• This is a political forum that is non-biased/non-partisan and treats every person's position on topics equally. This debate forum is not aligned to any political party. In today's politics, many ideas are split between and even within all the political parties. Often we find ourselves agreeing on one platform but some topics break our mold. We are here to discuss them in a civil political debate. If this is your first visit to our political forums, be sure to check out the RULES. Registering for debate politics is necessary before posting. Register today to participate - it's free!

Volcker: Taxes likely to rise eventually to tame deficit

PeteEU said:
The US and the world was in such a deep hole thanks to right wing policies put in place before FDR came to power that it took many years to just get back to the same state as before the crash.
Click to expand...

No, it wasn't.

It was a "burp", which all economies must do on occasion. Then Hoover made it worse by skyrocketing interest rates, which is the last thing you should do.

If he would have dropped rates and let the thing play out, it would have been similar to what we're experiencing now, minus the huge real estate problem that is hanging over us. But he didn't.

FDR then entended the problem by running up the federal deficit and implementing anti-competition and pro labor policies.

In an article in the August issue of the Journal of Political Economy, Ohanian and Cole blame specific anti-competition and pro-labor measures that Roosevelt promoted and signed into law June 16, 1933.

"President Roosevelt believed that excessive competition was responsible for the Depression by reducing prices and wages, and by extension reducing employment and demand for goods and services," said Cole, also a UCLA professor of economics. "So he came up with a recovery package that would be unimaginable today, allowing businesses in every industry to collude without the threat of antitrust prosecution and workers to demand salaries about 25 percent above where they ought to have been, given market forces. The economy was poised for a beautiful recovery, but that recovery was stalled by these misguided policies."
Click to expand...
 
Zyphlin said:
All this "we should raise it" and "we shouldn't raise it" is missing the point to me that bothers me about this.

Almost everyone in the "We should raise it" crowd seems to act like this is obvious, that we knew this was going to be the case, that its not surprising. Fine. Then either Obama is a complete ****ing idiot OR is an absolute liar.

If it was so obvious and unquestionable that we needed to raise taxes then he should've never gone about promising that no taxes would be raised for those that aren't "rich" in hopes of tapping populism and "appearing bipartisan". To do so either means he was too ****ing dumb to realize something so "obvious and unquestionable" or so disingenuous an slimey that he boldly and flatly lied to the face of the American people time and time again for nothing but political expediency. Change from Politics as Usual indeed.
Click to expand...

When you heard him speak, you knew he was full of crap.

You can't promise to not raise taxes when most of the social programs are under funded and you have a large amount of debt.
That's just craziness.
 
washunut said:
Some of the discussion becomes so partisan it seems people would be willing to say day is night to be able to blame their opponents.
Click to expand...

Agree with this. It doesn't take much study to realize that there's plenty of responsibility to go around. The financial collapse was a tag team of government and corporate failures -- part deregulation, part social engineering, part wishful thinking, part accounting cover-up, part straight-up gambling -- and a true bipartisan effort.
 
USA-1 said:
Fannie Mae and Freddie Mac were victims, not culprits - BusinessWeek

Start with the most basic fact of all: virtually none of the $1.5 trillion of cratering subprime mortgages were backed by Fannie or Freddie. That’s right — most subprime mortgages did not meet Fannie or Freddie’s strict lending standards. All those no money down, no interest for a year, low teaser rate loans? All the loans made without checking a borrower’s income or employment history? All made in the private sector, without any support from Fannie and Freddie.

Look at the numbers. While the credit bubble was peaking from 2003 to 2006, the amount of loans originated by Fannie and Freddie dropped from $2.7 trillion to $1 trillion. Meanwhile, in the private sector, the amount of subprime loans originated jumped to $600 billion from $335 billion and Alt-A loans hit $400 billion from $85 billion in 2003. Fannie and Freddie, which wouldn’t accept crazy floating rate loans, which required income verification and minimum down payments, were left out of the insanity.

The number don't lie unless you like to spin.

Low interest rates, greed and speculation and easy money from the FED led to the housing bubble.
Click to expand...

My understanding is Fannie relaxed its standards for issuing securities based on subprime loans because they were losing business amid aggressive lending during the housing bubble. Fannie over-leveraged itself just like the rest, lacked adequate cash reserves and needed a massive bailout. Fannie and Freddie are not blameless.

There also was a legislative effort -- championed by Bush -- to force these banks to hold some liquidity and was killed by a bipartisan effort. I'm sure you recall Barney Franks' now infamous defense of Fannie. He, and many others across the political spectrum, didn't want to see the bubble and wanted to keep the credit flowing.
 
GhostlyJoe said:
My understanding is Fannie relaxed its standards for issuing securities based on subprime loans because they were losing business amid aggressive lending during the housing bubble. Fannie over-leveraged itself just like the rest, lacked adequate cash reserves and needed a massive bailout. Fannie and Freddie are not blameless.

