Well, here's what he has to say now:

http://www.newmogul.com/item?id=1002

I'm a little skeptical of someone who called something that obvious and ends with a plug for his book, apparently. It's not like nobody but him knew this was coming, just a lot of a people that should have known better.

Ron Paul's economic adviser, BTW.

Cheery fiction to go with the news headlines: http://www.365tomorrows.com/10/11/a-solution/

Hell, send a copy of the book to Obama to read after he gets elected . :)

ow.

That video and this crisis 6 months ago would have probably gotten Ron Paul the nomination.

A pdf has been circulating around my work (I work at a major investment bank btw) that I thought you guys might find interesting. I dont have an online space to post it, but I'll copy-paste the text here. If someone wants the pdf (and can post it online), let me know where I can send it. (The copy-paste directly from pdf seems to have introduced some weirdness in the formatting - apologies)

Ok, so here's the article - I've bolded the most interesting portion for skimmers. Note the date at the top:

----------------------------------------------

Fannie Mae Eases credit To Aid Mortgage Lending- New York Times

Page 1 of 2
September 30, 1999
Fannie Mae Eases Credit To Aid Mortgage Lending
By STEVEN A. HOLMES
ln a move that could help increase home ownership rates among minorities and low-income consumers, the Fannie Mae
Corporation is easing the credit requirements on loans that it will purchase from banks and other lenders.
The action, which will begin as a pilot program involving 24 banks in 15 markets -- including the New York
metropolitan region -- will encourage those banks to extend home mortgages to individuals whose credit is generally not
good enough to qualifu for conventional loans. Fannie Mae officials say they hope to make it a nationwide program by
next spring.
Fannie Mae, the nation's biggest underwriter of home mortgages, has been under increasing pressure from the Clinton
Administration to expand mortgage loans among low and moderate income people and felt pressure from stockholders to maintain its phenomenal growth in profits.
In addition, banks, thrift institutions and mortgage companies have been pressing Fannie Mae to help them make more
loans to so-called subprime borrowers. These borrowers whose incomes, credit ratings and savings are not good enough
to qualify for conventional loans, can only get loans from finance companies that charge much higher interest rates --
anywhere from three to four percentage points higher than conventional loans.
"Fannie Mae has expanded home ownership for millions of families in the 1990's by reducing down payment
requirements," said Franklin D. Raines, Fannie Mae's chairman and chief executive officer. "Yet there remain too many
borrowers whose credit is just a notch below what our underwriting has required who have been relegated to paying
significantly higher mortgage rates in the so-called subprime market."
Demographic information on these borrowers is sketchy. But at least one study indicates that l8 percent of the loans in
the subprime market went to black borrowers, compared to 5 per cent of loans in the conventional loan market.
In moving, even tentatively, into this new area of lending, Fannie Mae is taking on significantly more risk, which may
not pose any difficulties during flush economic times. But the government-subsidized corporation may run into trouble in an economic downturn, prompting a government rescue similar to that of the savings and loan industry in the 1980's.
"From the perspective of many people, including me, this is another thrift industry growing up around us," said Peter
Wallison a resident fellow at the American Enterprise Institute. "If they fail, the government will have to step up and bail them out the way it stepped up and bailed out the thrift industry."
Under Fannie Mae's pilot program, consurners who qualiff can secure a mortgage with an interest rate one percentage
point above that of a conventional, 30-year fixed rate mortgage of less than $240,000 -- a rate that currently averages
about 7 .76 per cent. If the borrower makes his or her monthly payments on time for two years, the one percentage point
premium is dropped.
http://query.nytimes.com/gsVfullpage.html?res:9C0DE7D8153EF933A0575AC0A96F9 58260&91s2e5c:1&2s0p0.8..
FannieM ae Easesc redit To Aid MortgageL ending- New york rimes Page2o f2
Fannie Mae, the nation's biggest underwriter of home mortgages, does not lend money directly to consumers. Instead, it
purchasesl oans that banks make on what is called the secondarym arket. By expandingt he type of loans that it will buy,
Fannie Mae is hoping to spur banks to make more loans to people with less-than-stellarc redit ratings.
Fannie Mae officials stress that the new mortgages will be extended to all potential borrowers who can qualifi, for a
mortgage. But they add that the move is intended in part to increase the number of minority and low income home
(owners who tend to have worse credit ratings than non-Hispanic whites.
Home ownership has, in fact, exploded among minorities during the economic boom of the 1990's. The number of
mortgages extended to Hispanic applicants jumped by 57.2 per cent from 1993 to 1998, according to Harvard
University's Joint Center for Housing Studies. During that same period the number of African Americans who got
mortgages to buy a home increased by 71.9 per cent and the number of Asian Americans by 46.3 per cent.
In contrast, the number of non-Hispanic whites who received loans for homes increased by 31.2 per cent.
Despite these gains, home ownership rates for minorities continue to lag behind non-Hispanic whites, in part because
blacks and Hispanics in particular tend to have on average worse credit ratings.
In July, the Department of Housing and Urban Development proposed that by the year 2001,50 percent of Fannie Mae's
and Freddie Mac's portfolio be made up of loans to low and moderate-income borrowers. Last year, 44 percent of the
loans Fannie Mae purchased were from these groups.
The change in policy also comes at the same time that HUD is investigating allegations of racial discrimination in the
automated underwriting systems used by Fannie Mae and Freddie Mac to determine the credit-worthiness of credit
applicants.
A-spynShGQQgTheNewYorkTimesComI tptoamnye lPrivacvPoliclyS earcn lCorrectionIs XUll lUtp lContactUsl W-g1kfoq

That video and this crisis 6 months ago would have probably gotten Ron Paul the nomination.

No way.

The crisis was already well known to anyone reading beyond the MSM's filter, six months ago. Just like Schiff knew what was coming years ago. People just don't care until it's too late, and are incapable of critical thought.

As long as the TV dictates who it's okay to vote for, we're not changing course more than a degree to the left or right of the same, misguided course.

So, yeah, just noticed that you can attach files to posts... apologies, never noticed it being used before until I just saw San's post about Palin.

So, here's the pdf:

346

MoSwkCog-Ro

2I0QN-FYkpw

It's depressing to watch the morons trash him over and over, all the while he's dead on.

Lmao this guy should be Obama's treasury secretary. that and when did ben Stien become one of the nation's "financial" experts? Beuller? Beuller?(or whoever it's spelled)

It makes me sad when people hope guys like Paul or Schiff would be part of an Obama cabinet. They are diametrically opposed. It could never happen.

The way to get Schiff (or someone like him) in Paulson's shoes would've been to hire Ron Paul as President.

Instead, now we'll see how long "Hope" can pay the bills.

Lmao this guy should be Obama's treasury secretary. that and when did ben Stien become one of the nation's "financial" experts? Beuller? Beuller?(or whoever it's spelled)

Ben Stein has been writing economic and politics articles and commentary for thirty years. He's also debateably insane, but that doesn't count against him in public discourse these days :>

Instead, now we'll see how long "Hope" can pay the bills.

I don't think people are looking for "Hope" as a way to pay the bills. I agree with you about Paul and Shiff, both have great foresight into what was going to happen, the issue is now that it's happened how do we get back our Mojo?

I have to believe that Obama really cares and will be careful with how he does things, just bringing accountability to the table will be a huge improvement on things.

My hope is that the new president will make the right moves, that is what the hope is.

If he doesn't, well then what to do? Just live with and try to survive the results.

The problem is that Obama's stated policies are guaranteed to dig us deeper. When the government itself is nearly insolvent, you can't spend your way out of a depression.

The only way to really fix this would require some extremely unpopular decisions, but Obama's presidency is based almost solely on popularity. He has no hope for a second term if he does the things that need to be done, as short sighted and uninformed as we have become.

Instead, he's likely to make choices that mask the problem and prolong the inevitable (while worsening how bad it will eventually be).

It sure is going to be one helluva challenge:D

I understand the theory of do nothing and the fact that the government funds are clearly "ghost" funds at the moment. Believe me, I'm in the position now of being owed the most amount of money I have ever been owed in my life. My salary over the past 45 days has gone down to $16.00 dollars a day and I have done everything that a good businessman was supposed to do.

I'm not sinking in a sea of debt, my debt is negligible less than $5000.00

(venting inc)

I have kept employees paid but I did tell it straight to one really valuable and dedicated employee on Friday I said "You are working at your own risk" and she understood but is willing to take the risk.

