Quickly, while I have much sympathy for Stone’s argument above about Gov pushing access to housing too far (although I have a sense he’s spun his rendition of party political blame to fit his world view, I’d guess from my Wider AngloSaxon experience that the both Tory and Left were wild about home ownership, although for different reasons), I found his attempt to pin this on the American community banking act irritating as I distinctly recalled reading an analytical article indicating said act had no real impact (positive or negative).
So, please, let us stay on fact and data based arguments as to government impact on the markets. It annoys me to see market arguments diluted and undermined by stereotyped weak arguing. I am certain (certainly it is the case in markets I know better) there has been serious government distortion to over-invest in housing in the US.
Eh, this is entirely incoherent. Leaving aside the question of “wage gap” (you seem to be wrong empirically), my observation was about drivers for things like wage gaps. Social status seeking.
Social status is not uncorrelated with income (certainly not perfect correlation, some low income jobs get higher status, etc). Status seeking certainly has an impact on outcomes. I made the observation in connection with systems that presumed to “level” wages, as an illustration of the failure of wage levelling.
ACORN and Barney Franks brought their massive power to bear on the helpless financial industry. Had there been an administration in place with appropriate sympathy for the trials and tribulations of bankers, this disaster might have been avoided. Alas, there was only the Republicans, who cravenly submitted to the massive liberal cabal’s minority power.
If only the self-regulating magic of the Free Market (I pause that the reader may genuflect…) if only that magic had been unleashed, all of this might have been avoided, but it was not to be. Friendless and powerless, the financial industry could only submit to the nailed jack-boot of the liberal juggernaut, and take what meager solace they could from grabbing money with both hands. Cold comfort, indeed.
You would do well to show some sympathy, some humanity, in regard to their plight. Cringing behind the walls of their gated communities, they dare not venture forth to the local bowling alleys for a line or two, they have only the Hamptons and the ski resorts of Aspen and Switzerland. Innocent lambs as they were, they fell prey to the socialist agenda of Greenspan and Phil Gramm (R, People’s Republic of Texas), and bitterly they rue the day.
That’s hardly helpful and worse than Stone. Leaving aside the idea of “forcing” banks to lower lending quality (or banks plus other types of mortgage lenders, queerly not actually regulated), which to me is a red herring, it seems to me that there is ample evidence of your Frank fellow and the politicians generally pushing for too liberal policy on housing via the subsidized Fannie - Freddie mechanisms, and ignoring warning signs.
Forcing then, perhaps not, irresponsibly shoveling more fuel onto a blaze that was already ready to burn out of control, to win points with the Left constituencies, well, there we have an argument. Stone seems to have a command of this, he should go there, rather than the red herrings.
Well, gee, Bill, when I was talking about the massive power of the liberal juggernaut? I was sorta kidding. Sorry, thought I made that plain.
If it is your contention that this wasn’t done to make money, but in submission to the awful majesty of a minority, it buggers the question. Why, then, didn’t the financial institutions cry out for relief? Had they no sympathetic ears in a Republican administration? Is a pig’s ass pork?
Refresh my memory, selective and partisan as it is. When there were grumblings about a ruinously expensive military adventure put on our national credit card, was it the Dems who rushed out to praise the wonderful, wonderful housing market?
We could have expected revenues to be around $4000 billion at the end of the decade without the Bush tax cuts. Obama isn’t going to change taxation policy at before then and we’re going to see a revenue shortfall of well over a trillion a year in 2010 due to the catastrophic drop in tax revenues caused by the Bush tax cuts. I’m happy to let the numbers make my case here, we can let our fellow forumers judge which of us is correct. And bringing spending up is irrelevant. Spending doubles every decade too more or less which is why you need revenue to increase by the same amount.
The Fed ended regulation of mortgage providers and allowed them to sell mortgages after 90-180 days instead of holding them to maturity. They just stopped enforcing regulations.
