Greenspan “Betrayed” Ayn Rand and Ruined the Economy

CriticalBill wrote: [I walked into a bank in 1999 and 30 minutes later walked out with a $75,000 unsecured loan that I could use for anything because I had good credit and BS'ed my income.

Last week we were turned down for a refi. with both our credit scores north of 800.

CriticalBill wrote:

AspenValley wrote:

Soulshiner wrote: Seems like all of those countries experiencing growth are production economies, the jobs that the US shipped overseas.

Sorry, but I happen to think what crashed our economy wasn't too much regulation, it was too much Randian fundamentalism. Applying even more of the same as a "solution" is in, my mind, pretty much the definition of insanity.

I think the main reason for our current situation is the lack of saving and easy credit that became the norm over time. This country has/had one of the highest standards of living on the planet which was in large part because of borrowed money. The economy crashed from the bottom up because everyone wanted a house, or a nice car, or a big screen...and they got em easy.

I walked into a bank in 1999 and 30 minutes later walked out with a $75,000 unsecured loan that I could use for anything because I had good credit and BS'ed my income.

I don't totally disagree with you, Bill, but I think you're attacking the problem from the wrong end. OF COURSE people are going to take loans with ridiculously low interest rates and very little in the way of documentation if they are offered them. But I think those business "genuises" who handed out such loans are far more to blame than the people who accepted them.

Because if you stood out on the street corner handing out ice cream cones on the street with a verbal wink and promise for them to "pay you later", how many would take you up on it? And consider further, if you cooked your books to make it look like all those ice cream cones you gave away knowing you weren't going to get paid for them made it look like your business was 20 times hotter than Ben & Jerry's? And then you sold stock in your "hot" company based on those cooked books? And then went short on the pension and mutual funds you sold the stock to? And then.....as if you hadn't already committed enough crimes....when it finally got out that you little scheme was coming apart, you threatened the federal government with crashing the whole economy if the taxpayers didn't "make good" on the money you'd stolen?

What then, Bill?

Blame the people who took the "free" ice cream cones?

Get real!

And so the blame should be placed where it belongs - on the GSEs who took what would have been a small problem and exacerbated it many times over; taking unheard of risks and issuing guarantees based on the full faith and credit of the taxpayers because they were losing market share they wanted to have back so that their stockholders would be happy. The GSE bailout has consumed more TARP money than all the rest combined did. It was the GSE issued mortgage securities that the institutions held as assets and issued loans against. It was the GSE issued securities, backed by the full faith and credit of the US government, that necessitated TARP, not AIG, not Goldman-Sachs. Those institutions held the GSE securities as assets - securities backed by the full faith and credit of the US Government, just as the Treasury Notes currently being sold are, just as the notes in the SS "Trust Fund" are. Not making good on them would have had the same result as not making good on a Treasury Note. And why are the GSEs private companies who have their operations backed by the full faith and credit of the US Government? Because way back in the middle 1960's they were losing too much money as government operations and LBJ and his cabal in Congress needed to find a way to reduce the deficit they were racking up. This isn't the result of lack of regulation, it's the result of government policy, enacted for political profit, being inserted into the domestic economy by the federated government. It's the result of Congress telling the GSEs that 50% of every mortgage it bought had to be in the area of affordable housing loans and community redevelopment areas and the GSEs lowering or eliminating their qualifying standards to meet that mandate. Sans participation by the GSEs, when the whole thing started to unravel it would have been a much, much smaller issue than it ended up becoming.

If you have a million dollars and you are told that if your investment of the million results in a profit you get to keep the profit, but if you lose it all, regardless of how you managed to lose it, you would get all of it back, would you care how much risk you were taking? Wouldn't you be looking for the greatest potential return regardless of risk? Tell me I get all my original capital back if I lose it and I'm on the next flight to Vegas putting a million bucks down on 17 at the roulette table - which is figuratively what happened when the financial institutions purchased as assets the securities issued by the GSEs that were backed by the full faith and credit of the US government on the sub-prime loans they bought in the secondary mortgage market that the GSEs had lowered their qualifying standards to purchase so that they could keep both the Congress and their stockholders happy.