Great Recession stacks up with the others:
—FEEBLE GROWTH
America's gross domestic product — the broadest measure of economic output — grew 6.8 percent from the April-June quarter of 2009 through the same quarter this year, the slowest in the first three years of a postwar recovery. GDP grew an average of 15.5 percent in the first three years of the eight other comebacks analyzed.
The engines that usually drive recoveries aren't firing this time.
Investment in housing, which grew an average of nearly 34 percent this far into previous postwar recoveries, is up just 8 percent since the April-June quarter of 2009.
That's because the overbuilding of the mid-2000s left a glut of houses. Prices fell and remain depressed. The housing market has yet to return to anything close to full health even as mortgage rates have plunged to record lows.
Government spending and investment at the federal, state and local levels was 4.5 percent lower in the second quarter than three years earlier.
Three years into previous postwar recoveries, government spending had risen an average 12.5 percent. In the first three years after the 1981-82 recession, during President Ronald Reagan's first term, the economy got a jolt from a 15 percent increase in government spending and investment.
This time, state and local governments have been slashing spending — and jobs. And since passing President Barack Obama's $862 billion stimulus package in 2009, a divided Congress has been reluctant to try to help the economy with federal spending programs. Trying to contain the $11.1 trillion federal debt has been a higher priority.
Since June 2009, governments at all levels have slashed 642,000 jobs, the only time government employment has fallen in the three years after a recession. This long after the 1973-74 recession, by contrast, governments had added more than 1 million jobs.
—EXHAUSTED CONSUMERS
Consumer spending has grown just 6.5 percent since the recession ended, feeblest in a postwar recovery. In the first three years of previous recoveries, spending rose an average of nearly 14 percent.
It's no mystery why consumers are being frugal. Many have lost access to credit, which fueled their spending in the 2000s. Home equity has evaporated and credit cards have been canceled. Falling home prices have slashed home equity 49 percent, from $13.2 trillion in 2005 to $6.7 trillion early this year.
Others are spending less because they're paying down debt or saving more. Household debt peaked at 126 percent of after-tax income in mid-2007 and has fallen to 107 percent, according to Haver Analytics. The savings rate has risen from 1.1 percent of after-tax income in 2005 to 4.4 percent in June. Consumers have cut credit card debt by 14 percent — to $865 billion — since it peaked at over $1 trillion in December 2007.
"We were in a period in which we borrowed too much," says Carl Weinberg, chief economist at High Frequency Economics. "We are now deleveraging. That's a process that slows us down."
—THE JOBS HOLE
The economy shed a staggering 8.8 million jobs during and shortly after the recession. Since employment hit bottom, the economy has created just over 4 million jobs. So the new hiring has replaced 46 percent of the lost jobs, by far the worst performance since World War II. In the previous eight recoveries, the economy had regained more than 350 percent of the jobs lost, on average.
During the 1981-82 recession, the U.S. lost 2.8 million jobs. In the three years and one month after that recession ended, the economy added 9.8 million — replacing the 2.8 million and adding 7 million more.
Never before have so many Americans been unemployed for so long three years into a recovery. Nearly 5.2 million have been out of work for six months or more. The long-term unemployed account for 41 percent of the jobless; the highest mark in the other recoveries was 22 percent.
Gregory Mann, 58, lost his job as a real estate appraiser three years ago. "Basically, I am looking for anything," he says. He has applied to McDonald's, Target and Nordstrom's.
"Nothing, not even a rejection letter," he says.
His wife, a registered nurse, has lost two jobs in the interim — and just received an offer to work reviewing medical records near Atlanta.
"We are broke and nearly homeless," he says. "If this job for my wife hadn't come through, we would be out on the street come Sept. 1 or would have had to move in with relatives."
Federal Reserve Chairman Ben Bernanke has called long-term unemployment a "national crisis." The longer people remain unemployed, the harder it is to find work, Bernanke has said. Skills erode, and people lose contact with former colleagues who could help with the job search.