There also was a legislative effort -- championed by Bush -- to force these banks to hold some liquidity and was killed by a bipartisan effort. I'm sure you recall Barney Franks' now infamous defense of Fannie. He, and many others across the political spectrum, didn't want to see the bubble and wanted to keep the credit flowing.
Click to expand...

Fannie and Freddie were victims of the housing bubble created by low interest rates, abundant money from the FED and Bush's policies to make this an ownership society. Bush and Greenspan did everything in their power to keep the bubble inflating even to the point of Bush eliminating down payments for home buyers. They were driving the train that went over the cliff. They brought everyone with them.
 
USA-1 said:
Fannie and Freddie were victims of the housing bubble created by low interest rates, abundant money from the FED and Bush's policies to make this an ownership society. Bush and Greenspan did everything in their power to keep the bubble inflating even to the point of Bush eliminating down payments for home buyers. They were driving the train that went over the cliff. They brought everyone with them.
Click to expand...

Again, to my understanding this simply isn't the case. Bush really did push for a larger safety net for these institutions and was stymied by Congress. Not that that is the only factor or that Bush made no mistakes, but just saying "Bush and Greenspan did it" is as gross an oversimplification as saying "Barney Frank and Chris Dodd did it."
 
GhostlyJoe said:
Again, to my understanding this simply isn't the case. Bush really did push for a larger safety net for these institutions and was stymied by Congress. Not that that is the only factor or that Bush made no mistakes, but just saying "Bush and Greenspan did it" is as gross an oversimplification as saying "Barney Frank and Chris Dodd did it."
Click to expand...

The mess at Freddie and Fanny are the result of the collapse of the housing bubble. Not the cause of it. Yes they did not have an adequate safety net but they did not cause the collapse in the housing sector.

The housing bubble could not have happened without record low interest rates and the FED pumping money into the system. Abundant cheap money caused the housing bubble. Bush helped it grow with his home ownership policies. Yes. Greenspan and Bush created the housing bubble which they could have stopped at any time.

http://www.nytimes.com/2008/12/21/business/21admin.html
 
Last edited:
USA-1 said:
Fannie and Freddie were victims of the housing bubble created by low interest rates, abundant money from the FED and Bush's policies to make this an ownership society. Bush and Greenspan did everything in their power to keep the bubble inflating even to the point of Bush eliminating down payments for home buyers. They were driving the train that went over the cliff. They brought everyone with them.
Click to expand...

Wrong, wrong, wrong.

Bush pushed for Fannie to restrain itself, and Barnie Frank went berzerk, claiming it was "racist" not to give these loans to people. GhostlyJoe is exactly right.
 
Erod said:
Wrong, wrong, wrong.

Bush pushed for Fannie to restrain itself, and Barnie Frank went berzerk, claiming it was "racist" not to give these loans to people. GhostlyJoe is exactly right.
Click to expand...

Give me a break. That is not what caused the housing bubble or it's collapse.
You guys should do some research instead of relying on biased talking points.

Record low interest rates led to the housing bubble. It could have never happened with out them.
Bush and Greenspan used the housing sector to get us out of the 2001 recession. Interest rates should have been raised and money tightened in 2003. There was too much money to be lent. They had to manufacture demand to find places to put all that money.

"There’s a must-read study by staff members of the Federal Reserve Bank of New York analyzing the roots of the subprime crisis that came out in March. I don’t think it got much attention then as the conclusions seemed uncontroversial at the time. But now that Washington politicians are trying to rewrite history, it should be mandatory reading for every American interested in knowing how we got here.

The study identifies five causes of the subprime meltdown:
-Convoluted loan products that consumers didn’t understand.
-Credit ratings that didn’t do a good job highlighting the risks contained in subprime-backed securities.
-Lack of incentives for institutional investors to do their own research (they just relied on the credit ratings).
-Predatory lending and borrowing (which I think means fraud perpetrated by borrowers).
-Significant errors in the models used by credit rating agencies to assess subprime-backed securitie

"The Great Housing Bubble was caused by an expansion of credit that enabled irrational exuberance and wild speculation. The expansion of credit came in the form of relaxed loan underwriting terms including high debt-to-income ratios, lower FICO scores, high combined-loan-to-value lending including 100% financing, and loan terms permitting negative amortization."
 
Last edited:
USA-1 said:
The mess at Freddie and Fanny are the result of the collapse of the housing bubble. Not the cause of it. Yes they did not have an adequate safety net but they did not cause the collapse in the housing sector.

The housing bubble could not have happened without record low interest rates and the FED pumping money into the system. Abundant cheap money caused the housing bubble. Bush helped it grow with his home ownership policies. Yes. Greenspan and Bush created the housing bubble which they could have stopped at any time.

http://www.nytimes.com/2008/12/21/business/21admin.html
Click to expand...