There is no bailout for guys like me and it would take considerably less than 700 Billion to keep me afloat. In fact I could easily keep things going with less than 100k in cash and I would actually use it for what I said I needed it for. I'm not going to shut my doors but eventually it's going to come down to not being able to pay people and I have to then look at my family as the highest priority on the money chain.

I am outraged, that is an understatement, over what is going on with these SOB's I would feel zero emotion watching them hung like Mussolini and burned, unfortunately that's not an option.

I don't think letting things crap out is a viable way though. I think we need to do what Obama said, do a ground up rebuild. If all of these auto companies tank there will be a huge amount of unemployment filings which means that tax revenues dry up and it becomes a larger outflow than it is now.

I'm too tired to type it all out tonight, perhaps tomorrow. But I am interested in hearing how you think it could be done...after all it is people like we see here that are the ones that matter...at least in my mind they do.

C'mon San...

Change...it's all about change!!!

We will gladly put our heads up our own asses long as we think..

CHANGE!!!

two bad choices as Pres doesn't make a right. ;(

If we're going to get deeper in debt, I'd at least rather get something for it instead of giving it it all to some investment bankers and DoD contractors. Not liking a policy doesn't mean it's not better than an alternative.

It makes me sad when people hope guys like Paul or Schiff would be part of an Obama cabinet. They are diametrically opposed. It could never happen.



Forgive me the indulgance of envisioning my governmental* dream team. i know it will never happen but, it's akin to playing fantasy football. only IF!

Ben Stein has been writing economic and politics articles and commentary for thirty years. He's also debateably insane

Could be but since I long ago settled on the insane part I would have largely dismissed any thing the jack ass had to say.

Greenspan was right for a while...

Then he wasn't

Schiff will be right for a time...

Then he won't

"Change" is about not being locked into dogmatic thinking and being pragmatic enough to switch gears and interface with people of varying ideologies.

No, this guy won't be in an Obama administration... but I can tell you this, it is far more probable that his ideas would be heard and taken seriously now than they would have under Bush.

Bush never waived from his ideological pinnings. He was unable to adjust or throw aside previously held beliefs that werent working, even in the face of overwhelming reality.

Obama is a pragmatist. He is not locked into any ideology, and he doesn't have a dogmatic world view.

Im doing pretty good on the political predictions for the last few years, so let me make a couple about what Obama accomplishes in the next 4 years.

1. Spending will be brought under control. The budget will be balanced in 3 years. This is the strong buzz coming from democrats in congress. They realize that if they are able to do this, the Republicans are done for the next 20 years.

2. There will be a new Health Care plan for the United States in 2009.

3. There will be an immigration deal in 2010. (this will mostly be a issue to let the Republicans impale themselves on before the midterm elections)

4. There will be a new Energy plan in 2009-2010. This will focus on infrastructure and renewable energy sources. It will be pretty damn huge and most likely the thing Obama will be hanging his legacy on.

5. Obama will have a 70-75% approval rating in 2011.

6. The Dow will be back at 11k-ish by 2011.

7. Obama will appoint at least 5 Supreme Court judges by the end of his second term in 2012.

I hope for the best too, but pretending that we can keep writing rubber checks to fix all of our problems is the same mentality that got us here to begin with.

Where will the money come from to fund these new programs and balance the budget? That is just not realistic.

Ben Stein is a former Presidential speech writer. He has an interesting resume, if you take the time to research it. He is considered to be intelligent enough that they gave him a television series, where folks pitted their knowledge against his.

And San, not to be casting stones or anything, but are we going to be hearing about Ron Paul for the next four years, every time something he said rings true? I liked the guy too, but the election is over.

I am not as optimistic as Lleauric, but I do think that if he can marshal the party to act as a force of change Obama has the opportunity to enact some meaningful, innovative programs that this country will embrace much as was seen after the last major financial collapse of this country.

I am already looking at my grandkid's kids being held accountable for the Bush debt, so I am not going to wring my hands too much right now about any necessary spending that is required to put the country back in a forward direction. That does not mean I agree with it; only that I understand the need.

And San, not to be casting stones or anything, but are we going to be hearing about Ron Paul for the next four years, every time something he said rings true? I liked the guy too, but the election is over..

Uh?

Maybe you didn't read the thread very carefully, but someone else suggested that Peter Schiff (Ron Paul's economic adviser during the campaign) would be a good addition to the Obama cabinet. I was replying to that.

Regardless, Ron Paul didn't die on November 4th. His ideas on the economy and monetary policy are just as relevant now as they were before. The only thing that has changed is the magnitude of the problem, not its fundamental nature.

Ben Stein is a former Presidential speech writer. He has an interesting resume, if you take the time to research it. He is considered to be intelligent enough that they gave him a television series, where folks pitted their knowledge against his.

Uh huh...

Stein has publicly denounced the theory of evolution, which he and other intelligent design advocates term "Darwinism," declaring it to be "a painful, bloody chapter in the history of ideologies," "the most compelling argument yet for Imperialism," and the inspiration for the Holocaust.[19][20] Stein does not say belief in the theory of evolution alone leads to genocide, but that it is a necessary component.

Clearly he doesn't have any screws loose at all!

It will take money to get things straight, but how that money is spent is the key, bottom line.

Obama's policies seem to be good sound policies that address the problems at the core. Lost companies mean lost jobs means lost tax revenues means the whole thing goes belly up.

I think that there was a pretty good consensus on election day that people realize that paying taxes is one of the things that need to be done. The whole bullshit privatization ideology that took hold with Reagan ends up costing ten times as much as it did before.

Wait till Stein comes to the realization that the Christian right only loves Israel because in the rapture they need to have the jews there to convert or kill.

Spend what money? What money do you think they're spending right now? Did you pay $700+ billion extra tax in April?

The government hasn't had any real money to spend in a decade. We have to sack up and learn to flatly reject any plan that includes manufacturing even more debt and inflation.

Enough already. Our house is burning down and we're trying to put the fire out with a box of matches.

So are you saying just do nothing?

I think that there was a pretty good consensus on election day that people realize that paying taxes is one of the things that need to be done.
I agree to a point. Taxation will happen! does not matter who the F we elrect.
for me this election was more about wich direction the Governmental golden shower is directed.

If your gonna piss my tax monies away start with my face please.

Spend what money? What money do you think they're spending right now? Did you pay $700+ billion extra tax in April?

The government hasn't had any real money to spend in a decade. We have to sack up and learn to flatly reject any plan that includes manufacturing even more debt and inflation.

Enough already. Our house is burning down and we're trying to put the fire out with a box of matches.

Spot on San, but you won't get a consensus here.

Here they are chanting about the second coming of Camelot ( without any real reason for chanting so mind you).

Throwing money and buying/taking over companies is not a good way to go. Bush and Clinton's methods might not have worked either but that doesn't mean you go 100% the other way.

Balance, that's going to be the only way Obama gets us out of this mess. How he achieves that balance is of great interest to me as I haven't a clue how to provide the fulcrum. If he can inspire a country to breath and focus like Pres Ronnie did then he'll be on the right path I think.

Fandros, you sound like the guy who lands in combat and looks around saying "look at all these idiots getting killed" and then an hour later we see you being carted off the field the victim of a random artillery shell. It's luck dude, that is all that is going to define the casualties and the survivors on the human level in this.

Your job and income will also cease to exist in the near future. This is going to hit everyone, no one is going to be immune.

Furthermore, the whole "invest in gold" is not quite working out because as manufacturing slows down there becomes less of a demand which means it's worth less money...but then again the money is worthless which makes gold worthless because you can't buy something with something that's worthless.

Dollars whether they exist in theory or reality need to be invested and those investments need to be managed. The so called free market has not quite worked out for us because we are the only ones trying to do it, EVERY other country has subsidies, every other country invests in its businesses...I wonder who makes those ariel tankers for the US Airforce now...hmmm...it's not Boeing or Lockheed is it? It's Airbus. A subsidized company that developed an aircraft with government funding and well...they now own the day.

Basically if we don't invest in American business then guess who wins, and yes this is a winnable situation, this is about economic patriotism and investing in us that is "us" we the people of the USA.

Nah, you know nothing of my job or how it's affected by the economic woes. To say the least mine is one of a few not under duress and not likely to be so until things are so bad you , and many others, would already be out of work and unable to afford internet let alone post here.

I'm not in the services, production of goods nor am I a salesmen of any type. I don't manage a website, rely upon the automotive industry nor do I work on Wall street.

Good luck with your future predictions tho, as usual spot on ..errr not.

