Well - We've got to judge Obama on what he has accomplished...the cries of "Booosh" is responsible for everything wrong are wearing real thin after Obama has been in office over two years. I'm saying some of Obama's fixes made the problem so much worse - he is lousy with the economy - lousy
But, the economy doesn't start and stop with each President. Each is handed a fully formed, good or bad, economy within a set of parameters they must work with. We know what Bush did with the economy he was handed. Or anyone who can read and think knows. When Obama took office, his "office" was 50 feet in a hole. He has managed to climb up to ground level, amazingly, but the fact that he isn't flying isn't his fault.Originally Posted by Catwoman
Of course this is what the republicans will be saying. Pointing at him and saying, 'but he isn't pooping sunshine and butterflies, therefore he is failing" and of course the low information voters who can't really/ or won't find the truth, or understand how things work, will all nod in agreement.
I just thank god Obama was elected and not McCain. I like to believe McCain would have done the same things to pull us back from the brink of economic disaster, but then I'm not so sure of his judgement anymore. He did pick Sarah Palin for vice, and that first big decision showed incredibly faulty judgement.
Yes but, don't you think enough with the "its not his fault" stuff. Have you ever read the Dr. Seuss book, " The Cat in the Hat Comes Back"? The problem in the story stems from a tiny red spot, the more they try to fix it, the worse and worse it gets
- even with the help of Thing 1 and Thing 2 (Geitner and Bernanke?), that's Obama with the economy....his professorial brand of economics do not work in the real world. He needs to head for academia...then he can't hurt anything else.
The implication that we are now out of the "ditch" is, IMO, overstated. Most folks weren't in a very strong position a few years ago and it looks like a lot of them are worse off now. The reasons are multi-pronged and not something you can blame on any single source.
For the administration's part all they really did was spend a ____ pot load of money on the wrong things. Wars and bailouts at best created a very limited number of jobs and cost trillions of dollars. One obvious course of action could have been to gear up some domestic production. Infrastructure in the US is a mess and will need to be fixed soon or the US will fade to black. The electric grid is a terrorist's dream, there are estimates that as high as 80% of the bridges in this country are in need of critical maintenance, our rail system is antiquated, and on and on. The trillions spent on two wars and the long line of corporate bailouts could have made exponential strides toward infrastructure upgrades and created millions of real jobs at the same time. Yes, I do remember who started both categories, but I also know who has the authority to end them now. "We just inherited this mess" plays for a little while because until you've had a chance to implement *change* it is a valid claim. After a few years we should be seeing signs that the ship is beginning to turn. We're not.
Regarding the economy proper the housing bubble is probably the critical wound. No one is really to blame for that except the homeowners themselves. People are greedy sheep. Consumers spent years spending money like drunken sailors, buying too much house because hey, it will just be worth more tomorrow! And worse, living in the fantasy world that it would never end. Common sense went right out the window and you have millions of people looking for someone to bail them out of their own stupidity. If you don't expect housing priced to drop another 30% you will probably be surprised.
The jury is still out on the Fed's policy. Ignoring things like food and energy prices to evaluate core inflation is absurd. Apparently Mr. Bernanke and crew are able to exist without driving, flying or eating. Will they be able to put the brakes on inflation when it really gets going? There is a lot of room for doubt how effective they can be with interest rates already near zero.
It is NOT time to fill your bunker with MRE's, ammo, silver coins and tin foil. It IS time to look for value opportunities. I wouldn't be a bit surprised to see a 30% correction in the stock market right along with housing prices, but there are good companies who's stock is down for no reason other than the market is jittery. If you're going to be buying a house there will be plenty of foreclosures to search through for many years to come and the banks will have to wheel and deal on them. It's always a good time to grow a garden if you have a spot. It's better food that is better for you and costs less. Duh. How about avoiding debt like the plague right now? Its just time to start using common sense. Do that and you will get through this little dip just fine.
So what's the fix, then? Other than just replacing people?
I would ask what can anyone or president do to fix the economy in 2 years. It took over 10 years and a big war to come out of the Great Depression. I think we are heading into round three of the recession because of public sector job cuts. These job cuts for the most part are being caused from lack of tax revenue from the housing sector.
Until the housing sector recovers the overall economy won't recover. I would add don't blame the home buyers. The so called expert bankers out of greed approved and sold these worthless loans as bonds to make even more money for themselves. No body held a gun to the bankers head to force them to make these loans. I was in banking at the time and could not believe the loans that were being made.
Although there probably weren't any guns involved, the Community Reinvestment Act did require lending institutions make "risky" mortgage/business loans in order to remain in compliance with the law. Fannie Mae and Freddie Mac were also tasked with ensuring that loans with favorable conditions were available within "high risk" and "at risk" communities.
Banks then did what banks do, they managed that risk by blending it into other investment vehicles. There are always unintended consequences of social engineering and this seems to be a pretty good example of a one.
"Things should be made as simple as possible, but not one bit simpler." ~ Albert Einstein
I'm sorry to report that I'm seeing the same old, same old here in the Philadelphia suburbs. Stores and restaurants are crowded, highways are congested, and many people still go to the Jersey shore on weekends. The only difference I've noticed is that there are very few cars at a Starbucks on my way to work that used to be a real nuisance with cars going in and out in the morning. WTF? When are people going to wake up?
The issue, imo, wasn't that the mortgage backed securities were collateralized, but that the risk wasn't properly stated. The rating companies gave CDOs AA- and Aa3 ratings that should have been more like B grade. Risk and reward were no longer correlated and priced correctly.
I know it's fun to blame the CRA, and that's likely part of the problem to be sure, but that can't account for all of it (see Krugman's analysis of the situation, not that I like Krugman at all). For example, in my neck of the woods, with people I knew, it was easy to go out and get a 5 or 7 year ARM with Alt A stated income, little to no money down (either 80/20/0 or 80/15/5), and buy way more house than was needed. One loan officer tried to get me to go for a $980k loan on our household income of $220k going this route (Minneapolis, cost of living is not coast-high). Anecdotally, one friend of mine made quite a bit of money doing this, or was going to... bought a house on an ARM, sold, moved up (rolled the profits into the next house, skipping cap gains taxes), and successfully did this until he was in a $1.4mm house. And then, the market collapsed and his ARM was coming due. I'm fairly sure he walked away from it and sent the bank the keys. He contributed to the market problem without ever, ever even being eligible for a Fannie loan.
The problem, again imo, was across the board that people, including underwriters, were banking on housing prices always going up. Again, anecdotally, I know of several lenders who actually favored getting foreclosures back as they were able to sell at a profit. That is, it was a huge financial win for them to get someone in and paying a mortgage and then eventually get that house back to sell. People forgot to buy and live like house prices can go down.
Oh, just found more if you want to dig into the CRA stuff... looks like Wikipedia has a lot of resources to read further if you're interested http://en.wikipedia.org/wiki/Communi...nancial_crisis
Well, coming Depression or not, I think it just makes sense to be completely debt free, learn how to garden, raise chickens, keep bees, home canning and preserving, basic sewing, basic first aid, and many other old fashioned skills.
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