Only one party however scrapped mortgage regulations, allowed credit ratings agencies to self-regulate, and let the bnks lever up the debt:asset ratio to unsupportable levels. And when authorities around the country took legal action to stop the predatory lending they used the government to block any legal action and prevent anything being done to stop the unsafe lending. From the time the predatory lending/bubble/mushrooming derivatives action started to the meltdown itself the GOP controlled all three branches of government, so how did the Democrats block them from carrying out reform? And what do the GSEs have to do with this? They were a bit-part player. If they hadn’t have existed exactly the same thing would have happened. The GSEs, Jimmy Crter, the CRA, are all red herrings brought up by the right desperate to deflect blame from where it belongs.
Barney Frank pushed for reduced lending standards for F and F because he gets big campaign contributions from them and they’re competing with other mortgage buyers for mortgages. The other buyers (Goldman, Lehman, Citi etc.) had no restrictions allowing them to buy subprime debt or dodgy mortgages in general. F and F did and what was happening in 2003-7 when there was a lending free-for-all was that the mortgage originators were abandoning F and F and selling their mortgages to Wall Street. In 2006 alone Fannie lost 56% of her market share. So these private companies used their pet congressmen to lobby for market share just like Wall Street uses their pet congressmen to do their bidding.
Of course Barney Frank was in a minority seat on a GOP-controlled committee and had little real say in policy direction. They controlled it up till the end of 2006 by which time the bubble was bursting and during the previous 14 or so years of control they’d been wholly owned subsidiary of Wall Street.
If you are saying the wage gap (really, compensation gap) is not increasing, please give a cite. It is true that a big driver of the explosion in CEO salaries was their publication, which was supposed to shame them into not being greedy but had the opposite effect. However that gap was with other CEOs. I don’t suspect their relative social status versus the average worker changed very much even as their compensation increased.
“A man will do many things to be loved, but he’ll do anything to be envied.”
Mark Twain
Wouldn’t it have been wonderful if it had worked?!
“Yeah, Fred? Tom here. Yeah, they’re fine. Look I’m reading in the paper about our salaries, and you know, I’m pretty embarassed about it. You, too? Bill and Steve? Look, I been thinking, lets cut our salaries by about 75% and throw the money into the pension fund for our line workers, shit, we’d still have fucking piles! Yeah, right on, power to the people…”
Some of the Native Americans of the Pacific Northwest showed off their social status by holding giant parties called potlatches, and they were constantly trying to outdo each other in how much stuff they could give away. If only our modern day CEOs were like that!
I think you’ll notice that Native Americans lived in makeshift shelters and believed that it was divine to hang yourself by the nipples for a day.* That they never advanced beyond that stage of technological development probably has a lot to do with the sort of mentality behind potlatches.
I would suggest that this would be a very bad thing, insofar as the survival of such “gifting” customs in Africa seems to correlate strongly with corruption and nepotism, as the “Big Man” (or Men, or Women) extract rents that they can then hand out.
Fine for a small tribal society, very bad all around for an urban civilisation, sets up nasty incentives.
Heavens, Wm, I don’t think anyone is advancing generosity as a virtue appropriate to a modern civilization. We all recognize that property rights are the central core of human rights, the Crown Jewel. The other human rights are but grace notes, they provide the setting and reflect the glory of property. The mathematics that make a moon landing possible are founded on our discovery of the most correct method for calculating compound interest.
It would be best to brush aside this aberration of anthropology, since we are assured that this is not an appropriate symbol for an advanced civilization, it pales compared to a three-year-old child seizing his playmate’s red fire truck and screaming “Mine!”.
Snark aside, the potlatch custom simply reflects the alternative form of compensation, respect and community regard. Even in America, it was common to have professions which were known to be modestly paid…the doctor, the cleric, the teacher…but were compensated by community respect and approval. I mention this only to suggest that such naive and primitive notions persist even to our enightened times, despite our best efforts.