Wednesday, October 1, 2008

The Audacity of Hope-o-crisy...An Explanation of Our Economic Crisis

This video explains in detail our current economic crisis. However, for those of you who do not have 10 mins. and 51 seconds, suffer from ADD or just can't endure the accompanying music, I have summarized for you at the bottom of this post:

Here is the breakdown for you like a fraction:

1. The current economic crisis was caused by the housing bubble.
2. The housing bubble was caused by subprime mortgages to low income and bad credit borrowers.
3. Jimmy Carter and the democrats passed the Community Reinvestment Act (CRA) which gave incentives to banks to help low income borrowers get a home. (That was a good thing)
4. In 1995 the Clinton Administration added new provisions to the CRA which forced banks to offer $1 trillion (I don't even know how many zeros that is!!!) in new subprime loans and created subprime mortgage backed securities or face severe penalties thus forcing neighborhood banks into predatory lending (Why? Because they focused on low income bad credit types)
5. Fannie Mae & Freddie Mac (Government Sponsored Enterprise - GSE) added fuel to the fire by guaranteeing these loans (oh, boy!) bundling and selling on Wall St. (pretty darn profitable).
6. More mortgages meant more money for Fannie & Freddie so they wanted to increase the number of mortgages (greed) but how? They lowered the bar... moved down the income scale with "affordable mortgages" in the form of Variable rate, interest only, option arm, stated income, no money down loans.
7. Bustling activity in the housing market with the influx of new buyers (who would not have normally qualified) more demand than availability forcing prices to skyrocket (remember, Econ 101 law of supply & demand)

8. Then the variable rate loans reset and interest rate increased, gas prices shot up (because America is addicted to foreign oil), paychecks are squeezed and people stop paying, banks stop lending, subprime market collapses, foreclosures pile up, no buyers (remember subprime is dead) only seller, housing prices fall, more buyers stop paying (because they realize that their loan is upside down and it's cheaper to rent).
9. Fannie's guarantee is worthless, why -- because they overstated their assets!!! (These criminals to be discussed later)
10. Banks closed due to worthless gov't backed securities, jobs are lost and here we are.
11. Why is the expansion of the CRA to blame? Because prior to CRA expansion (Clinton Admin) home prices increased with inflation afterwards home prices became unhinged from inflation (see #7) causing housing prices to rise too fast and reckless speculation. A bubble waiting to burst.....
12. This could have been avoided in fact in 2003 Pres. Bush tried to stop it and the dems blocked him and in 2005 Sen. McCain co-sponsored a bill (The Housing Enterprise Regulatory Act of 2005) which would have stopped it but the dems blocked that too. Who? Barney Frank (D-MA) and Melvin Watt (D-NC) to name a few.

But I know the naysayers don't believe me so I can't resist showing you the proof:

13. See, Fannie had friends in the Senate -- Chris Dodd (received sweet heart loan from Countrywide), and Barack Obama.

14. Jim Johnson who just happened to be the CEO of Fannie when CRA was expanded, improperly deferred $200 million in expenses and Fannie Mae under-reported his compensation originally reported at $6-7 million but was actually $21 million (avarice and corruption at it's best) oh, this is the guy that Barack Obama chose to pick his VP and he gave Obama the maximum donation of $4600. He now works for Goldman Sachs which gave Barack Obama $700,000 and raised another $500,000 through bundling (It pays to have corrupt friends doesn't it?)
15. Barack Obama has another friend Franklin Reines who he receives housing advise from who also happened to be the Vice Chairman of Fannie when CRA was expanded (Do you smell something rancid here?) Reines also received a sweet heart loan and resigned from Fannie due to accounting irregularities with a $25 million dollar golden parachute.
16. Barack Obama received more campaign money in just 3 years than John Kerry did in 20 years from Fannie & Freddie. He received 49 times more than John McCain. (Would you like to take a guess why? I guess calling for more regulation doesn't pay, huh)
17. Barack Obama also worked for Miner, Barnhill & Galland which sued banks (CitiBank being one of them) for not issuing enough subprime loans.
18.Neither poor people, the free-market, or deregulation caused this. A bad government regulation caused this, self-interested lawyers caused this, greed and stupidity on wall street caused this, and bad social engineering caused this creating an environment and the wrong incentive (CRA) which forced banks into predatory lending and set low income families up for failure. That's not hope and that's not change that's cruelty.

Barack Obama's friends caused this; the political philosophy to which he ascribes caused this. He has the audacity to lecture the country on failed economic policies! This is not change it is more of the same. It is hypocrisy -- It is hope-o-crisy!