Free trade can and would work if not for the issues you pointed out. That being said that doesn't mean we hide our heads up our asses as you suggest and let big daddy Govt to do it all for us. That won't work.....sorry back to school.

We do need to respond with tarrifs with those countries that apply tarrifs to our goods. We need to find a way to bring work back to the US that Clinton and crew signed away. We made it more expensive to build and create stateside than to ship it away to countries that could give a damn about us. We need to get the automotive unions, yes a democratic org and a part of the the problem, on board and realize they've overstepped their bounds and their own vision.

We need to retool the entire Automotive industry, in my mind this is where our money should go since they weren't smart enough to change their business models on their own. Don't give them money, help them lower their overhead to a point that doing business actually makes sense/money.

This has to happen, has to or we just push off the problems to another generation ( yes as Bush and those before him did ).

Time to stop rubber stamping cash handouts, I'm sorry Rover that shit doesn't work and as such belies any other sage advice you connect to that great wisdom.

Fandros, you sound like the guy who lands in combat and looks around saying "look at all these idiots getting killed" and then an hour later we see you being carted off the field the victim of a random artillery shell. It's luck dude, that is all that is going to define the casualties and the survivors on the human level in this.

Your job and income will also cease to exist in the near future. This is going to hit everyone, no one is going to be immune.

Furthermore, the whole "invest in gold" is not quite working out because as manufacturing slows down there becomes less of a demand which means it's worth less money...but then again the money is worthless which makes gold worthless because you can't buy something with something that's worthless.

Dollars whether they exist in theory or reality need to be invested and those investments need to be managed. The so called free market has not quite worked out for us because we are the only ones trying to do it, EVERY other country has subsidies, every other country invests in its businesses...I wonder who makes those ariel tankers for the US Airforce now...hmmm...it's not Boeing or Lockheed is it? It's Airbus. A subsidized company that developed an aircraft with government funding and well...they now own the day.

Basically if we don't invest in American business then guess who wins, and yes this is a winnable situation, this is about economic patriotism and investing in us that is "us" we the people of the USA.

Had to point this out as a errrrr wrong. We're still using old aircraft ;P KC 135's have been around for quite some time.

Had to point this out as a errrrr wrong. We're still using old aircraft ;P KC 135's have been around for quite some time.

Heh...soon to be replaced.

Nah, you know nothing of my job or how it's affected by the economic woes. To say the least mine is one of a few not under duress and not likely to be so until things are so bad you , and many others, would already be out of work and unable to afford internet let alone post here.

I'm not in the services, production of goods nor am I a salesmen of any type. I don't manage a website, rely upon the automotive industry nor do I work on Wall street.

Good luck with your future predictions tho, as usual spot on ..errr not.

Free trade can and would work if not for the issues you pointed out. That being said that doesn't mean we hide our heads up our asses as you suggest and let big daddy Govt to do it all for us. That won't work.....sorry back to school.

We do need to respond with tarrifs with those countries that apply tarrifs to our goods. We need to find a way to bring work back to the US that Clinton and crew signed away. We made it more expensive to build and create stateside than to ship it away to countries that could give a damn about us. We need to get the automotive unions, yes a democratic org and a part of the the problem, on board and realize they've overstepped their bounds and their own vision.

We need to retool the entire Automotive industry, in my mind this is where our money should go since they weren't smart enough to change their business models on their own. Don't give them money, help them lower their overhead to a point that doing business actually makes sense/money.

This has to happen, has to or we just push off the problems to another generation ( yes as Bush and those before him did ).

Time to stop rubber stamping cash handouts, I'm sorry Rover that shit doesn't work and as such belies any other sage advice you connect to that great wisdom.


LOL..I didn't say rubber stamp money give aways, you did. I thought you said there was no money? How can it be retooled for free? Oh and your job, I assure you it will be gone long before many others, you are a military contractor, guess whats going to be cut first. Jobs go because other jobs go, it's pretty rudimentary.

I was wrong on everything? Hahaha...bye dude, see you on that stretcher.

LOL..I didn't say rubber stamp money give aways, you did. I thought you said there was no money? How can it be retooled for free? Oh and your job, I assure you it will be gone long before many others, you are a military contractor, guess whats going to be cut first. Jobs go because other jobs go, it's pretty rudimentary.

I was wrong on everything? Hahaha...bye dude, see you on that stretcher.

You're a clueless fool bud. I'm not a military contractor and haven't been for over 8 years. It's that level of thinking that had you on that beach and on the stretcher while I was miles away putting you on said beach ,try again junior.

You're making tons of false statements and observations based on poor research and planning on your part.

You're a clueless fool bud. I'm not a military contractor and haven't been for over 8 years. It's that level of thinking that had you on that beach and on the stretcher while I was miles away putting you on said beach ,try again junior.

You're making tons of false statements and observations based on poor research and planning on your part.

Oh, so you posting here saying you work with military people is not correct? Why do you work with military people?

So you have to be a contractor to work with military folks?

You really know absolutely nothing about my job field and my employer. My job doesn't rely up on the economy and infact is one of the few to be fairly safe during a downturn.

I am not a contractor, not by a longshot.

Heh...soon to be replaced.

Not true, depot has rode in to extend it's lifespan.

Dahell do you get your facts? Stay on the beach, the water is fine for you there.

Not true, depot has rode in to extend it's lifespan.

Dahell do you get your facts? Stay on the beach, the water is fine for you there.


No, actually the contract was awarded to Airbus to supply ariel tankers.

So you have to be a contractor to work with military folks?

You really know absolutely nothing about my job field and my employer. My job doesn't rely up on the economy and infact is one of the few to be fairly safe during a downturn.

I am not a contractor, not by a longshot.


So end the mystery, what is your field that is immune to economics.

No, I don't think we should do nothing. I don't want us to do something worse than nothing though, in the name of doing something.

Further inflating our currency and/or deepening our foreign debt is not a good solution. There are going to be externally enforced limits to how long we can continue this charade of deficit spending. Especially since our largest two benefactors are having trouble now themselves.

Again, what money would you have them spend? Should they steal what's left from Social Security? Some pensions? Print more dollars and push us closer to stagflation?

This country will never truly be great again if it cannot learn to live within its means.

No, actually the contract was awarded to Airbus to supply ariel tankers.

Nope, not true as far as the USAF is concerned. It's okay this lil fiasco has already been settled as far as I'm concerned.

As for my actual job? Eh, I've stated it many times over the years what I do. Safe to say it is infact safe from economic downturns. It's one of the reasons I jumped out of the automotive industry 9 years ago. It was at that time when I watched home prices sky rocket, watched the Big 3 refuse to break out of a 50 year business mold and when I saw jobs starting to go overseas that I feared for the worst.

Doubted myself for years, but in the end playing it safe paid off and now I don't have to worry about feeding and housing my kid ( who's almost 17 now /cheer and about ready to check the world out for himself).

I have 23 ish years to retirement so should be time enough ( especially since I never did go with the trend of putting my 401k into high risk ventures). Instead I settled for low yield low risk and didn't take a bath on the recent downturn nearly as bad as my friends did.

The Big Three CANNOT be allowed to go bankrupt. Period.

You will see double digit unemployment. That is a depression. Besides, Chapter 11, it may work for the business of the automakers, as it allows them out of Pensions, contracts and factories, but it totally destroys and leaves the workers to the fucking dogs.

This CAN be done. And it can work.
http://www.chinatownconnection.com/images/crisis.gif
Detroit needs to go on the offensive. Make cars not just for Americans, but for the world. Compete. Make cars that people want to have and can afford.

The Big Three CANNOT be allowed to go bankrupt. Period.

You will see double digit unemployment. That is a depression. Besides, Chapter 11, it may work for the business of the automakers, as it allows them out of Pensions, contracts and factories, but it totally destroys and leaves the workers to the fucking dogs.

This CAN be done. And it can work.
http://www.chinatownconnection.com/images/crisis.gif
Detroit needs to go on the offensive. Make cars not just for Americans, but for the world. Compete. Make cars that people want to have and can afford.

That's a big part but it needs to go further. They can no longer afford to build enmasse without sales of said inventory. They can no longer afford to ship raw materials all over in bulk without orders...

Fluid smart production, as was sold to them in the 50's and ignored much to our chagrin now.

The Big Three CANNOT be allowed to go bankrupt. Period.

You will see double digit unemployment. That is a depression. Besides, Chapter 11, it may work for the business of the automakers, as it allows them out of Pensions, contracts and factories, but it totally destroys and leaves the workers to the fucking dogs.