—SHRINKING PAYCHECKS
Usually, workers' pay rises as the economy picks up momentum after a recession. Not this time. Employers don't have to be generous in a weak job market because most workers don't have anywhere to go.
As a result, pay raises haven't kept up with even modest levels of inflation. Earnings for production and nonsupervisory workers — a category that covers about 80 percent of the private, nonfarm workforce — have risen just over 6.2 percent since June 2009. Consumer prices have risen nearly 7.2 percent. Adjusted for inflation, wages have fallen 0.8 percent. In the previous five recoveries —the records go back only to 1964 — real wages had gone up an average 1.5 percent at this point.
Falling wages haven't hurt everyone. Lower labor costs helped push corporate profits to a record 10.6 percent of U.S. GDP in the first three months of 2012, according to the Federal Reserve Bank of St. Louis. And those surging profits helped lift the Dow Jones industrials 54 percent from the end of June 2009 to the end of last month. Only after the recessions of 1948-49 and 1953-54 did stocks rise more.
Stock investments may be coming back, but savings are still getting squeezed by the rock-bottom interest rates the Fed has engineered to boost the economy. The money Americans earn from interest payments fell from nearly $1.4 trillion in 2008 to barely $1 trillion last year — a drop of more than $370 billion, or 27 percent. That amounts to shrinking income for many retirees.
Washington isn't doing much to help the economy. An impasse between Obama and congressional Republicans brought the U.S. to the brink of default on the federal debt last year —a confrontation that rattled financial markets and sapped consumer and business confidence.
Given the political divide, businesses and consumers don't know what's going to happen to taxes, government spending or regulation. Sharp tax increases and spending cuts are scheduled to kick in at year's end unless Congress and the White House reach a budget deal.
In the meantime, it's difficult for consumers to summon the confidence to spend and businesses the confidence to hire and expand. Never in the postwar period has there been so much uncertainty about what policymakers will do, says Steven Davis, an economist at the University of Chicago Booth School of Business: "No one is sure what will actually happen."
As weak as this recovery is, it's nothing like what the U.S. went through in the 1930s. The period known as the Great Depression actually included two severe recessions separated by a recovery that lasted from March 1933 until May 1937.
It's tough to compare the current recovery with the 1933-37 version. Economic figures comparable to today's go back only to the late 1940s. But calculations by economist Robert Coen, professor emeritus at Northwestern University, suggest that things were far bleaker during the recovery three-quarters of a century ago: Coen found that unemployment remained well above 10 percent — and usually above 15 percent — throughout the 1930s.
Only the approach and outbreak of World War II — the ultimate government stimulus program — restored the economy and the job market to full health.
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There has been no recovery, as a matter of fact, there hasn't even been a bottom yet. We're still in a depression and it's about to get much worse.
http://www.youtube.com/watch?v=wD6MNpP0GbM&feature=plcp
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There has been no recovery, as a matter of fact, there hasn't even been a bottom yet. We're still in a depression and it's about to get much worse.
http://www.youtube.com/watch?v=wD6MNpP0GbM&feature=plcp
We are barely (if at all) keeping up with inflation.
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We are barely (if at all) keeping up with inflation.
I have not watched the video (can't at work right now) but I agree that there's been no recovery. If a Republican were president we'd hear that bad news "messaged" endlessly from the MSM along with the 8.x plus % unemployment rate and inflation.
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Real unemployment is around 23% and Ryan is no fiscal conservative. http://youtu.be/LUDoOP6RK94
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Real unemployment is around 23% and Ryan is no fiscal conservative. http://youtu.be/LUDoOP6RK94
You falling for that propaganda again? This is why people like me or AUT1 will never go libertarian. That party has as many nuts as the other 2 with less results.
(http://static.railbirds.com/gallery/2009/03/25397tin_foil_shazam.png)
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Real unemployment is around 23% and Ryan is no fiscal conservative.