Bookworm Girl said...

what i find amazing is the media and their unbalanced coverage of the candidates. this is not the journalism i learned in school. not even close. seems like what i learned is a fairy tale.

great post here, cbw!

Zabeth said...

I've forwarded this to video to a few of my more liberal friends. What I find shocking (and amusing) is their outright anger! I'm just spreading information. I tell them-I'm not the one you should be mad at.

I find the closedmindedness of those who pride themselves in being openminded amazing. I don't fire back angry retorts when they forward me anti-McCain articles.

Conservative Black Woman said...

It completely boggles my mind that our people are so resistant to hearing another side. It's so amazing that if information doesn't come in the form of a soundbyte or dumb-azz powerpoint presentation w/o text that we refuse to take it in. What can you do?

Pamela said...

I'm not surprised at all about the anger. I remember in 2001 not long after Pres. Bush was elected when I sent an email to many of my Christian friends asking them to pray for the president. This gal I will refer to is one of them that received my email. During two different times in our lives we attended the same church. Sad to say I found out that she was a rabid liberal because of this harmless email asking for prayer. For the record I do not consider liberals in general as rabid. I refer to her as one because she replied all to my email with such vitriol because she said she never saw forwarded emails from people to pray for Pres. Clinton. It was an amazing rant. Her comments were so hurtful that I actually bursted into tears crying at my desk at work. I just could not believe that someone would get mad because someone asked her to pray for the president. That is in the Bible. It was not a personal issue with me. I was absolutely amazed that a Christian would get that upset about someone asking for prayer. I take prayer very seriously. I do not remember if at the time I wondered if she wished Pres. Bush dead. Mind you he had not been elected long enough to really do anything much. In fact he has not been in office two months at the time. The reason I remember this was because both of us were working at a company that would have layoffs the end of February. This was during the time before she lost her job. Pres. Bush's first day in office would have been in January 2001 on inauguration day. To this day I don't send emails to her about anything that mentions the name of Republican politicians. I get them from her almost daily slamming Palin and McCain. I quietly delete them without responding. I gave general responses about the bailout nonsense since both sides at first were against it (however for different reasons as you know). Other than that I have kept quiet. She would be upset if I sent her the link to the Freedom Journal Magazine. She suffers from high blood pressure. I think you can see why. Anger and bitterness is not good for your health. We have had this discussion about anger in another context of course. Pretty much everything bad that happens to her she first believes is because of racism. I have no words to describes how sad I feel for her. She is stuck in her own little perverted little world. I feel really bad for her but who wants to bring this up? I'm not a glutton for punishment. The Lord will have to deal with her. Unless He says I should I will keep quiet. He has ways of making His plan clear. I'm sure He has tried more than once but at this point she has refused to change.

There is a lot of anger and bitterness in some blacks, especially with some that are old enough to remember the separate fountains, watching the KKK marching down streets, seeing lynchings, homes burned down or bombed, etc. My friend would have been teeny-bob age when all of that was going on. I was eight years old when Martin Luther King was assassinated. When you are that angry and bitter the truth does not matter. If you think your party is perfect and will take care of your trouble any truth about that perfect party will be dismissed and you will become the enemy.

The hurtful thing for me as a Christian is to see blacks still holding on to that bitterness and anger when the Bible plainly says that Christ views them as murderers in their hearts. The Bible also says that they will not be forgiven if they do not forgive their brothers. Too many blame all whites for what some did because they have had their opportunities longer because of racism aka white privilege. Again unforgiveness and bitterness at work. These same angry bitter people vote, campaign and sad to say minister out of that bitter place.

Anonymous said...

This is an asesome blog. I have been looking for something like this for a long time. As a conservative black woman myself it can get pretty lonely and depressing sometimes. The BC seems to just follow like lemmings and I can't get people to think things through. I loved your explanation of the current economic crisis. I understand things the way you do as I worked in banking for 10 years prior to having my kids and becoming a stay at home mom. As bankers you are accused of everything evil. We are prejudiced just becasue we don't have as many loans on the books for minorities. The facts dont matter. The ONLY reason for the disparity HAS to be discrimination in some people's minds. Well as a former banker I know that I didn't get paid unless I was able to put loans on the books so why do I care what color someone is? If they qualify I will fight tooth and nail to get that loan approved and on the books. But if the government threatens you with preventing growth of the bank or fines you will do as you are told as a banking institution. So you come up with creative ways to lend. These people are not going to get the same type of loans that quality borrowers are going to get. The government can't make a bank do that so you have to mitigate your risk with higher rates and other 'creative' lending practices. You are damned if you do and damned if you don't. I loved banking but hated all the PC crap we had to do to continue in business when you knew there was no money to be made. We weren't a charity. Anyway thanks for the breath of fresh air. Loved it

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