They have already failed. Bankruptcy is just a technicality at this point.

If this were the America that created Detroit, these dinosaurs would be allowed to fail. Ineffective companies failing and being replaced by new ventures is an important part of Capitalism. We seem to have forgotten that lately.

All a "bailout" does is defer the inevitable. If the Big 3 get these billions, you know as well as I do that they won't change fundamentally enough to matter.

Everyone in the companies will go back to complacency mode, instead of acting in the face of adversity. In a couple years (if that), they'll be failing again and none of their employees will have moved an inch closer to finding alternatives.

San, I don't think any wiser words have been written on this forum.

/nods I find I'm with San on this one.

My suggestion to help the Big 3 is the only way I could see giving the Big 3 monies.

L2 is right on one significant point, all parties need to be involved and told to shit or get off the pot before any check is cut.

A point that I think needs to be made, in the context of this debate: as much as we may decry their ineptitude (and let's be honest, the automakers have gotten a lot less corporate welfare (not saying that they haven't historically gotten sickening amounts, but I'm speaking of recent years here) than the financial institutions which dug us this giant securities hole, and produced NOTHING in exchange for it other than a huge hangover and immense suffering for millions), the automobile industry is one of the few ground infrastructure based industries that we have *left* in this country. It is not just jobs, and not just the jobs of the automakers themselves that are at stake (don't forget all of the suppliers that manufacture components or raw materials, such as the plastics plant I worked for for six years), but the infrastructure itself that is of intrinsic value and I would submit that the potential downfall of these industries should be viewed as a national security issue. (and yes, I know we have Toyota and Mercedes and VW plants here in the US, but we don't own those, and they support infrastructure in other countries, because we no longer own the fabricating shops either, and the overwhelming majority of profits produced by them go overseas, so they don't provide the same level of benefits in any sense beyond the immediate jobs and are in most cases a net negative on our balance sheet)

America *cannot* survive as we know it as a nation of dog-washers and store clerks. If we lose those industries, it will take years-decades to get them back as we will have to build them from the ground up, not to mention the ground-level technical expertise and experience that is lost. Remember the steel industry, textile manufacturing, consumer appliance and electronics manufacturing? These are all *already* gone from US shores or dying, and with them vast stores of knowledge about these industries, and the machine fabricating industries that supported them, in *addition* to the jobs that they supplied. What do you think will happen when/if the Chinese call in their markers or do something that we are forced to respond to economically or militarily? What do we make anymore?

I think it's disgusting that we have the political will to soak taxpayers for hundreds of billions to go to our financial date-rapists (who have now left us barefoot and pregnant) with the only strings attached being a vague 'hope' that this stabilizes the financial system (and preliminary reports of how the funds are being applied are not promising), but not a fraction of that to save literally millions of directly-affected and downstream jobs, as well as important infrastructure - Phel is right in that it reeks of class warfare and an axe-grinding being applied to old anti-union scores. There needs to be some recognition that the shreds of industries that support our *actual* economy are worth saving independent of one's political affiliation, or welfare flavor preference (and unions didn't create Big Three's mess btw, they got there via top-level greed just like the financial industry did and to a certain extent that was driven by the need to satisfy unrealistic expectations for increases in 'shareholder value'/returns in the financial bubble world) because they hold as much of our country's independence at stake as who holds our debts.

I agree with L2 that there should be a sitdown and a game plan drawn up with regard to how the funds are going to be applied and a set of concrete goals as well as a path to get there, by the industry. This should have happened with the financial bailout as well, the financial collapse coming at the end of a lame duck and malevolent administration forcing our hand with regard to getting out the initial bailout measure has been particularly unfortunate, (what 'guaranteed oversight'?); but if we allow them to collapse, it is going to cost far more to rebuild our auto industry from the ground up (assuming that it happens at all, and they don't go the way of textiles) than it will to retool them in order to survive - and their downfall will disproportionally affect the working and middle classes as much or more than the credit collapse will.

This has run on too long, but if you folks get the chance, check out the film 'IOUSA' currently in wide release. I believe Malse posted something about it a short while back, but pay particular attention to what is going on with the two island populations in the little cartoon vignette...

Regards,
Nydia

What if, and this is mere speculation we retooled the automakers to some degree with the following in mind.

1) With govt monies comes an agreement they produce "green" vehicles for the various govt agencies up to and including the military. Maybe we can get the various US based defense contractors to put monies and planning into this effort. This will keep jobs and maybe get some value for our dollar? Build vehicles meant to patrol our boarders etc etc...
2) Do as L2 suggests, build to sell to the world and with quality not seen in Detroit in some time. Become industry leaders once again on a global scale.

I woke in the middle of the night and had an entire line of thought with this in mind. Damned if I can recall the whole series of pros/cons that came with this idea and I'm forgetting much that came along with that "dream".

I think that both 1) and 2) are going to have to happen, with 1) being a carefully managed financial/infrastructure-building investment bridge to 2), along with some good old fashioned VAT/protectionism added in for good measure, as unpalatable as that might sound. We *have* to build to 'sell to the world', otherwise what we're doing is just slightly better return-on-investment corporate welfare, much like the defense industry (and if you want to see sickening levels of mismanaged/unneeded/unaskedfor pork, there you go), but we also have to accept that much of the world is willing to engage in some highly shady/competitive practices in order to 'sell to the world' such as using loss-leaders to wedge their way into and overwhelm competition in a market while keeping tarrifs for imports high at home, etc (Toyota, Hyundai) allowing that activity to be supported, and we'd better be ready to play hardball here too if we want to make the 'selling to the world' deal work as well as dealing with the quality end.

On the quality end, Ford had some promising partnership arrangements with Mazda back in the '90s which improved the quality of some of their models greatly; GM had their Saturn manufacturing model, and so there is evidence that Detroit is *capable* of producing quality at a decent price. Perhaps now that their backs are to the wall and they're no longer masters of their own destiny, they will finally be able (with a little help and pressure from us) to take those endeavors seriously.

Regards,
Nydia

/nods

I think the ole TVA model was in the back of my head when I wanted to see the Big 3 being retooled to build for the Govt. Not sure how that would play out, but maybe we could bring in advisors that would teach/force them to learn to build Lean.

It doesn't make much sense to simultaneously consider the Big 3 a national security issue, while also pointing out that the (more important) electronics industries have already left town. Trucks and Jeeps are nice, but they aren't winning a 21st century war.

If push comes to shove, can you even run a manufacturing plant without foreign electronics today? My Dad owns a furniture manufacturing operation that uses Japanese and Italian (WTF?) tools as much as domestic ones. I can't imagine that building a car is lower tech than building a desk.

Not to mention the computers, which run everything.

This isn't the 40s. We're decades beyond an isolationist industry being feasible, even in an emergency.

If we lose those industries, it will take years-decades to get them back as we will have to build them from the ground up, not to mention the ground-level technical expertise and experience that is lost.

How do you explain Tesla Motors springing up overnight?

Why would the technical expertise be lost? Are these people going to be lobotomized during their exit interviews?

Do you have anything to back this up? I've heard that fearmongering before, but no one ever substantiates it. I think it's true that it would take years/decades to restart an industry such as electronics manufacturing, but not one which is currently active.

Great companies are formed from the best of the detritus of failed dinosaurs. I can't imagine that the best of the Big 3 would just walk away from the industry.

It doesn't make much sense to simultaneously consider the Big 3 a national security issue, while also pointing out that the (more important) electronics industries have already left town. Trucks and Jeeps are nice, but they aren't winning a 21st century war.

If push comes to shove, can you even run a manufacturing plant without foreign electronics today? My Dad owns a furniture manufacturing operation that uses Japanese and Italian (WTF?) tools as much as domestic ones. I can't imagine that building a car is lower tech than building a desk.

Not to mention the computers, which run everything.

This isn't the 40s. We're decades beyond an isolationist industry being feasible, even in an emergency.


How do you explain Tesla Motors springing up overnight?

Why would the technical expertise be lost? Are these people going to be lobotomized during their exit interviews?

Do you have anything to back this up? I've heard that fearmongering before, but no one ever substantiates it. I think it's true that it would take years/decades to restart an industry such as electronics manufacturing, but not one which is currently active.

Great companies are formed from the best of the detritus of failed dinosaurs. I can't imagine that the best of the Big 3 would just walk away from the industry.