From the article you linked: "There are plenty of culprits, like lenders who peddled easy credit, consumers who took on mortgages they could not afford and Wall Street chieftains who loaded up on mortgage-backed securities without regard to the risk. But the story of how we got here is partly one of Mr. Bush’s own making, according to a review of his tenure that included interviews with dozens of current and former administration officials."

This is much more complex than just housing policies and cheap credit, though they were clearly contributing factors.
 
GhostlyJoe said:
From the article you linked: "There are plenty of culprits, like lenders who peddled easy credit, consumers who took on mortgages they could not afford and Wall Street chieftains who loaded up on mortgage-backed securities without regard to the risk. But the story of how we got here is partly one of Mr. Bush’s own making, according to a review of his tenure that included interviews with dozens of current and former administration officials."

This is much more complex than just housing policies and cheap credit, though they were clearly contributing factors.
Click to expand...

Right. But without all the cheap easy money the bubble could have never happened. They created the bubble. It did not create itself.

The consumer gets blamed a lot, but if a banker showed you that you could buy a house for what you are paying for rent and the value of that house is growing every year who could resist? The average buyer did not know it was a bubble. They were convinced it was the smart thing to do. A way to save for the future. Also who would have thought that millions of people would lose their jobs. The number one reason for foreclosures is loss of job, not buying a home they couldn't afford. Most could afford the home until they lost their job.
 
USA-1 said:
Give me a break. That is not what caused the housing bubble or it's collapse.
You guys should do some research instead of relying on biased talking points.

Record low interest rates led to the housing bubble. It could have never happened with out them.
Bush and Greenspan used the housing sector to get us out of the 2001 recession. Interest rates should have been raised and money tightened in 2003. There was too much money to be lent. They had to manufacture demand to find places to put all that money.

"There’s a must-read study by staff members of the Federal Reserve Bank of New York analyzing the roots of the subprime crisis that came out in March. I don’t think it got much attention then as the conclusions seemed uncontroversial at the time. But now that Washington politicians are trying to rewrite history, it should be mandatory reading for every American interested in knowing how we got here.

The study identifies five causes of the subprime meltdown:
-Convoluted loan products that consumers didn’t understand.
-Credit ratings that didn’t do a good job highlighting the risks contained in subprime-backed securities.
-Lack of incentives for institutional investors to do their own research (they just relied on the credit ratings).
-Predatory lending and borrowing (which I think means fraud perpetrated by borrowers).
-Significant errors in the models used by credit rating agencies to assess subprime-backed securitie

"The Great Housing Bubble was caused by an expansion of credit that enabled irrational exuberance and wild speculation. The expansion of credit came in the form of relaxed loan underwriting terms including high debt-to-income ratios, lower FICO scores, high combined-loan-to-value lending including 100% financing, and loan terms permitting negative amortization."
Click to expand...

I don't dispute any of this, but this describes a systemic breakdown. Lack of adequate oversight and regulation combined with cheap credit and unsustainable risk-taking. If Fannie is a victim, then so is Bush's reputation by the same logic. It's not like Bush created the system or failed to attempt any controls.

I'm not trying to be partisan here. The CRA is not solely to blame. Barney Frank isn't solely to blame. Even the shady accounting practices of Lehman or the practice of borrowing money to gamble on high-yield securities aren't solely to blame. Rather, all must share the blame, as all contributed to a systemic breakdown that could have been prevented with foresight. But, as we are all well aware, foresight can't be qualified until after the fact.
 
UtahBill said:
In case I was too subtle, that was sarcasm aimed at the borrow and spend crowd (aka conservatives)....
Click to expand...
Still confused about the difference between Republicans and conservatives, I see.
 
GhostlyJoe said:
I don't dispute any of this, but this describes a systemic breakdown. Lack of adequate oversight and regulation combined with cheap credit and unsustainable risk-taking. If Fannie is a victim, then so is Bush's reputation by the same logic. It's not like Bush created the system or failed to attempt any controls.

I'm not trying to be partisan here. The CRA is not solely to blame. Barney Frank isn't solely to blame. Even the shady accounting practices of Lehman or the practice of borrowing money to gamble on high-yield securities aren't solely to blame. Rather, all must share the blame, as all contributed to a systemic breakdown that could have been prevented with foresight. But, as we are all well aware, foresight can't be qualified until after the fact.
Click to expand...

Low interest, easy credit and Bush's homeownership policies are to blame for the housing bubble. I work in the housing industry and we could see exactly what was happening, while it was happening. Everyone was trying to make a killing. We built twenty years worth of homes in five years. It could easily have been brought under control by raising interest and tightening the money supply. Times were too good so they let it run it's course. They didn't want to ruin a good thing.....all that skyrocketing GDP and all.
 
