By the numbers

560 Billion Dollars
Cost of the Iraq War to the US so far.
700 Billion Dollars
Cost of the one time bailout to compensate for deregulation and greed in the financial markets.
560 Billion Dollars Pluse 700 Billion Dollars
The cost of two terms of Republican Leadership
Five
The approximate percentge of Democratic Candidate Barack Obama’s lead over Republican Candidate John McCain
8.5
The average difference between winner and loser in percent of the popular vote in US Presidential elections since 1960.
Zero
The minimum difference between winner and loser in percent of the popular vote in US Presidential elections since 1960, rounded to the nearest percent. (Bush/Gore … it was actually negative one half a percent.)
Twenty Three
The maximum difference between winner and loser in percent of the popular vote in US Presidential elections since 1960, rounded to the nearest percent (Nixon/McGovern)
210 to 929
The ratio of hits on YouTube for the search terms “Joe Biden Parody” vs. “Sarah Palin Parody”

Source: The intertubes.

Comments

  1. #1 Richard
    September 29, 2008

    “700 Billion Dollars
    Cost of the one time bailout to compensate for deregulation and greed in the financial markets.”

    700 billion yes. Greed and deregulation – nope. Greed has driven all markets since the beginning of time. The argument that people got more greedy in the late 1990s seems naive and silly. As for deregulation – again, this is not the cause. Too much and inconsistent regulation caused the problems. The expansion of the Community Reinvestment Act to lend to low income borrowers and the implicit government guarantee of Freddie and Fannie were all part of the problem.

    The sub prime market’s problems stem in large part from a bunch of well intentioned policy makers not understanding the effects of their actions. More regulation isn’t likely to help dig us out of this mess. Ideally we should just leave banks alone to make loans and the government should get out of the home loan business.

  2. #2 _Arthur
    September 29, 2008

    From the top of my head, the US government now assumes another $780 billions of Fannie Mae, Freddie Mac debt.

  3. #3 Stephanie Z
    September 29, 2008

    Richard, the argument isn’t that people got more greedy in the 1990s. It’s that for the last several decades, greed has gotten progressively more rewarding. That is indeed a problem and directly contributes to riskier behavior.

    And the government has been in the business of getting people into houses for a long time. The FHA, in fact, has been one of the government’s self-sustaining entities–it made enough money to fund its own mission. There is no reason that mission couldn’t have been extended to lower-income families without the deceptive lending practices we got from privatizing the process.

  4. #4 tony
    September 29, 2008

    Richard

    The sub-prime mess was the result of LENDERS failing to exert any governance in their lending practices.

    1. It is always the LENDER’s responsibility to assess risk – they failed to do so.
    2. It is the LENDER’s responsibility to assess the recipient’s ability to pay (as part of the risk assessment). That they made such calculations (on ability to pay) based on the LOWEST TEASER rates and not the final BALLOON rate – and did so knowingly – was again a failure of the lender.
    3. The CDS merely deferred the risk – since these toxic and worthless mortgages got sold again and again as AAA investments, without adequate insurance as REQUIRED BY LAW.

    The LENDERs were there at the beginning of the process. The LENDERs were there in the middle of the process. and the LENDERs are there at the end of the process, expecting a handout instead of a reprimand.

    A lot of people have complained that no one should be allowed to buy a house without a hefty deposit (as in the old days). In my opinion, the era of 100% mortgages are not to blame. The era of unregulated credit is entirely to blame. The lenders made the loans. Let them take the consequences of their poor risk assessments.

    The vast majority of mortgage holders are responsible, and want to pay their mortgage. With massively rising interest charges on those affected by sub-prime mortgages I’m surprised there are so few foreclosures.

    Claims from financial professionals of ‘I didn’t know’ are falling, rightly, on deaf ears.

    That said – I think it will be worse for taxpayers ultimately if we don’t have some kind of cushion in place. The Democrat’s revised plan at least put some appropriate safeguards in place – requiring caps on compensation and a return on the government investment, as well as stricter and more forceful oversight in future.

    The people who have profited directly from CDS’s, from sub-prime mortgages, and from the excesses that were the result of unfettered trading, should be required to pay for their behavior.

    Unfortunately the vast majority of those culpable will remain unscathed. I’m fully expecting to work til I die. Retirement is not an option for me any more. I hope the same is now true of the fat cats who took us here! I hope the market swings wipe them out financially.

    [/rant]

  5. #5 Richard
    September 29, 2008

    @Stephanie – I think the “deceptive lending practices” are vastly overstated. The government through Freddie and Fannie, together with Countrywide and Bear Sterns pushed a variety of methods for expanding loans to low income borrowers. These included low (or no down payment), not asking where a down payment came from, ignoring (or paying less attention) to past credit history and being more flexible in terms of what was considered income. These were government promoted policies driven largely by the view that low income folks should be able to get loans. Banks had been avoiding this group in the past for a very simple reason. This group (low income borrowers) tend to be bad credit risks. The federal government stepped in and coerced banks to lend to this group, and at the same time expanded the role of Fannie and Freddie to buy and repackage mortgages to sell on to investors.

    There are many other guilty parties: the credit rating agencies were asleep at the wheel. Borrowers who are in default also have bear a lot of the responsibility.

  6. #6 Richard
    September 29, 2008

    @Tony, your opinion is at odds with what most economists think.

  7. #7 Stephanie Z
    September 29, 2008

    Richard, what is deceptive to you, with a financial education, is not the same thing that is deceptive to someone without it. Keep that in mind when trying to assess the scope of deceit.

  8. #8 Richard
    September 29, 2008

    Stephanie. I agree that there are wide ranges of financial understanding out there. But is ignorance of what someone can and cannot afford an excuse for default? Put another way, does the argument of deceit apply also to people who can’t make car payments, who run up credit cards, who can’t afford a rental? Why is a mortgage so different?

    And if there is a sector of the economy that doesn’t understand the issues, then why was the government actively trying to lend to them?

  9. #9 Stephanie Z
    September 29, 2008

    Richard, the best way currently to get a financial education in the U.S. is to grow up with money. In a country that claims that everyone gets a chance to succeed, the fact that church-provided premarital counseling is the best/most financial education most people get is shameful. Yes, ignorance in this case is a perfectly acceptable excuse.

  10. #10 Greg Laden
    September 29, 2008

    Richard, I think you are basically right, but here’s the problem: We can’t throw the crooks in jail because technically they are not crooks. Had proper regulations been in place, then there would be some crooks to throw in jail.

    But we need to fix this no matter what. If a 700 billion dollar buyout of crap assets is the way to fix it, then so be it.

    But then, we’ve got to get appropriate regulations in place so we can throw the crooks in jail. Later.

    I’ve been telling Stephanie off line what I think we should REALLY do, but I’m not going to announce my fiscal fix publicly at this time.

  11. #11 Richard
    September 29, 2008

    Greg, no doubt there are crooks all around. Unfortunately, when all this has played out, it’ll be the ordinary folks who make their mortgages on time, live within their means, and didn’t make a bundle trading some bogus security that are going to have to pay for this whole mess.

    I’m not entirely convinced that the bailout is the right way to go. But hopefully the government can buy some of these assets at a good enough discount that we can actually make some money off of them to ease the burden on the tax payer.

  12. #12 Stephanie Z
    September 29, 2008

    Well, since Greg didn’t think to swear me to secrecy, I will mention that his strategy involves airplanes. Personally, I think helicopters might be better, but there are drawbacks either way.

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