In short, what was rated as solid as gold as an investment was, actually, about 4% crap. It’s going to take a while to figure out which part of it is crap and which part is gold.

Markets have been doing this for hundreds of years, and they take a bit of time to adjust.

My government just told me it was going to take care of the problem by injecting trillions into wind farms, prophylactics, and any green energy that isn’t nuclear. And I have to pay for it.

No mention at all of examining payment histories on mortages.

If you want a scapegoat it’s the rating agencies who didn’t do their due diligence, and it’s the banks who bought mortages in bulk without doing their due diligence to understand the nature of those loans.

Bottom line, people got lazy and there’s hell to pay.

Government getting into the mix didn’t cause this problem, but those policies exacerbated it.

Enough blame to go around.

Any time you hear the words “Free market,” assume the speaker is an academic and speaking of a fantasy world, because truly free markets don’t exist when government is your partner.

– Max

If you can shoot, you’re welcome — we’re going to need you. Eventually. Either here or there.

Your wife will be going up against mine, a gourmet with a flair for the Italian. I say we lock them in the kitchen and let them fight it out, last woman capable of leaving the table under her own power loses. I fully intend to be elsewhere while this happens, unless of course it involves them running out little samples of their wares while we eat chips and salsa on the sofa watching the Super Bowl and drinking beer.

Yeah, I know — pipe dream. But I can dream, can’t I?

— Max

We read of earmarks and think, well that is the way it has always been done. Well, not exactly. The Washington Post ran a series in its Sunday Magazine not too long back documenting the creation of the modern earmark in its profile of Cassidy Associates – a premier lobbying firm. The growth in number and amount over the last thirty years has been staggering. This leads, of course, to the “well everybody’s doing it” justification and its twin the “if I don’t get some my constituents will think I’m a chump”.

The net is things are not debated on the merits with the welfare of the whole the driving concern. It comes down to each group, region, or cause having to fight to take from the many to give to the few. I’m not naïve enough to think this sort of horse-trading has not been part of representative government since the dawn of time but I think this corruption of a concept where representatives are elected to enact laws enabling executives to create policies that benefit the whole rather than selected interests has reached it’s the point of no return. Representatives are not even ashamed of exacting a price for their vote in terms of special interest earmarks. While perhaps not lining their pockets literally it seems to me a rather blatant form of bribery – the corruption of the noblest form of government attempted in history – IMHO.

“Government is like a baby. An alimentary canal with a big appetite at one end and no sense of responsibility at the other.”

I really wish we could get rid of them all and just start over. Power and greed have corrupted most, and the ones who know better get out when they can.

If one were to limit their research to the National Review or the WSJ editorial page, they likely would arrive at the same flawed conclusion as you – that the Community Reinvestment Act (CRA) was to blame for our current economic mess. Indeed this is a partisan political position rather than a plausible economic cause.

First, it needs to be pointed out that the CRA applies only to depository banks. But most of the institutions that spurred the massive subprime growth were not regulated banks; they were unregulated lenders like American Home Mortgage and Argent. These lenders, along with Bear Stearns and Lehman Brothers, while compounding the subprime problem, operated freely outside of any CRA compliance. Nor did the CRA force the credit-rating agencies to foolishly slap AAA ratings on subprime debt.

Following substantial empirical research, in December, 2008, the Federal Reserve stated that, ” Contrary to the assertions of critics, the evidence does not support the view that the CRA contributed in any substantial way to the crisis in the subprime mortgage market.” Link

“Those who continue to blame the CRA, Fannie Mae, etc. reveal their fundamental misunderstanding of how credit operates in general, what the financing process was like from 2002-07, and how this situation came to pass. Or worse, they understand it, and choose to lie about it anyway for partisan political purposes.” (Big Picture)

The Democrats own this mess, by tampering with the rules of the banking industry so that they couldn’t protect themselves from bad mortgages. It intensified back in the 70s when the Democrats passed the Community Reinvestment Act, which took away from banks the right to investigate applicants for mortgage loans. Most banks have always done a ‘due diligence’ investigation when a mortgage loan is applied for, to learn if the applicants have large outstanding debts, if they have ever taken bankruptcy, if they have ever defaulted on previous loans they have taken — in short, whether they pay their bills and live up to their promises. Jimmy Carter and the Democrats decided that this traditional bank investigatory power wasn’t necessary. These nice people should be loaned money to buy houses they couldn’t afford to pay for so that the Democrats could feel good about everyone being able to buy a home.

Predictably, this didn’t work the way they planned it. Families who made $40,000 a year bought $240,000 houses with variable rate mortgages and then couldn’t pay for them when the rates went up. [Don't worry, I blame the banks too, for, predictably enough, trying to protect themselves from defaulted loans].

This ‘mess’ is not the Bush administration’s fault. It is the fault of the Democrats. Carter’s administration passed the Community Reinvestment Act and the Clinton Administration enlarged its scope.

Put the blame where it belongs, Fliterman. Extend your research. And stop blaming everything on Bush. That’s the “coward’s way out,” as my Dad used to say, back before the Fall of Rome.

Marianne