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I can't watch the video at work right now (will try to later when no one is around) but I'm wondering what the source is of that unemployment number? The U-6 unemployment rate is 15% with seasonal adjustment and 15.2% with no seasonal adjustment. The more commonly reported number is the U-3 number which is currently 8.3% with seasonal adj. and 8.6% with no adjustments.
The adjustments are made to account for predictable hiring patterns such as hiring then letting go of temp, student-type labor at the beginning and ending of summer then hiring and letting go of temp labor at the beginning and ending of the holiday season later in the year.
Source: http://www.bls.gov/news.release/empsit.t15.htm/
Of course, since this information comes from FedGov...it's probably suspect...
You falling for that propaganda again? This is why people like me or AUT1 will never go libertarian. That party has as many nuts as the other 2 with less results.
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Brevity is the soul of wit.
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Though this be madness, yet there is method in't.
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The U-6 FAIL!
I AM LIBERTARIAN and will change that for no one. I'm an avid reader of Austrian Economics through mises.org in Auburn, AL
SGS Alternate
(http://www.shadowstats.com/imgs/sgs-emp.gif?hl=ad&t=1343999598)
http://www.shadowstats.com/alternate_data/unemployment-charts
http://www.shadowstats.com/article/payroll-survey-unpublished-numbers
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The U-6 FAIL!
I AM LIBERTARIAN and will change that for no one. I'm an avid reader of Austrian Economics through mises.org in Auburn, AL
SGS Alternate
(http://www.shadowstats.com/imgs/sgs-emp.gif?hl=ad&t=1343999598)
http://www.shadowstats.com/alternate_data/unemployment-charts
http://www.shadowstats.com/article/payroll-survey-unpublished-numbers
I like the Von Misses school of Austrian Economics as well, but you go so far beyond that. Anyone can draw a chart dude. Doesn't mean it's factual. Care to provide some REAL facts to back up the crayola work?
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Welfare+unemployment+new claims for SSI (disability insurance) > 23% . Some of those who have fallen off of the UE radar are finding new ways to fund their lifestyle without having to actually work. Not to mention the able bodied lowlifes (not all welfare recipients are lowlifes) who refuse to work because they have to many children. When the numbers go down in one area they can be found going up in another area. That is all.
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Though this be madness, yet there is method in't.
An educated man.
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Welfare+unemployment+new claims for SSI (disability insurance) > 23% . Some of those who have fallen off of the UE radar are finding new ways to fund their lifestyle without having to actually work. Not to mention the able bodied lowlifes (not all welfare recipients are lowlifes) who refuse to work because they have to many children. When the numbers go down in one area they can be found going up in another area. That is all.
Well good luck convincing the Bureau of Labor Statistics to publish and use that "number" while a Democrat is in the White House, buddy.
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Well good luck convincing the Bureau of Labor Statistics to publish and use that "number" while a Democrat is in the White House, buddy.
Government = Lies. Period.
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Government = Lies. Period.
Get your Libertarian candidates elected and change it then.
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There will be no election this year.
Anyone that is watching what is going on in the world and is not concerned at all about what is happening is simply being delusional.
Recently, a "team of scientists, economists, and geopolitical analysts" examined the current state of the global economic system and the conclusions they reached were absolutely staggering....
One member of this team, Chris Martenson, a pathologist and former VP of a Fortune 300 company, explains their findings:
"We found an identical pattern in our debt, total credit market, and money supply that guarantees they're going to fail. This pattern is nearly the same as in any pyramid scheme, one that escalates exponentially fast before it collapses. Governments around the globe are chiefly responsible.
"And what's really disturbing about these findings is that the pattern isn't limited to our economy. We found the same catastrophic pattern in our energy, food, and water systems as well."
According to Martenson: "These systems could all implode at the same time. Food, water, energy, money. Everything."
http://www.republicbroadcasting.org/index.php?cmd=columnists.article&articleID=542
George Soros, through his Soros Fund Management LLC investment management firm, filed his 13F form today with the SEC, indicating some interesting position changes and new investments. Most notably, Soros exited a number of financial firms, such as Goldman Sachs Group, Inc. (NYSE:GS) and JPMorgan Chase & Co. (NYSE:JPM). Interestingly, Soros no longer has any substantial positions in financial firms, whether in the United States, or globally.
http://www.valuewalk.com/2012/08/soros-exits-goldman-sachs-jpmorgan-adds-to-gold-position/
DEFAULT
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An educated man.