How do you explain Tesla Motors going to the Federal Government seeking $400 million in loans for the already approved $25 billion available?


http://news.yahoo.com/s/ap/20081118/ap_on_go_co/congress_autos

General Motors, Chrysler and Tesla Motors Inc. have already applied for loans under the existing $25 billion Energy Department program and Ford CEO Alan Mulally said the automaker plans to apply on Tuesday. GM, Chrysler and Ford have not disclosed the amount of aid they're seeking or for what purposes. Tesla said it was seeking about $400 million in loans for two projects.

How do you explain Tesla Motors springing up overnight?


Tesla motors has no manufacturing capability. This isn't about smart designs, it's about the knowledge of how to take things from designs to ten thousands of units, not 50, and all the heavy industry required to make the parts that make the parts of what makes the parts. If you want to see this exact problem in action, look at the space program: we've known how to build the rockets for 50 years, but we can't do it anymore.

Way to miss the forest for the trees, both of you.

Tesla is solvent without government loans though. They're barely scraping by, due to the economy, but they are scraping by.

Regardless, Tesla is a no brainer investment over GM. Practical, attractive electric cars for $400m or more Hummers and Escalades for $25b?

Malse summed it up much more succinctly than I could - the sad fact is that it does not take very long at all for crucial parts of a supply chain, either in materiel or in expertise, to be lost so that the path to the previous location/level of production *can't* be recreated without more or less starting from scratch. If those plants close, the supporting industries that make *parts* for them, both heavy and technically sophisticated, will be lost, scattered, and deteriorate. It's kind of astonishing, really, to think of all the technologies we've lost because all of the engineers and technicians that each knew little pieces of a given puzzle (including relatively low tech issues we were already grappling with when I worked in the automotive support industry, such as how to scale down or up a mold or a mold production rate, or a batch size, and a loss of skilled moldmakers) have been scattered as we lost things like the textiles and electronics industries - if no-one new is being trained in a skill, and no infrastructure exists to support an industry anymore, resuscitating it gets a *whole* lot more difficult.

There was something cogent I was going to add to address your question more succinctly but it's flown right out my addled brain, but think of something like the space program, or the automotive industry (or any 'real' industry for that matter) as being a pyramid, with the final product resting on all of the individual bits of technology and infrastructure needed to produce them, and if your base crumbles...

By the way, this very thing is currently happening in the nuclear industry in this country. A generation of nuclear engineers and technicians has died off and is retiring out, and being that we haven't approved a new nuclear plant in this country in 35 years, and we're no longer in the business of proliferation, no-one has been trained to replace them (or the folks who make the parts which make the parts for them, either) and a very real crisis is in flower both here and in the UK...

Regards,
Nydia

Way to miss the forest for the trees, both of you.

Tesla is solvent without government loans though. They're barely scraping by, due to the economy, but they are scraping by.

Regardless, Tesla is a no brainer investment over GM. Practical, attractive electric cars for $400m or more Hummers and Escalades for $25b?

That currently cost $100,000 for the current sports car and an estimated $80,000 or so for the sedan when it's available. That's not practical to the normal buyer, and neither is your example of Hummers and Escalades. GM has the Malibu (and while I don't prefer American cars has a very good reliability rating, good gas mileage, and a reasonable cost of ownership) and several other models that get over 30 mpg.

I'd personally rather invest in the Volt than I would invest in a company producing electric cars that cost $100,000. Tesla has some potential for sure, but I see much more mainstream potential to come out of the Volt when it hits the market at 40% of the cost. It's also much more practical to have a car with a back up power gen system when the batteries run out like the Volt which isn't present in the Tesla Roadster.

Malse is right that Tesla doesn't have the infrastructure currently. It would kill the American market to go from a company with the infrastructure available of a GM to a company that pumps out a few cars a month. Tesla also has virtually no distribution channels outside of the west coast, and again have a very limited market with their cost of ownership.

And, way to strawman :). Who says bailing out GM = more Hummers and Escalades? If people aren't buying (and they aren't), they won't be building them for long either, and it's certainly possible to attach strings to said aid. And Tesla isn't supporting several million people directly or indirectly and dozens of plants and their supportive supply chains (and as Tal has just mentioned, won't be selling at that price to the average consumer, either), so funding them vs funding GM = apples and oranges - it isn't going to prevent massive economic and social dislocation in addition to saving infrastructure (although it might well be a worthy goal in and of itself).

Late for lab, but I have some links someplace on the issue I'll try to dig up for you.

Regards,
Nydia

Again, the fallout is already happening. It's a delusion to think that $25 billion down the drain will prevent the inevitable from continuing in Detroit.

If we're looking to the future, I'm not convinced that the manufacturing capacity is necessarily as important as you guys seem to think.

Let's face it, more automation is the future of manufacturing. Betting the future on these UAW protected jobs is a losing bet.

If we're going to spend money, we need to retrain these blue collar workers so that they can do something actually in demand (and actually worth their union pay levels).

Where do the machines that do the automation come from, Sanchek? :)

Regards,
Nydia

That currently cost $100,000 for the current sports car and an estimated $80,000 or so for the sedan when it's available. That's not practical to the normal buyer, and neither is your example of Hummers and Escalades. GM has the Malibu (and while I don't prefer American cars has a very good reliability rating, good gas mileage, and a reasonable cost of ownership) and several other models that get over 30 mpg.

I'd personally rather invest in the Volt than I would invest in a company producing electric cars that cost $100,000. Tesla has some potential for sure, but I see much more mainstream potential to come out of the Volt when it hits the market at 40% of the cost. It's also much more practical to have a car with a back up power gen system when the batteries run out like the Volt which isn't present in the Tesla Roadster.

Malse is right that Tesla doesn't have the infrastructure currently. It would kill the American market to go from a company with the infrastructure available of a GM to a company that pumps out a few cars a month. Tesla also has virtually no distribution channels outside of the west coast, and again have a very limited market with their cost of ownership.

Musk also confirmed that the electric sedan, whose name could very well change (probably to something that sounds less like a Ford minivan) before it hits the market, will be priced in the $50-60k range, and be produced – likely in Albuquerque, New Mexico – in annual runs of 10,000-20,000 units.

edit: Also note that the Volt is a joke. They tried to promote it as an electric vehicle, but it's just an electric hybrid. It doesn't even have a mechanism to charge the battery while running. They haven't even caught up with the Prius yet.

Where do the machines that do the automation come from, Sanchek? :)

Regards,
Nydia

We actually have a decent robotics industry domestically, but it's not very important. These things are more and more becoming commodity items.

The important thing to understand is that there's not necessarily a legitimate long-term demand for many of these assembly line workers. For that matter, UAW has been fiercely fighting Detroit to limit automation for decades, to artificially maintain a larger number of superfluous manual labor jobs.

and how does a car that's $50-60k with annual runs of 10,000-20,000 units help a market that demands millions of cars a year? At that point it's still a niche market item that doesn't help with the loss of one of our largest employers(and the residual fallout).

How many Volts do you think GM will build in its first year? Do you know how many of the Prius Toyota sold in the US in its first year? Obviously not.

Surely we've learned our lesson about the dubious value of entities "too big to fail", over the course of the last few months.

I'm not sure why you've latched onto this Tesla vs. the world argument. In case I wasn't clear, I don't think a single Tesla Motors could replace GM.

However, we would be far better served by a few dozen Tesla Motors springing up from the ruins of Detroit than by putting the bloated giants on life support for a few more years.

The point is that even fifty TMs couldn't replace GM. It's not about whether or not an individual company is viable but about the importance of keeping what little manufacturing capability we have still existing. I don't care if another GM car ever rolls off the line, have them build Volvos and Teslas, but letting the entire industrial base dry up and blow away like the rotting leaves of those trees in the Detroit public school book dump is about as dumb as letting them move plants to Mexico under "free trade" agreements or dumping $700B into financial failures -- we can retrain monkeys to lie about money in a matter of days, it took four decades and trillions of adjusted dollars in resources and man-hours to get real industry working.

In simple terms, cost to float < cost to replace by orders of magnitude.

This seems more likely: http://www.thetruthaboutcars.com/breaking-news-chinese-may-buy-gm-and-chrysler/

I'd rather them get an additional 25 billion in aid than the Chinese gain control of them.

If China really wants them, the $25 billion won't make much difference.

GM's current market cap is $1.89 billion. China could afford to pay cash for hundreds of GMs.

I'd rather them get an additional 25 billion in aid than the Chinese gain control of them.


Exactly.

Think of a world in 20 years from now where Ford, Chevy and GM are replaced with Chinese brands.

That's what will happen.

We cannot go down without a fight, sacrificing our future on the altar of Free Market Purity.

