This is the story of an economic meltdown and just who caused it from the mouth of none-other than George Soros, financial backer of the left wing of the Democratic Party. It concerns what started this financial crisis and who was responsible. I say it was the CRA, Fannie Mae, and the Democratic Party and George agrees. And everyone knows George would never lie. Right, George? I give you quotes from world-wide Democratic billionaire financial mogul: George Soros. For those who care about the truth.
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George Soros:
GEORGE SOROS: And, you see, it wasn't only in the housing market. There were all kinds of other financial instruments. So there was not just one bubble. I describe in my book there is the housing bubble. But this housing bubble, when that burst, it was only the detonator that exploded the bigger bubble, the super bubble.
BILL MOYERS: Yeah. Nobody understood, really.
GEORGE SOROS: Which they didn't properly understand. And there was always a separation between the people who generated the mortgages and packaged them and sold them to you and the people who owned them. So nobody was paying attention to the quality of the mortgages because they didn't have an interest. They spent all day collecting fees. And then there were other people holding the mortgages.
Well, first of all you have to prevent housing crisis from overshooting on the downside the way they overshot on the upside. You can't arrest the decline, but you can definitely slow it down by minimizing the number of foreclosures and readjusting the mortgages to reflect the ability of people to pay. So you have to renegotiate mortgages rather than foreclose.
And you provide the government guarantee. But the loss has to be taken by those who hold the mortgages, not by the taxpayer.
BILL MOYERS: You mean the homeowner doesn't take the loss. The lender does.
GEORGE SOROS: The homeowner needs to get relief so that he pays less because he can't afford to pay. And the value of the mortgage should not exceed the value of the house. Right now you already have 10 million homes where you have negative equity. And before you are over, it will be more than 20 million.
To address this troublesome question, the socially, politically, and economically liberal billionaire investment guru George Soros congregated some of the world's most prominent economic minds this past weekend for the inaugural meeting of The Institute for New Economic Thinking (INET). Soros is the largest financier of the group, donating $50M and using his influence to acquire the financial backing of others.
Meeting at King's College in Cambridge, England, the intellectual members of this new [Soros controlled]group grappled with the causes of the recent financial crisis. One of the keynote speakers of the event was University of California at Berkley professor of economics and 2001 Nobel Economic Laureate George Akerlof. In his address, Akerlof describes one of the core contributors of the financial crisis as the failure of capitalism:
Capitalism does work ... but unfortunately, capitalism sometimes works all too well, and then it also needs to be curbed ... We now need urgently to reestablish a financial regulatory system that works.
The recent financial crisis was to a large degree the result of the housing crisis, which in turn was the result of a reduction in the value of homes from over inflated values. Very basically, mortgages were given to borrowers, and then these mortgages were bundled into "mortgage backed securities," leveraged sometimes more than thirty times, and presented to investors as relatively safe investments.
When more homeowners than usual couldn't pay their mortgages to the investors because they over purchased, the effect was significantly multiplied by the leverage. If only two percent of the mortgages went to foreclosure, but the portfolio of mortgage backed securities was leveraged at thirty times, then the effect would be a 60% loss. These foreclosures became known as toxic mortgages and were the contagion by which the financial crisis spread.
The above explanation is dangerously simple but important to touch on because to a large extent, the government [Fannie Mae] intervention in the market directly caused this financial crisis through at least three interventions.
The first interference of the supply-and-demand dynamics of the housing market by the government came through the 1977 Community Reinvestment Act that was broadly expanded in 1993 by the Clinton administration. In his memoir My Life, Clinton says,
"One of the most effective things we did was to reform the regulations governing financial institutions under the 1977 Community Reinvestment act. The law required federally insured lenders to make an extra effort to give loans to low and modest income borrowers ... After the changes we made between 1993-2000, banks would offer more than $800 billion in [loans] to borrowers covered by the law. A staggering figure that amounted to well over 90% all loans made in the 23 years of [the act].