I may come across as dumb good sir, but I assure you, that I am more well read that a lot. :)
Btw: We need to start a cigar thread. I know this has nothing to do with politics, but you mostly respond in here. Tabak Especial are the bomb.
Get your Libertarian candidates elected and change it then.
Amen, exactly what I said in the other thread.....to many keep the party split.
Bottomfeeder: No offense, b/c sometimes we see eye to eye, but you and others like you are what is keeping the Libertarian candidates behind. You buy too much into the Alex Jones type shit and don't articulate your position very well. It comes off as tinfoil hat type and that is why others give you so much shit on here. If the Libertarians wouldn't do what you do and calm the fuck down a bit, there would be a lot more of us in office. Whoops, did I say us? Freudian slip for sure.
Most of what I hear from other Libertarians is "Ron Paul Revolution! Fuck you if you don't agree!" Lets talk about his issues and discuss them like reasonable adults instead of trying to shove him down my throat. That would get the message across to the voters a lot better than what is happening now. This coming from a guy that almost marked his ballot for Ron Paul. We are our own worst enemy sometimes......I mean you... there is that Freudian slip again.
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There will be no election this year.
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My prediction: There will be an election and the world is not going to end on Dec. 21st.
Whether we are stuck with the same president and divided Congress or a new President and new Congress they all are going to have to get their collective heads out of their collective asses and come up with some REAL solutions that will bring this economy roaring back. Keynesian economics is KILLING this economy 'deader than hell'! Big and Small business and industry hate uncertainty which is what we have now with the LACK of any real leadership in the White House or Congress. It is the President's Constitutional JOB to rise-up above the petty, partisan politics and LEAD in the best interest of the nation that elected him. As I've said before, The Pharaoh is AWOL and derelict in his duties and sacred responsibility. There will need to be responsible, reasonable austerity measures taken by FedGov including real cuts in all spending (not cuts in increases but actual cuts), cut-backs in all entitlement programs across the board (100+ million people on some FedGov program, 1/3rd of the country...Really!?, that is absolutely unsustainable in a nation of 300+ million!), and real cuts in personal and corporate taxes coupled with a complete repression of tax loopholes, a global crackdown of tax avoidance mechanisms and means, ruthless prosecution of ALL tax evaders (including and especially filthy Congressmen, Senators, and Administration officials), and a serious, responsible scale-back of all unreasonable regulations of Business, Industry, and Commerce. Social Security and Medicare are currently unsustainable; they MUST be reformed; we can't keep using band-aid, spaghetti accounting to keep them going for a few more years until the next Congress. The Affordable Care Act must be repealed; we simply can't afford it and it gives unelected FedGov employees un-Constitutional authority over the citizens. The Patriot Act must be repealed and reformed for similar reasons (on that note the damn TSA is necessary but completely out-of-control at this point; the pit-bulls MUST be heeled). And we've GOT to stop supporting nations in which we have NO vested interest and that don't help us in some tangible way. Period.
I felt like channeling Hamilton this afternoon... :rant:
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My hats off to both of you for saying how I feel without totally committing me to Searcy. We have a BIG mess and no one in DC is willing to fix it. It's almost as if the people don't exist save the corporations/lobbying firms who have bought and paid for our representation. It's a steep climb but it's doable. I will be voting Ron Paul if he runs , or Libertarian if he does not. Regardless, I refuse to vote republicrat.
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Get your Alice in Wonderland Libertarian candidates elected and change it then.