The free market isnt some snake oil to be applied to every situation. To the Grover Nyquist types the answer to every question is "Free Market". They don't even need to hear the question. This is foolishness. Cutting off our nose to spite our face and bringing the temple down around our heads.

L2 we do not have Free Market, nor have we.

Don't mention it as some evil, it's not what brought us to the precipice. Instead constantly kowtowing and taking the short end of the stick on each trade aggreement has left us sitting ugly.

Free Trade/Free Market are not what we have and shouldn't be bandied about as evils.

Similar arguments were made for "saving" IBM when it fell behind the curve and for AT&T being "too big" break up without causing tele-anarchy.

Imagine if we were all still using mainframe terminals in 2009, because the government subsidized IBM against Microsoft.

Imagine if we were still paying prohibitive long distance fees, because AT&T was never broken up and the industry opened to competition.

Why are we suddenly so terrified to let Capitalism do its job?

The curious thing is...

Noone knows or can safely predict when our current recession will end. That being said 25 Billion amongst those 3 will barely get them through 2009. Hell GM spent what almost 7 Billion this last quarter?

It's just the tip of what will be begged for by the Big 3.

Similar arguments were made for "saving" IBM when it fell behind the curve and for AT&T being "too big" break up without causing tele-anarchy.

Imagine if we were all still using mainframe terminals in 2009, because the government subsidized IBM against Microsoft.

Imagine if we were still paying prohibitive long distance fees, because AT&T was never broken up and the industry opened to competition.

Why are we suddenly so terrified to let Capitalism do its job?

Because the capitalism you are referring to has never existed anywhere outside of the sophomoric discussions of egotistical academics. Trade protections work, tax incentives work, nationalization works, and every successful nation in history has made use of them, including us, until we drank our own lobotomizing kool-aid and thought the crap we'd been telling 3rd world nations to help us loot their economies would somehow work better for us. Amazingly enough, now all the countries who knew better than to listen are looting ours.

If Capitalism is too elitist a term, call it what you like. Whatever you call it, it certainly has been the cornerstone of the best of our economy.

The only elitism to worry about is the disciples of Ayn Rand or Thomas Friedman who think The Lexis and The Olive tree has anything to do with reality. Unsupported dogmatic belief systems may be most evident in rednecks and emo neopagans but can affect anyone who throws away empirical evidence that contradicts their conclusions -- Alan Greenspan admittedly included.

Objectivism and Capitalism aren't equivalents any more than Communism and Socialism are. I'm not sure what relevant point you're trying to make here?

I think it's also important to keep in mind, while Chris Dodd is bashing GM today, that their *current* (as in immediate) predicament was precipitated as much by the worldwide credit crunch (which they did not create, those folks who are getting the 750B did) as their slow response to the changing market (getting hit by 5.00/gal gas this summer right as the economy was tanking and credit was tightening didn't help, either, and the Bush administration subsidizing mega-SUV production post 9/11 by providing tax breaks to folks who bought SUVs that cost over 35,000 didn't exactly encourage them to run out and invest in making low-profit-margin compact cars in the years immediately prior). And the issue of 'union wages' being a large factor in why they haven't been competing is, in this day and age, just silly - the days of the 35.00/hour menial jobs are long gone, GM having gone to a two-tier wage system, its new assembly-line workers now making 12.00/hr. Wages now make up 8-10% of the cost of your average car, a fraction of what it was 20 years ago, and their efficiency in this regard rivals Toyota's - ironically, the profit difference is now down to the fact that health care (provided in Japan) costs 1500.00 per GM vehicle (although the union now pays for retiree health insurance). What does Toyota have going for it that we don't have? Reliable, fuel-efficient models that folks want to buy, yes, but also subsidy and protectionism at home...

There's another reason, on the 'selling ourselves down the river, and then selling the paddle' tack that makes bailing GM out a case of enlightened self-interest. If GM is forced to declare bankruptcy, it won't be able to qualify for Chapter 11; it can't get the credit for that. Instead, it will in all liklihood be forced into Chapter 7, which means immediate liquidation. Now, who do you think might buy, along with the infrastructure itself, the Volt technology, unfinished as it is, that we have spent a decade and millions upon millions of dollars developing, and then sell back to us? SAIC is already lined up at the box office, as Sanchek just linked, and I also uncovered an article on this afternoon. Can you think of *any* possible downside to this equation? ;)

I think people don't want to look clearly at just how dire the situation has gotten, how far we have already sold our future, our security, and our capacity for self-determination down the river. Saying we 'can't afford' to save what we have left, because of our ginormous debt level (and which our current keptocracy has deliberately exacerbated with the zeal of the Nazi inner circle blowing up their own railroads and infrastructure, and deliberately starving their own people, in the closing days of the war, destroying the potential for government to effectively function) is effectively giving up on the last shreds of our manufacturing base and resigning our fate to that of a host of other third world 'plantation' countries (and we already export wood to China which is returned to us in finished forms and sold to us for orders of magnitude more money, btw).

Melodramatic, yes - but think about what giving up that base, and tendering it to the hands of (in China's case) autocratic governments who own too much of us already, and are willing to abuse their environment and people to an appalling and unsustainable degree in order to continue concentrating (real) money and power, and ask if yourself if that 'free' market philosophy still keeps you warm at night. I don't love the Big Three, and especially have no love lost for GM, but this most recent crisis is not primarily of their making and I think credit needs to be given where it is due in terms of the progress they have made efficiency-wise, and real consideration given to the enormous economic and social costs we would pay, and end up paying down the road, were we to give up the ship on them.

Regards,
Nydia

L2 we do not have Free Market, nor have we.

Don't mention it as some evil, it's not what brought us to the precipice. Instead constantly kowtowing and taking the short end of the stick on each trade aggreement has left us sitting ugly.

Free Trade/Free Market are not what we have and shouldn't be bandied about as evils.

No, but there has been a steady injection of free market principles over the last 8 years, namely in the realm of deregulation.

Its not that we have a perfect free market, its that the people running the show are making decisions based on that theology (for lack of a better term).

And Im not saying Free Market ideas are all bad. Im just saying that they should be one tool in the toolbox. Applied when needed and curtailed when they are not. Like Malse said, lots of things work, its timing and ability to adjust that make all the difference.

Bush gets the blame because he deserves it. He has been completely unable to adjust in any circumstance when reality disabuses his ideology.
Think Katrina. Government does do things well and can't be of help.
Think Iraq. Once Democracy is set forth, flowers will be thrown at our feet.
And this financial crisis. Free Market ideas are causing damage, but no action is taken until far too late as the Great Pumpkin, or the Invisible Hand, or Jesus on Cloud, or whatever the fuck he believes in, never rode in to save the day.

The decoupling of risk and reward in the financial sector is a whole different bag of worms.

Bush is a moron, but you'd be keeping intellectual company with him to solely blame him for the results of a bill that Clinton signed into law.

Using the CRA as a blame for this mess is just wrong. I know you said Clinton signed into Law, so maybe its not the CRA that you had in mind, but im going on that assumption because its one that needs debunking anyway.

This isnt the fault of Fannie and Freddy. Subprime mortgages are sympton, not a cause of this.

This started with non regulated banks like American Home Mortgage which was mostly in bed with Bear Sterns and Lehman Brothers.

http://bigpicture.typepad.com/comments/2008/10/misunderstandin.html

Let's clarify the causes of current circumstances. Ask yourself the following questions about the impact of the Community Reinvestment Act and/or the role of Fannie & Freddie:

• Did the 1977 legislation, or any other legislation since, require banks to not verify income or payment history of mortgage applicants?

• 50% of subprime loans were made by mortgage service companies not subject comprehensive federal supervision; another 30% were made by banks or thrifts which are not subject to routine supervision or examinations. How was this caused by either CRA or GSEs ?

• What about "No Money Down" Mortgages (0% down payments) ? Were they required by the CRA? Fannie? Freddie?

• Explain the shift in Loan to value from 80% to 120%: What was it in the Act that changed this traditional lending requirement?

• Did any Federal legislation require real estate agents and mortgage writers to use the same corrupt appraisers again and again? How did they manage to always come in at exactly the purchase price, no matter what?

• Did the CRA require banks to develop automated underwriting (AU) systems that emphasized speed rather than accuracy in order to process the greatest number of mortgage apps as quickly as possible?

• How exactly did legislation force Moody's, S&Ps and Fitch to rate junk paper as Triple AAA?