This regulation artificially increased the demand for houses by adding more purchasers to the market. The increase in demand was artificial but temporarily increased the value of homes because more consumers were buying the same supply of houses, therefore bidding up the prices. When these buyers tried to sell their homes because they couldn't pay for them, a glut of houses (supply) hit a decreased market (demand). As a result, home prices today are regressing toward their more historical rate of growth.
The housing bubble partly created by a forced easing of lending standards was exacerbated by the Federal Reserve, who dropped interest rates to very low levels for an extended period. This second example of intervention allowed borrowers to get mortgages at historically low costs, but when the Fed increased rates, the cost of getting a traditional mortgage or keeping an adjustable rate mortgage increased greatly, further contracting demand.
The final and perhaps most important government influence in the housing market that led to the financial crisis was the creation of Fannie Mae and Freddie Mac in 1968 and 1970, respectively. These quasi-government agencies provided the means for primary lending institutions (like your corner bank) to sell their mortgages, and with them, their risk. The idea was that if the bank didn't have the mortgage on its books, then it could make another mortgage, thereby increasing the money supply.
This practice reduced the corner bank's concern over the creditworthiness of the borrower, because the bank knew that it would be able to sell the mortgage to either Fannie Mae or Freddie Mac. Because so many bad mortgages were sold to Fannie and Freddie, their balance sheets were crippled, and the Federal Housing Finance Agency took control of them in 2008. This takeover pushed the burden of the bad loans to the taxpayer and assured that future mortgages could continue to be sold to the government.
These three important interventions into the free market by "well-meaning" government policies led to the financial crisis from which we are recovering today -- the law of unintended consequences fully shown.
So says George Soros, architect of many left wing organizations including the left most wing of the Democratic Party.
I concur.
Joey
Joey
Joey’s Newspage,
Where people come to exercise their minds.
http://www.blogger.com/profile/00659050837324784709
Recently, Joe made a speech. Joe makes nice speeches but sadly they seldom have anything to do with either truth or reality. For example, the other day he took some bows for "us" (Obama and himself) winning the Iraq war. NOW HOLD ON JOE, three years ago you voted AGAINST the surge along with most of your Democratic buddies saying that it would NEVER work! Remember?
And man, were you positive. Yes you were - you were positively wrong!
And then you said the other night that the Republicans were in office from 2000 to 2008. ONCE AGAIN YOU ARE WRONG! But what's new? You see, Joe, George Bush was in office from 2000-2008 but in case you didn't notice, your party, THE DEMOCRATIC PARTY controlled both houses of congress from 2006 on. That means anything that got done from 2007 was done by YOUR congress whether it was later approved or not by the President. I guess that slipped your mind too. But boy, you really sounded good up there. Like you knew what you were talking about. Which you most certainly did not!
And finally, the most ludicrous statement of all: you said the Republicans delivered a 1.3 trillion dollar deficit to your party before the lights even went on in the White House. (I guess you meant before Obama turned the lights on for all his parties but that's okay.) And then that the Republicans between 2000-2008 ran the economy into the dirt. That's what you said. The Republicans gave your poor Democrats a 1.3 trillion dollar debt and ruined the economy. Joe either you are a complete phony or you don't know your butt from first base.
SO, here's the truth about both statements. Read it Joe, then maybe you will know what you are talking about.
WHO RUINED THE AMERICAN ECONOMY
This is an essay on when loyalty to one’s country must trump loyalty to one’s party if America is to continue as the bright light of freedom.
My subject in this article is twofold: (1) Who caused this financial mess and (2) did Obama really inherit a 1.3 trillion-dollar debt from George Bush as he is fond of saying?
Here's the truth that you will never hear from the Democrats. You can check each of these facts out on line. It's all there. .
Democrats keep blaming George Bush for this economic crisis much as FDR blamed the depression on Herbert Hoover for over a decade. Neither claim is true. Hoover didn’t cause the depression and FDR made it worse and George Bush didn’t cause the current recession and Obama has made it a whole lot worse.