FIXT for accuracy
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My hats off to both of you for saying how I feel without totally committing me to Searcy. We have a BIG mess and no one in DC is willing to fix it. It's almost as if the people don't exist save the corporations/lobbying firms who have bought and paid for our representation. It's a steep climb but it's doable. I will be voting Ron Paul if he runs , or Libertarian if he does not. Regardless, I refuse to vote republicrat.
Then you have effectively voted Democrat. Whether you like it or not.
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I may come across as dumb good sir, but I assure you, that I am more well read that a lot. :)
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I gather that; hope not to have implied otherwise.
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Btw: We need to start a cigar thread. I know this has nothing to do with politics, but you mostly respond in here. Tabak Especial are the bomb.
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Yes, we do. Tabak Especial eh? I'll give it a try. I have stumbled-upon the brand Bahia in the past few months and, while being a bundled cigar, they are phenomenal. Godfather had recommended Cain Daytona for me and I liked the corona-size so much I ended up buying a box; a little pricey but a great cigar. Room 101 Connecticut is another one that surprised the heck out of me at the Las Vegas Big Smoke last year; I've been smoking them ever since. (Maybe we ought to take this discussion to the another forum...)
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My hats off to both of you for saying how I feel without totally committing me to Searcy. We have a BIG mess and no one in DC is willing to fix it. It's almost as if the people don't exist save the corporations/lobbying firms who have bought and paid for our representation. It's a steep climb but it's doable. I will be voting Ron Paul if he runs , or Libertarian if he does not. Regardless, I refuse to vote republicrat.
We do have a big mess; there's no doubt about that. I may be one of the very few sane Republicans out there; I do see fundamental differences between the choices which is why I will not vote Democrat or Libertarian.
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Why are Greece, Spain, Italy, Portugal and so many other countries experiencing depression-like conditions right now? It is because they have too much debt. Why do they have too much debt? It is because they allowed themselves to become enslaved to the bankers. Borrowing money from the bankers can allow a nation to have a higher standard of living in the short-term, but it always results in a lower standard of living in the long-term. Why is that? It is because you always have to pay back more money than you borrowed.
http://marketdailynews.com/2012/08/20/this-is-what-happens-when-you-allow-your-country-to-become-enslaved-to-the-bankers/
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http://marketdailynews.com/2012/08/20/this-is-what-happens-when-you-allow-your-country-to-become-enslaved-to-the-bankers/
You are almost there. And why did they borrow money? That's your rootcause. Quit looking at symptoms and blaming financial institutions.
FWIW - I'm a "banker" and you have no clue how that shit works aside from the shit you read on Alex Jones and Illuminati consipracy websites. The problem with banking only occured when the Fed Gov got involved when private banks essentially became agents of the Federal Reserve. Just like the Euro, WTO or World Bank. Gov't is your root case culprit not a bank.
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You are almost there. And why did they borrow money? That's your rootcause. Quit looking at symptoms and blaming financial institutions.
FWIW - I'm a "banker" and you have no clue how that shit works aside from the shit you read on Alex Jones and Illuminati consipracy websites. The problem with banking only occured when the Fed Gov got involved when private banks essentially became agents of the Federal Reserve. Just like the Euro, WTO or World Bank. Gov't is your root case culprit not a bank.
We don't need a central bank and banks that loan the government their own money or banks period. I hate fucking banks who make money from nothing, just print it up. Yes, government passed the Fed Reserve act and the banking act, so yes they are the problem too. Financial institutions. along with other corporations, now own the government so we have soft fascism.
FWIW- I AM NOT RESPONSIBLE FOR PAYING GOVERNMENT DEBT.
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Public or private debt it's all going down REAL soon. Mark my words.
http://www.reuters.com/article/2012/08/21/berkshire-munidebt-idUSL2E8JL4O420120821
Buffett cuts $16 billion US municipal credit bet in half
I still love the Swiss franc
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We don't need a central bank and banks that loan the government their own money or banks period. I hate fucking banks who make money from nothing, just print it up. Yes, government passed the Fed Reserve act and the banking act, so yes they are the problem too. Financial institutions. along with other corporations, now own the government so we have soft fascism.