• What about piggy back loans? Were banks required by Congress to lend the first mortgage and do a HELOC for the down payment -- at the same time?

• Internal bank memos showed employees how to cheat the system to get poor mortgages prospects approved that shouldn't have been: Titled How to Get an "Iffy" loan approved at JPM Chase. (Was circulating that memo also a FNM/FRE/CRA requirement?)

Caseshillerpricedeclines_2

• The four biggest problem areas for housing (by price decreases) are: Phoenix, Arizona; Las Vegas, Nevada; Miami, Florida, and San Diego, California. Explain exactly how these affluent, non-minority regions were impacted by the Community Reinvesment Act ?

• Did the GSEs require banks to not check credit scores? Assets? Income?

• What was it about the CRA or GSEs that mandated fund managers load up on an investment product that was hard to value, thinly traded, and poorly understood

• What was it in the Act that forced banks to make "interest only" loans? Were "Neg Am loans" also part of the legislative requirements also?

• Consider this February 2003 speech by Countrywide CEO Angelo Mozlilo at the American Bankers National Real Estate Conference. He advocated zero down payment mortgages -- was that a CRA requirement too, or just a grab for more market share, and bad banking?


Another thing.. if you want to see and read from another prophet of this mess, along the same lines as the OT of this thread..
Read this guys blog
http://www.irvinehousingblog.com/
Its pretty famous at about this point. He was screaming about the bursting bubble and what was going to happen for a long time, and he wasnt selling houses in low income areas.

Its not low income housing loans that caused this.. and the reality is that low income CRA loans are not defaulting at a rate any higher than the national average.
however...

On the other hand, lending money recklessly to obscenely rich white guys, such as Richard Fuld of Lehman Bros. or Jimmy Cayne of Bear Stearns, can be really risky. In fact, it's even more risky, since they have a lot more borrowing capacity. And here, again, it's difficult to imagine how Jimmy Carter could be responsible for the supremely poor decision-making seen in the financial system. I await the Krauthammer column in which he points out the specific provision of the Community Reinvestment Act that forced Bear Stearns to run with an absurd leverage ratio of 33 to 1, which instructed Bear Stearns hedge-fund managers to blow up hundreds of millions of their clients' money, and that required its septuagenarian CEO to play bridge while his company ran into trouble. Perhaps Neil Cavuto knows which CRA clause required Lehman Bros. to borrow hundreds of billions of dollars in short-term debt in the capital markets and then buy tens of billions of dollars of commercial real estate at the top of the market. I can't find it. Did AIG plunge into the credit-default-swaps business with abandon because Association of Community Organizations for Reform Now members picketed its offices? Please. How about the hundreds of billions of dollars of leveraged loans—loans banks committed to private-equity firms that wanted to conduct leveraged buyouts of retailers, restaurant companies, and industrial firms? Many of those are going bad now, too. Is that Bill Clinton's fault?

GLBA. The entire thing stems from repealing Glass-Steagall.

None of this happens if you can't roll mortgages into securities and/or issue debt insurance. Without the MBS and CDO, risk and reward fall on the same shoulders and we're all good.

We probably would've remained in recession much longer earlier this decade (which was already screwed before 9/11), but never in this current predicament.

Ok. Thats fair.

But remember, thats a bill from three Republican Congressmen. Phil "Satan" Gramm, Leach from Iowa, and Bliley from Virginia.

Now Damn Clinton and the Dems for Quid Pro Quoing this piece of shit and taking concessions from the Republicans in exchange for supporting it. But it wasn't born out of the Democrats.

Clinton was pretty fucked at this point of his presidency, impeachment, ect and made a deal with the devil. His hands are soiled from this, but this is the baby of the UberFreeMarketsReichsfurher Gramm and his merry band of Deregulators.

Oh, I definitely hold them all responsible. Certainly not just Clinton. McCain choosing Gramm as his economic adviser was one of my biggest complaints with him.

I don't think it's reasonable to pin GLBA on the notion of the free market though. The free market worked swimmingly for nearly 70 years before GLBA came along and removed all sanity from the finance/insurance industries.

More often than not, the free market idea is co-opted to feed us something that isn't free market at all. NAFTA, for example. That's not a problem with the free market. That's a problem with the inept and/or corrupt politicians running our country anymore.

Glass - Steagall was the lit fuse, but there was also this little SEC rule that was repealed in 2004...then...3 years later...BOOM...mortgage defaults!

The largest portion of the sub-prime mortgages were issued in 2004 - 2005.

The free market worked swimmingly for nearly 70 years

There was a regulated free market and it was with Reagan that started the run to deregulation.

http://www.usnews.com/blogs/flowchart/2008/11/18/how-bankruptcy-would-benefit-gm.html

The bankruptcy idea has merit, but there is this thing called public perception.

This is about selling cars and an auto maker that files for bankruptcy will not sell cars.

They aren't selling cars anyway.

If public perception really matters, Detroit has been sunk for some time now already. Almost everyone knows how screwed they are.

People still fly on airlines that filed Bankruptcy, the 3 million auto workers be the retired or whatnot have the biggest stake in a chapter 11 by the auto giants.
The average American household has 2.2 cars. The problem is the market is saturated with a lot of cars with an average age of less than 9.3 years old. Meaning there is a huge supply of available used cars that are comming into market as Americans shed those unneeded cars they own. Thus the problem is that the big 3 are still trying produce numbers of cars that just can't be physically sold.

In addition the average American family will shed the gas guzzlers first. The market gets saturated with SUV's, trucks and Mini-Vans that are not economical but are very cheap to buy. When you offset the cost of buying an SUV vs. a newer more economical car the cost of the lower price buys a lot of gas. So the savings of economy vs. cost of buying depending on how much you drive can make it rather attractive. The SUV has pretty much depreciated to it lowest level almost already. The point being, if you can go buy an 05, 06 Explorer for $6K vs a new car that gets twice the mpg but costs $16K it will take a whole lot of driving to burn the $10K price difference in fuel.

Half-baked (or less) idea:

Is it possible to prop up whichever two out of the three need the least assistance and/or show the most long-term promise, and allow the third to fail?

They aren't selling cars anyway.

If public perception really matters, Detroit has been sunk for some time now already. Almost everyone knows how screwed they are.

Especially right now they aren't. Cars are a trendy thing, this years big sellers might well be next years losers. It wasn't that long ago that the top sellers were from GM, Ford and Chrysler and that was in the last 5 years. Much depends on fuel prices.

Now granted the stifling of innovation and quality production must be addressed and forced with regulation in order to have any success in this "bailout".


People still fly on airlines that filed Bankruptcy, the 3 million auto workers be the retired or whatnot have the biggest stake in a chapter 11 by the auto giants.

But flying is a once and done thing, people will shy away, hell they'll just simply not even look at cars they worry will not be contractually covered by warranties and many other perceived or real issues.


I mean, hey, we can look at bankruptcy, which is a decision each automaker can look at or just simply close the doors and look at imports because that is all there will be.

Either way we will pay with medical assistance, unemployment and welfare to those who's retirement contracts are canceled and those across and not only directly involved in the manufacturing of cars but with those in support roles right down to the little lunch businesses near the auto plants.

One way we definitely lose, the other way we at least have a fighting chance.

If you remove the vehicles sold to government, trucks sold to business, and the tax subsidized SUVs, what do you really have left for the past several years? They've been in pretty bad shape in the higher volume segments for awhile now.

If we do remove those vehicles we then use imports to fill those needs?

But imports seem to have their issues also.

http://www.nytimes.com/2008/11/19/business/economy/19ports.html

I guess we'd better put $25 billion into Toyota too, if subsidizing manufacturing jobs means more than fiscal sanity.

I guess we'd better put $25 billion into Toyota too, if subsidizing manufacturing jobs means more than fiscal sanity.

The fiscal sanity was thrown out the window over 20 years ago, but does no response mean we get it back?

in other things, it was particularly interesting to see Paulson in front of congress yesterday and watch the look on Ron Pauls face.

Rover you keep attempting to put a black eye on ole Pres Ronnie as if he was the start of bad times. He wasn't, you're gaining no traction...

In 1980 when Pres Reagan took office there was double digit inflation (had been for 4 years). Times were quite ugly already and had been before he took office.

On topic, Palarran you have an interesting suggestion. We do keep lumping the Big 3 as a singular entity. Perhaps we need to allow the least of the 3 , whichever that is, go bankrupt ( or be purchased outright by others) and do what we can to force the others to join the 21st century.

Kill the rabbit, to scare the monkey? I think that's what Rybit said in an earlier post.

