Ok, let me state it more clearly. The government neither mandated, nor insured, nor bought jumbo mortgages. These were decisions made solely by the borrowers and lenders. Those loans blew up too. So it suggests that the government’s role in causing the financial crisis was a lot smaller than some claim.There is no such thing as an absence of govt interference in the mortgage lending market. You can’t pour sewer sludge into a pool and expect any of the water to remain “clean”.
Once one area of the market is distorted by govt interferrence, ALL areas in the market become distorted.
I guess that depends on whether you consider the Fed actions, controlling margin requirements and interest rates and money supply, part of the government itself. Who has the ultimate authority on legal tender and what it’s worth?Ok, let me state it more clearly. The government neither mandated, nor insured, nor bought jumbo mortgages. These were decisions made solely by the borrowers and lenders. Those loans blew up too. So it suggests that the government’s role in causing the financial crisis was a lot smaller than some claim.
It is hard to determine exactly how the actions of the Fed influence excessive risk taking. While the Fed lowering interest rates in the early 2000s could have encouraged excess borrowing, the same activity today is not encouraging excess risk taking and borrowing.I guess that depends on whether you consider the Fed actions, controlling margin requirements and interest rates and money supply, part of the government itself. Who has the ultimate authority on legal tender and what it’s worth?
As the Chinese representative said to Hank Paulson in the movie “Too Big to Fail,”
“Sometimes the relationship of government and private industry is not so simple.”
Not at all. The lenders require some loans to keep in their portfolio to earn interest on, and jumbos have traditionally been one of those they have looked to because the loans are larger, easier to manage, and less headache than holding a bunch more smaller mortgages.Ok, let me state it more clearly. The government neither mandated, nor insured, nor bought jumbo mortgages. These were decisions made solely by the borrowers and lenders. Those loans blew up too. So it suggests that the government’s role in causing the financial crisis was a lot smaller than some claim.
Because the housing market has crashed. Fannie and Freddie aren’t buying trash anymore. And the economy crashed, so people aren’t fueling their lifestyles with debt.It is hard to determine exactly how the actions of the Fed influence excessive risk taking. While the Fed lowering interest rates in the early 2000s could have encouraged excess borrowing, the same activity today is not encouraging excess risk taking and borrowing.
Emphasis mine.I was referring to the second Bush administration, when total US debt roughly doubled in 8 years. Neither the Iraq war or the war in Afghanistan was handled ‘in budget’ until the Obama administration. For better or worse, this was a significant break with US tradition, as was cutting taxes on the rich during a time of war. If we use Congress’ calculations, the total cost of those two wars is about $1.4 trillion dollars to date and still climbing, but the true cost to US taxpayers is actually quite a bit higher (which the CBO even notes in it’s reports). And, if we are using Congress’ estimates, the wars and tax cuts on top earners were, combined, the lion’s share of the explosion in debt under the second Bush’s administration.
Here’s the graph:Emphasis mine.
That’s fallacious.
During the time Bush was in office, the total US debt increased by approximately $5T. The cumulative cost of the wars was right around $1T when he left office, I believe. And the tax cuts on the middle class “cost” far more than the tax cuts on the rich. I believe the ratio is something like ~70% of the entire “cost” of the tax cuts is due to the middle class cuts, while the rich cuts account for ~30%.
And that’s not even considering that federal tax revenues reached their highest levels ever after the tax cuts were passed for everyone. Tax revenue didn’t even hit that level at the height of the dot com bubble and tax revenue hasn’t hit that level since.