Bad economic policies by the Democratic Party caused both. In truth, the Obama Administration is the dumbest administration I have ever observed in my 81 years as a political spectator. Know why? None of these people has ever run a business or held a real job. Only 7% of them have ever even worked outside the government or academia. They teach – and they take the taxpayer's money - but they don’t do. That’s because they don’t know HOW to do. That's because they never did.
I want to begin by saying I am aware of the need for organizational unity. A chain is only as strong as its weakest link and though there are substantial arguments for individual freedom, there is also an argument to be made for collectivity. As an example, let's look at a labor union.
When discussing labor unions, a closed shop where all company employees must be union members is the strongest type of union. An open shop where individuals can decide whether they want to be in a union or not is the weakest.
When you want to destroy a union, the thing that you do is to demand free elections and secret ballots within the union. When you want to strengthen a union, you deny both. Hence the ‘Card Check’ that Obama wants us to pass is meant to strengthen national unions such as his own favorite SEIU but not to help union members.
So you can argue passionately for and against unions and be right no matter which side you pick. That's because both arguments have merit. And this type loyality is the exact same argument used by political parties when coercing party members into party subservience even when the member knows in his heart that he is selling his soul. In unity there is strength, they say, and to a point they are right.
America is the greatest experiment in individual liberty this world has ever seen – and by far the most successful. The reason is simple: Capitalism affords people the freedom to become all they can be with each citizen holding the key to his own future. There is no better motivation and no more successful motivation anywhere in the human experience. But what exactly is Capitalism?
Capitalism is an economic system that is an offshoot of Calvinism. Calvinism is (or was) a religion that teaches that hard work brings success and indolence brings failure. That simple religious concept has taken hold in America as Capitalism and is at the heart of America's prosperity. You make your own bed and you lay in it.
America was not ordained by anyone. No individual brought this country into existence. America came into existence as the result of the work done by dozens of brave men (our founders) and a series of fortuitous events beginning in Philadelphia, and ending six years later with a victory at Yorktown, Virginia. A victory, by the way, that would have been impossible without the help of the French Fleet (which only helped us because they hated England).
It is obvious therefore, that while America is the product of great vision blended with personal courage, it is also the product of great good luck. Therefore, if we are foolish enough to let it die, we are likely never to see its like again. You might want to remember that. Freedom of the sort we have, is rare.
That brings us to today. First, some facts of interest: (1) many if not most of the CEO’s on Wall Street supported Barack Obama in the 2008 elections (2) there are more millionaire Democrats in the US Senate than Republicans (3) Jim Johnson, buddy of President Obama and the guy that led Obama’s search for a Vice President, was formerly the CEO of Lehman Brothers, the big Wall Street firm that collapsed.
Johnson was also CEO of Fannie Mae and when he retired took with him a ‘golden parachute’ worth over 25 million dollars. (Wasn’t Obama railing against golden parachutes during his campaign? I guess he wasn't talking about his friends.)
Have you ever heard of Franklin Raines? He too was CEO of Fannie Mae. He too was a friend and associate of Barack Obama’s. He too retired with a golden parachute only his “parachute” was worth 92 million dollars (he had to give half of it back when the feathers hit the fan but he got it even as his friend Barack was telling America he was against them). Yep, you can’t always learn the truth listening to politicians.
Finally there is this: the government runs a lot of “businesses” now. For example, they run HUD, Amtrak, Medicaid, Medicare, Social Security, the Post Office and yes, Government Motors (GM) – and all them lose BILLIONS OF DOLLARS every year. The fact is that nothing the government runs efficiently. They ALL incur huge deficit. That means they lose a lot of money.
Yep, government-run businesses are all deeply in debt. One reason is that government employees average $71,000 a year doing the same job that non-government workers do for $37,000 a year. That's almost twice as much. Plus, they don’t work as hard or as long and they get better benefits all paid for by we the taxpayer. While the rest of the American people have been suffering job losses and pay cuts the last two years, government workers have suffered almost not at all. They are paid with OUR tax money but lots of them are union workers and union workers voted for Obama and so – well you can guess the rest. Political contributions pay off.