Might be something in that proposal.

For what it's worth, I know a guy that knows a guy high up at Ford. The guy himself told me earlier this year that there would probably only be one or two of them left by the end of the year.

This was ~6 months before the credit crunch hit.

He didn't elaborate as to whether their troubles were related to the crazy gas prices at the time or more fundamental issues.

So, Palarran's idea definitely may be very likely.

Rover you keep attempting to put a black eye on ole Pres Ronnie as if he was the start of bad times. He wasn't, you're gaining no traction...

In 1980 when Pres Reagan took office there was double digit inflation (had been for 4 years). Times were quite ugly already and had been before he took office.

On topic, Palarran you have an interesting suggestion. We do keep lumping the Big 3 as a singular entity. Perhaps we need to allow the least of the 3 , whichever that is, go bankrupt ( or be purchased outright by others) and do what we can to force the others to join the 21st century.

So using Social Security money for other things was a good thing?

Reagan was not fiscally conservative nor was he conservative on the constitution. He sucked, he left US servicemen on the field he was nothing more than a grandstander and a sloganizer. He and his administration looted the treasury, ripped off the average person set the pace for deregulation. BinLaden said one of the defining factors for his attack on the US was the non response by Reagan in 1983.

BinLaden said one of the defining factors for his attack on the US was the non response by Reagan in 1983.

He also said

"Who can forget your President Clinton's immoral acts committed in the official Oval office? After that you did not even bring him to account, other than that he 'made a mistake', after which everything passed with no punishment. Is there a worse kind of event for which your name will go down in history and remembered by nations?"

So, we should govern based on the ramblings of a madman?

*waits for the comment : That's what we have been doing for the past 8 years*

He also said



So, we should govern based on the ramblings of a madman?

*waits for the comment : That's what we have been doing for the past 8 years*

No we should not govern based on the ramblings of a binladen. We should also not send US troops into harms way and do nothing when they are attacked then wave the flag like we actually give a shit when in reality we don't. Then we shouldn't place the leader who did that on some kind of pedestal.

Okay you are one of a kind, thankfully.

His presidency was a solid one, sorry you can't handle it. But you are a party man and as such not up to making objective statements about such so I accept it.


Sorry to derail, wanted to be sure I had the right of Rovers rationale. I can now understand some of his stances.

So placing a battalion of Marines in harms way and then, even while they are under fire, require the battalion commander to contact the whitehouse for permission to defend themselves then when that battalion of Marines loses 240 killed in an attack and then do nothing to those who attacked them and order those Marines to retreat from that situation even when those attackers are clearly defined as was their operational base.

You support that? You find that solid?

Im not sure where I am on the Big Three Bailout anymore.

The 3 CEOs together were a trainwreck yesterday, and Im not really sure why we are lumping all 3 companies together.

Also, I found some a very compelling argument from a unexpected place that has my support for the proposal shifting.\

Mitt Fucking Romney.

http://www.nytimes.com/2008/11/19/opinion/19romney.html?hp

And Reagan was good... but wildly overrated.

Well, you only know about Reagan from the books and word of mouth L2. I'm sorry, but he did things for the country...dug us out of a hole and inspired alot of folks at the time that were quite honestly in the same sort of mood you see today.

I agree, we shouldn't be lumping the Big 3 in together.

Mitt Fucking Romney eh? LoL he's a pretty stand up guy by most accounts. He did a great job out here in Utah during the Winter Olympics ( as much as could be done, years later the liquor commision is only now coming around to the 21st century. Huntsmen being a big part of the push to bring us out of the stone ages!!!

I really never understood why Romney lacked good support in the Republican party.

one word... (and it's not something that weighs with me one iota, but does with the party)

Mormon

Well, you only know about Reagan from the books and word of mouth L2. I'm sorry, but he did things for the country...dug us out of a hole and inspired alot of folks at the time that were quite honestly in the same sort of mood you see today.

Didnt say he wasnt a good president. He was. But the Saintification of Ronnie is waaaaay overboard.

Remember that Republican primary debate? I half expected the nomination to go to the guy who promised to dig up the man and fellate his corpse.

And Romneys core problem was that he tacked way to hard to the right in the Primaries. McCain owned the center so he went way to far to the base.

And lets be real here a second Fandros. Im gonna guess that you were born in 65'. If you were like 99% of Teens and early 20s you barely knew who the President was, never mind being cognizant enough to register and quantify political change in the country from a time you where you were still trying to figure out what your pecker did, to a time where it was the center of your universe.

Im not sure where I am on the Big Three Bailout anymore.

The 3 CEOs together were a trainwreck yesterday, and Im not really sure why we are lumping all 3 companies together.

Also, I found some a very compelling argument from a unexpected place that has my support for the proposal shifting.\

Mitt Fucking Romney.

http://www.nytimes.com/2008/11/19/opinion/19romney.html?hp

And Reagan was good... but wildly overrated.

Well if it makes you feel any better, Romney didn't write that article personally. It was written by a PR firm here in DC. Doesn't change the message any, nor that he didn't probably read it over first before putting his name on it, but he didn't write it himself if it makes you feel less dirty.

Wow..

I actually DO feel better.

Let's be real real L2 ;P My generation isn't anything like the generation of kids you see atm or even like the one before us.

I wasn't like 99% of the teens, starting in 1980 i Had a teacher ( I still remember him well today a Biology teacher Mr Kruchek) who pushed his entire class to get involved in the election process in some manner.

A few friends , along with myself, seeing the shitty condition the country was in decided to join the young republicans and work at a local office doing flyers and such.

Yup wasn't much, but I was very aware of what was going on and was always invested in Pres Reagan's run.

Well if it makes you feel any better, Romney didn't write that article personally. It was written by a PR firm here in DC. Doesn't change the message any, nor that he didn't probably read it over first before putting his name on it, but he didn't write it himself if it makes you feel less dirty.


Proof?

I've heard the man speak and even with question flying out of left field he was every bit as eloquent as he is in this article.

I'd buy that he sat around and worked with a group to put it together. But unless you have hard proof this is nothing more than you guessing. Sorry but it doesn't wash real well with the man's rep. ;P

Mitt Romney is a businessman, he's not infallible. He has done some positive things and some negative things. He is definately not someone who takes the average person into consideration when he makes a business decision. Don't forget just a short while ago he was advocating that people invest their money in the stock market and he also was gung-ho on the wall street bailout which only benefited guys like him.

Also, he mentions that his Father ran American Motors...anyone remember what happened to AMC?

Proof?

I've heard the man speak and even with question flying out of left field he was every bit as eloquent as he is in this article.

I'd buy that he sat around and worked with a group to put it together. But unless you have hard proof this is nothing more than you guessing. Sorry but it doesn't wash real well with the man's rep. ;P

You honestly think he has that much free time to write letters to newspapers, THEN proofread it, and THEN to take the time to pitch them to the various editorial departments ... with no personal gain? That just doesn't make any sense. He probably barely had enough time to read it - more likely it was someone on his staff that read the thing and passed it off for his approval. The truth is more likely someone who will gain financially from the auto industry not getting bailed out has plenty of PR resources to get an article like this ghost written and pitched. They probably met with Romney weeks ago and were waiting for a good time to release this, perhaps a day when the auto stocks were gonna fall so low because of lack of Congressional bailout?

My girlfriend used to work at a PR company named Edleman, in their international division. There's been dozens of articles with the Ambassador to Morocco's name on it that my she wrote, and she's fairly convinced she knows who wrote that article in question.

You don't have to believe me though, I could care less if you do, only Lleauric does. I want him to sleep well at night :)

No it's like anything else on this board. No proof means it's just you guessing.

Sorry, just because some couldn't find time doesn't mean all don't.

Plus I think Mr Romney is out of a job atm so maybe has more time than others.

I don't think he's a saint btw, just curious how you sold it as you knew it was sure he didn't write it and now you're saying you didn't know but it's likely.

Sorry L2, he could have wrote it and he certainly endorsed it ;P

I'm certain he endorsed it too, and all the information about his father probably came from him in some cliff notes of sorts, but the actual grammar of it all - some 31 year old dude who likes to build skate boards in his free time.

(and I've also said in this or a different thread I agree with the sentiment of the article, written by Romney or not, so much its kinda scary)

Don't be afraid Kel, it's quite common to become more moderate as you age and become responsible for your own business. You are running a successful one so of course you see the bottom line clearly.

You're not alone btw, today the Senate cancled a mock vote on the subject in question as they now also think its worth discussing more.