The Uncola said:
Did Barack Obama change his name to Paul Volcker?

Thanks for the intellectually dishonest fresh steaming pile.

:shock:
Click to expand...

Do you have a clue what position Paul Volcker occupies on Obama's staff?
 
USA-1 said:
You're kidding right?
Forcing banks to make loans? No bank was ever forced to make a loan. Derivatives? Credit default swaps? Record low mortgage rates? FED easy money policy? Hear of them? Lack of regulation led to the financial meltdown.

Greed and speculation in the financial sector fueled the housing bubble and it's eventual collapse.
You really should learn the facts instead of relying on GOP spin. It's funny how you guys hear something and then keep repeating it as fact.
Click to expand...



I am curious-how old are you? have you ever run a business? you sound like a college kid who has not had much experience in the cold hard world known as reality
 
GhostlyJoe said:
... If Fannie is a victim, then so is Bush's reputation by the same logic. It's not like Bush created the system or failed to attempt any controls.
Click to expand...

Not in the least. Bush's administration pro-actively pursued policies to disable financial regulation. For example, the man he appointed to head the Office of the Comptroller of the Currency (OCC) invoked an obscure clause from the 1863 National Bank Act to issue formal opinions preempting all state predatory lending laws. As a result, Bush used his executive power to invalidate all state laws on predatory lending. Talk about throwing gasoline on fire...

Also, his man heading the SEC was widely criticized for not enforcing regulations and making oversight a matter of the "honor system". I suspect almost all appointments he made engaged in similar a similar disingenuous manner to disable rules they didn't like or to look the other way.

GhostlyJoe said:
I'm not trying to be partisan here. The CRA is not solely to blame. Barney Frank isn't solely to blame. Even the shady accounting practices of Lehman or the practice of borrowing money to gamble on high-yield securities aren't solely to blame. Rather, all must share the blame, as all contributed to a systemic breakdown that could have been prevented with foresight. But, as we are all well aware, foresight can't be qualified until after the fact.
Click to expand...

There is certainly distributed fault, but the CRA issue strikes me as irrelevant. The vast majority of toxic lending came from the shadow banking sector. Fannie and Freddie were often squeezed out of the markets CRA mandates wanted them to serve. Why? Because the private (non-mandated) lenders had already swooped in and gave all those low-income people loans and then shipped them on up to Wall Street to be packaged into securities. Basically the economic melt-down would have happened even if there were no CRA, Fannie, or Freddie. Greenspan even repeated the word "fraud" about three times yesterday in the hearings. This meltdown was all about fraud which arose out of the fact there was no oversight, no regulation. The market was not as self-regulating as they had hoped. Not in the least.
 
Last edited:
TurtleDude said:
I am curious-how old are you? have you ever run a business? you sound like a college kid who has not had much experience in the cold hard world known as reality
Click to expand...

I was in the financial sector for ten years and in the housing industry for the last 25. I saw exactly what Bush and Greenspan were doing when they were doing it. That is the reason I pulled all my money out of equities right before the crash. Did you? Many people predicted the collapse of the housing sector. I was one of them.

I am dead on in my interpretation of what happened. I was part of it. Were you? Or do you get all your information from blogs?
 
Last edited:
metreon said:
Apparently, an economic advisor.
Click to expand...

Not just an adviser, chairman of the President's Economic Recovery Advisory Board

This guy would never say this in public without Obama's permission
 
texmaster said:
Not just an adviser, chairman of the President's Economic Recovery Advisory Board

This guy would never say this in public without Obama's permission
Click to expand...

Yes he would

Volcker is not some lacky, he wasnt a lacky when he was fed chairman, and I doubt he is a lacky now

That said he is correct in that taxes are going to have to rise to tame the deficit
 
Just another tick on Obama's clock to propose a VAT. Just watch - his deficit reduction commission will undoubtedly propose a VAT to pay for increased spending.

It's cming folks. And don't expect a cut in income or the corporate tax.
 
Erod said:
No, it is an accepted fact by anyone who's bothered to research it.

World War II, and the massive transfer of wealth to the United States during the reconstruction of Europe, is what made us the most powerful nation in the world.
Click to expand...

source, please.....
Most of Europe never paid back the money lent to them by the USA....
 
Lord Tammerlain said:
Yes he would

Volcker is not some lacky, he wasnt a lacky when he was fed chairman, and I doubt he is a lacky now

That said he is correct in that taxes are going to have to rise to tame the deficit
Click to expand...

Oh come on. He's in the Obama administration.

If he went on his own they would have denied he holds the same vision as the adminstration.

And they haven't have they?

This was a test to see how people would react to yet another new tax.

If you really believe he acted on his own you are fooling yourself.
 
Last edited:
You must log in or register to reply here.
Back
Top Bottom