(By the way, most of the American billionaires that I have heard about gave Obama tons of money for his 2008 campaign. They did not donate to the Republicans nearly as much as they did to the Democrats. That’s fine but we should stop this nonsense about Republicans being rich. The big money is in the Democratic Party. And though big corporations give to Republicans because Republicans believe in the free market, they don’t give JUST to Republicans.
Politics is basically show business. For example, we recently saw the BP Congressional dog and pony show put on by Barack Obama for the benefit of the TV cameras and the public. Officials of British Petroleum were summoned to congress and raked over the coals by the hatchet men of this administration: "BP bad, Barack good" was the message broadcast every day. But is that true? Are Obama and BP really at odds? Let’s see. Here are some facts you may not know. But they are facts.
1. BP gave Barack Obama one million dollars for his 2008 presidential campaign.
2. Obama’s chief aide is John Podesta. John, in fact, was the ringmaster for that dog and pony show on TV. So what’s wrong with that? I'll tell you what’s wrong with that.
John Podesta has a brother. He is Tony Podesta. John and his brother jointly own a company appropriately called, “The Podesta Group”. What does their company do? Why, it’s a lobbying firm. Yep, Obama’s right hand man owns a lobbying firm. (You remember Obama, the candidate who was against lobbyists but filled his administration with them. Well, John's brother Tony is a lobbyist.)
And for whom, you might ask, is Tony working? Why among others, for British Petroleum of course. Are you following me. Tony funnels BP’s money to politicians including his brother’s boss, the President of the United States in the form of campaign contributions. All through a lobbying firm that John and his brother Tony own together. Nice, isn't it.
So tell me, how mad do you think these guys are at each other? That’s funny. They are all friends and political allies and money flows freely among them. The show they put on is for the suckers. You know that old saying, never give the sucker an even break. Well, guess who are the suckers?
Oh, did I also tell you that Fannie Mae gave a ton of money to political candidates in 2008. You remember Fannie Mae – Jim Johnson, Franklin Raines, and ACORN – yes, well they gave a lot of money to certain political campaigns. Want to guess which ones? Hell, I'll tell you. First was Barack Obama with a million dollars from Fannie. Next was Senator Chris Dodd (D-CT) with about $800,000 and third was Barney Frank (D-MA) with about $600,000.00. Surprise!
And why did Fannie Mae give Dodd and Frank all that money? That’s easy. Each of them Chairs the Finance Committee for his respective house: Dodd for the US Senate and Frank for the House of Representatives. These two CHAIRED the committees intended to provide financial regulation and oversight to people like Fannie Mae and Freddie Mac along with the nations financial institutions (that got into so much trouble because there was NO oversight).
Any wonder Fannie would give so much money to these two very influential men?
I do. And I think they both should be investigated for what they did. (Dodd even took a “sweetheart” deal from Countrywide Mortgages and never was called to account for that. He was going to make his financial records public but strangely he retired instead and his friends in congress ignored his and Barney’s obvious conflict of interest. And so the crooked wheel turns.)
So now, if you have read this, you know a few things you didn’t know before. But there is much more to this drama than you know because the Democratic Party was also responsible for the collapse of our economy. And if you don't believe me, read this and then go read what George Soros, big time Democratic financial mogul, had to say about it. But before you go, here's that story.
The Democrat-caused financial collapse started with the Clinton Administration, proceeded through the Bush Administration, and ended with the Obama Administration with substantial help from Barney Frank, Chris Dodd, Maxine Waters, Jim Johnson and Franklin Raines and others. They all had their hand in it.
But let’s start at the beginning.
Once upon a time, American home mortgages were considered among the safest of all investments. Here’s how that worked. A bank or mortgage company would give you a mortgage. They took back your “paper”. But the bank needs cash to make more loans so a system was established to keep the banks liquid – they would sell their mortgage paper to Fannie Mae and in that way, replenish their supply of money to lend. The only rules were the banks had to use the Fannie Mae “guidelines” in making mortgage loans. They included things like a reasonable down payment, a good credit history, a good job history, a reasonable debt load in the household and a reasonable income. If you met those rules for the amount you wanted, you would get your loan. If you didn’t, you did not get it.