FWIW- I AM NOT RESPONSIBLE FOR PAYING GOVERNMENT DEBT.
We didn't have these issues with private banks before the Fed was invented (during Xmas on a private vote off the coast of Ga). The Fed Reserve and its power are the issue, not private banks.
When a bank lends money, it is real capital they own. Their ass IS on the hook for it, although they are essentially an agent of the fed at that point (another Fed power). But yes, the money is printed and backed by nothing. It's simply a federal reserve note - why would you blame First Bank of Jacksonville for something the Fed does and something the Fed MAKES them do? Do you know how much authority the Fed and FDIC have over private banks? I agree with your premise but you are pointing the wrong direction because youve read too many articles written by people who have no clue what they are talking about in this regard (Alex Jones and the like).
If financial institutions owned the govt then why in the hell did the govt have to bail THEM out? Most of our debt is held in bonds and by the Chinese. Not by Citibank or B of A.
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Get off of the Alex Jones references will ya? Most of the financial and economic cites I use are from credible sources. mises.org, lewrockwell.com, wsj, IBD, agora financial, Gary North, Peter Schiff, etc. Alex Jones is fringe, but sometimes he gets it right. Name one bank that has 10% reserves on outstanding loans? Just one.
Audit the fed and Ft. Knox...
And why is Soros bailing the financials and berkshire-hathaway dumping munis in favor of silver?
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Name one bank that has 10% reserves on outstanding loans? Just one.
Audit the fed and Ft. Knox...
And why is Soros bailing the financials and berkshire-hathaway dumping munis in favor of silver?
1. Again, a product of the system the Fed has created. The market is flooded with loans that shouldn't be there. This comes with banks being Fed and FDIC agents, along with them being FORCED to lend X amount. People (mainly the lame stream media) always leave out that part about how they were FORCED to lend. See - Community Reinvestment Act of 1979/1995 and Federal Reserve Act of 1913.
2. No issue with that at all.
3. True, they are doing this but why? Because the dollar is crap and the economy is crap. They are hedging. Commodities are always good no matter what...so....What the hell does that have to do with blaming private banks for all the world's problems since 200 AD? Besides, George Soros is a currency manipulator anyway. You should never use him as part of your economic defense platform. He's like the guy that sets fires to houses so he can sell the fire dept equipment. He manipulates anything he can get his grubby little hands on. The epitome of evil really.
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I'm not favoring Soros or Buffet, just stating their behaviors in the market. I know those two acts you stated and it sucks. Who were the lobbyist behind those laws? Who has benefited the most from the contraction of the housing market? Who will benefit in the future will the US defaults on all of it's debt (public and private)?
I believe in real property rights and hard assets like gold and silver. All fiat currencies will fall, along with the empires that created them. (Do as the Romans do). I'm sorry you are a banker, but everyone needs a job. The Rothchilds are saying there will be issuance of a global currency within five years, but I say less than two years.
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I'm not favoring Soros or Buffet, just stating their behaviors in the market. I know those two acts you stated and it sucks. Who were the lobbyist behind those laws? Who has benefited the most from the contraction of the housing market? Who will benefit in the future will the US defaults on all of it's debt (public and private)?
I believe in real property rights and hard assets like gold and silver. All fiat currencies will fall, along with the empires that created them. (Do as the Romans do). I'm sorry you are a banker, but everyone needs a job. The Rothchilds are saying there will be issuance of a global currency within five years, but I say less than two years.
Currency is ok as long as it is backed and redeemable. Problem is, now it is not. Kennedy was going to change that and was promptly shot (maybe because of it?). LBJ issued an executive order to reverse Kennedy's monetary policy of making money worth something and not just a worthless Federal Reserve Note.
My point is that banks are merely a symptom of a bigger problem. You have to dig deeper to see the bigger systemic issue with our financial problem. It lies with govt creating and meddling with the system of credit and banking.
I can tell you from first hand experience that banks did not benefit from the crisis in general. Many have been closed and are under FDIC control (like mine). A bank would never make too many risky sub prime loans on purpose, knowing most would default. It just wouldn't make good financial sense. They would lose money doing that.
They were forced to make these loans (reinvestment act). Then when the market collapsed, in to the rescue comes the lovely govt - who ironically caused the issue in the first place (subprime flooding) - offering to bail out the banks with TARP but under certain conditions (paying it back plus interest and putting in tighter regulations like Dodd/Frank).
Banks were basically punished by the GOVT for doing something the GOVT made them do in the first place. Weird eh? Too bad thats not what the media feeds to the public. Again, the root cause of all of this is too much govt meddling. If you look back, it has caused more than just this too.
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I think this quote is applicable at this point.
"Once enough of us decide we've had enough of all these so-called good things that the government is always promising – or more likely, when the country is broke and the government is unable to fulfill its promises to the people – we can start a serious discussion on the proper role for government in a free society," says Ron Paul.
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They were forced to make these loans (reinvestment act). Then when the market collapsed, in to the rescue comes the lovely govt - who ironically caused the issue in the first place (subprime flooding) - offering to bail out the banks with TARP but under certain conditions (paying it back plus interest and putting in tighter regulations like Dodd/Frank).
Banks were basically punished by the GOVT for doing something the GOVT made them do in the first place. Weird eh? Too bad thats not what the media feeds to the public. Again, the root cause of all of this is too much govt meddling. If you look back, it has caused more than just this too.
People are too lazy and ignorant to learn and understand this. This was another one of our government social engineering plans gone wrong.
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Good article that illustrates how that law setup the "house of cards" that eventually came crumbling down. It was written back in 2008 at ground zero of the crisis.
http://voices.yahoo.com/the-community-reinvestment-act-credit-crunch-1992536.html?cat=17
Politicians and pundits have differing opinions about the cause of the credit crisis now afflicting the American economy. Everything from deregulation to "Wall Street greed" has been pointed to for blame. But the Community Reinvestment Act of 1995 may be the real culprit.
The Community Reinvestment Act of 1995, which was a revision of a similar law enacted in 1977, was a Clinton era law that purported to increase the availability of loans to low income business owners and home buyers. What the Community Reinvestment Act did to further this goal was to punish banks and other lending institutions that did not sufficiently provide credit to low income borrowers. The Community Reinvestment Act empowered community organizers, such as Barack Obama, to pressure lending institutions to loan money to people without the ability to pay it back.
The problem was that many of these borrowers did not have sufficient income or assets to qualify for a loan Hence the subprime mortgage was born, offered to borrowers without the kind of credit history or assets to qualify for a more traditional loan. Various stratagems were employed to offset some of the risk of loaning money to bad risk borrowers, including charging a higher interest rate.
This practice, encouraged by the government through the Community Reinvestment Act and related regulations, seems to have led to the house of cards that has led to the necessity for a seven hundred billion dollar bailout of financial institutions. While the banks and other lending institutions must share some of the blame for engaging in risky lending practices, these were done in an atmosphere in which political coercion trumped sound financial practice.
Unfortunately the credit crunch that was caused, at least in part, by the Community Reinvestment Act was sparked calls for more not less regulation. While the bailout is probably necessary to save the United States from economic collapse, it will not address the real problem that led to the credit crunch in the first place.
Newt Gingrich, the former Speaker of the House, has proposed a series of reforms that are worthy of at least consideration. Gingrich proposes suspending the mark to market rule that artificially forces some companies into bankruptcy, repeal the Sarbanes-Oakley Law that Gingrich believes is crippling the economy, lower the capital gains tax to zero, and enact a sensible energy policy that encourages all means of domestic energy production, including oil drilling, nuclear, and alternative sources such as wind, biofuels, and solar.
Certainly one can argue the details of a long term fix to the credit crunch. But it is clear that without a long term solution, one that relies more on the free market and not on the dead hand of government regulation, any credit bailout, no matter how artfully crafted, with just be a temporary fix.