Those were good loans and that paper became known as a good investment around the world. Investors bought packages of securities when they were told the securities were backed by Fannie-Mae mortgages. That’s how solid the Fannie Mae mortgages were. All before the Democratic Party, the CRA and ACORN got in and screwed up the world.
To continue: so investors around the world long purchased securities backed by Fannie Mae mortgages. Private investors bought them, banks bought them, managed funds like your IRA, investment houses, and even other countries bought them – all as investments – all trusting that they were a “safe” investment as they had been for decades. You might think of the mortgages as the basic building blocks of many investment packages.
All during those years, these mortgages were financial, rather than political instruments. They were about money, not politics. They were, that is, until the mid-90’s. That’s when politics and social justice entered into the halls of Fannie Mae and everything thereafter went to hell.
There was a bill called the CRA – Community Reinvestment Act. This bill is far too complicated to go into now but it involves developing communities, many of which are in the inner cities.
During the Clinton Administration, and I think during the time Jim Johnson was CEO of Fannie Mae, a pressure group funded with taxpayer dollars began to put pressure on Fannie Mae to change the way they were doing business. In particular, pressure was exerted to ease up the Fannie Mae guidelines then in place for home loans. The purpose: to make more loans available to minorities and inner city residents so they could “share in the American dream”. The principal pressure group, later to be exposed for criminal wrongdoing, was called ACORN.
ACORN began a systemic pressuring of Fannie Mae to relax their home buying guidelines so more minorities could qualify. Thanks to the pressures of ACORN and Barney Frank (D-MA) who headed the House Finance Committee and Chris Dodd (D-CT) who headed the Senate Banking Committee along with the racist rants of Rep. Maxine Waters of Watts, Fannie Mae guidelines were relaxed.
Mortgage banks and lenders, often against their own wishes but pressured by Fannie and by ACORN, began to issue mortgage loans to people with very questionable qualifications.
Mortgage loans were issued to these applicants with no down payment, no documentation, no credit checks, and no work history – no nothing. Borrowers simply put down what they wanted and that was that. The 10% requirement for a down payment became first a 3% down payment and later a 0% down payment.
In time, these new mortgages became known as “no docs”. (Later they would earn the name “sub-primes” and then “toxic loans” which is what they actually were.)
These “no doc” loans were not so much financial instruments as they were social instruments. But banks issued them, charged higher interest rates because the loans were riskier, and money started to flow.
Once these loans were issued, the issuer (bank or mortgage lender) would sell them back to Fannie Mae and Fannie would do what it always had done with mortgages, it sold them to institutional and private investors to raise the cash it needed to run its business. And the destructive loan papers were on their way.
This process looked on the surface pretty much the same as it had always been. Bankers issued these loans and then sold the paper to Fannie. Fannie then packaged the loans and sold them to Wall Street who again repackaged them and sold them to investors around the world – including government banks - and everyone was happy. But there was a problem with those packages: they were based on a lie. They were based on bad mortgages that were in serious danger of default because the borrowers had no cushion. Had Fannie told their investors this, had they put this warning on those packages before they sold them, no one would have bought them and the crisis would have been avoided.
WARNING: THESE INVESTMENT PACKAGES INCLUDE TOXIC LOANS.
That would have changed everything. But they didn't do that. And so, unwary investors never were told these securities were far different than those of the past. These were not so much financial loans as they were “social justice” loans. They were issued not for credit worthiness but for ideological purposes.
From here, the story grows and certainly it includes greed on Wall Street and carelessness and duplicity and complicity in the Halls of Congress. But the root cause of all this trouble was issuing mortgage loans to people that really couldn’t afford them – a trillion dollars worth – and then selling that bad paper to investors around the world buried in derivatives. Not only that, but someone came up with an even worse idea. They cut the mortgages up into pieces and put various pieces from various mortgages into various derivative packages. My God, they couldn’t have had a worse idea if they set out deliberately to crash the world’s economies. Now the bad mortgages lacked identification as investment units. Nobody knew what they were and now nobody knew where they were.
So who pushed for the new Fannie Mae guidelines? The Democratic Party – people like Frank, and Dodd, and Schummer and Waters and – well the Democratic Party that tried to do something good and ended up doing something horribly bad – not only to us and the rest of the world, but also to the very people that were trying to help. the minority borrowers for whom this whole thing turned into a nightmare.
Today, they try to blame everyone and anyone, including George Bush, but they can't get away with it. By now, everyone knows THEY DID IT!
Even when Bush and McCain tried to reign in Fannie Mae with McCain being the last to try in 2005, Maxine Waters (D-CA) ripped Republicans and called them RACISTS, and the Republicans backed off. Calling someone “racist” worked every time, it scared people into silence. And so, the disaster was allowed to happen.
So, you see the story isn't the one Joe Biden is telling you. Maybe Joe doesn't even know the real truth - he seldom does - but it's nothing like the line he was giving you.
The guilty always point to everyone but themselves to distract those who pay only cursory attention. And that's what they have done here. Most Americans have no idea of what you just read. They don't know and I guess they don't much care. Truth isn't all it's cracked up to be. Party loyalty comes first.
One more thing. You have heard Obama say he inherited a 1.3 trillion-dollar debt from George Bush. “They drove the truck into the ditch and we are getting it out and now THEY want the keys!’, he is fond of saying.
No, no, Barack, This is not Chicago! Let's tell the truth!
The Democratic Party controlled congress beginning in 2006 and they continue to be in control even today. Remember that, please. Democrats have controlled the Congress of the United States since 2007. That's the last FOUR years.
Do you understand what that means? That means nothing got passed in our Congress in 2006, 2007, 2008 or 2009 if the Democrats didn’t want to pass it. Just like today, Democrats, not Republicans are in control of Congress. You must keep that in mind because it’s critical in what I am about to tell you.
The TARP stimulus was passed and signed on October 3, 2008. I am not here to debate whether we needed a bank bailout or not but the truth is we knew we needed to do something, even Bush knew that. But what could be done considering Obama was about to win and everyone knew it, the house and senate were controlled by the Democratic Party and Bush was not going to get anything other than what THEY wanted to pass. He was in the grip of Nancy Pelosi and Harry Reid so he could take what they gave him or do nothing at all and the Democrats were all over the White House demanding we bail out the banks.
George Bush was a lame duck at that time, so he agreed and the Democratic Congress passed the TARP bill. Bush, knowing he could only get what they would give him and also knowing he needed something, signed that bill into law. It was that bill, the TARP bill, that created the 1.3 trillion dollar debt.
And that my friend is how the Bush deficit went from 450 billion to 1.3 trillion in the last quarter of 2008. Yes, Bush signed it but no, it wasn't his bill. It was the bill of this Democratic Congress that forced it on him and then continued to pass bill after bill once their man took office. Don't blame George Bush for any of this. It is all squarely in the lap of the Democratic Party and Fannie Mae and ACORN. When Bush left office, the unemployment rate in America was just 5.8%. Today, it is estimated to be at 9.5% but in reality, we all know it is closer to 16.0%!!!
Political commercials are very expensive and they are paid for by someone for one purpose: tto convince you of something whether it’s true or not. It pays to use your head and to read and listen and think for yourself. Here you have been given the truth. The Democratic Party has been lying to you ever since they got into office. They have no idea what they are doing. That much is apparent now to everyone.
I want to believe the Democrats at heart wanted to make things better for their African American and minority base but they let their hearts rule their heads and ended up hurting everyone and helping no one. I want to believe that.
But you still need smarts to do the right thing and sometimes the right thing is the hardest thing to do.
Let’s investigate this and put the hearings on television. Let’s have a congressional investigation with members of both parties being on the “jury”. Let's find out if anyone committed a crime and if they did, let's lock them up., Hell, they are no better than the rest of us, and sometimes I think not nearly as good. Let's hold them accountable in court. I'd love to see it.
Joey
