Bush's ownership society scam exposed by the NY Times
By John Amato Monday Dec 22, 2008 3:45pmThe Bush economy was based mostly in part on the housing and mortgage markets. With no regulations in place, a wild west type monetary explosion hit and fueled Bush's "ownership society." While the scam worked, it infused tremendous amounts of cash into the economy which consumers spent very aggressively while also racking up their credit card debt. This also made the rich, much richer. 1920's rich. When that unraveled we had a complete economic meltdown. The NY Times hits it up with a piece called: White House Philosophy Stoked Mortgage Bonfire
The New York Times published a great article this week-end about Bush's contribution to the economic meltdown.
{snip}
More senior aides, like Karl Rove, Mr. Bush’s chief political strategist, were wary of overly regulating an industry that, Mr. Rove said in an interview, provided “a valuable service to people who could not otherwise get credit.” While he had some concerns about the industry’s practices, he said, “it did provide an opportunity for people, a lot of whom are still in their houses today.”
This is what comes of having the president's political hit man intimately involved in policy. None of this is to suggest that this wasn't based on the noxious free market fundamentalism of the conservative movement. It certainly was. They would have tried to deregulate and remove all oversight of the industry no matter what. But Bush-Rove-Cheney were a unique trio who were able to use the federal government to not only advance their self-serving economic and foreign policy ideology for the benefit of their rich contributors, they were also obsessed with using every lever of government as political tools to advance their electoral prospects and destroy the political opposition.
The problem is that they thought they could control forces that no government can control through marketing, lies and propaganda. And they got schooled. Unfortunately, everyone else is going to have to pay the price.
Read the whole article if you get the chance. It's yet another illustration of the stupidity, myopia, greed, arrogance and incompetence of the Bush administration --- and the total bankruptcy of conservative ideology when put into practice.
Login or Register to post comments.
Is the toxic mortgage situation more costly than the Iraq war?
no amount of money can replace a life.
Yep, no money can replace a life, even for millions or billions in a lawsuit by the victim's family...I'm so disturbed at how badly W has digged down into such a record deficit, and if he really is history's worst POTUS, it's a real insult to Nixon.
For more on this, go over to rawstory.com and read about a new book that details some of the connections between Nixon and (of all people!) Poppy Bush and the CIA. Just amazing, especially if true, how Nixon was supported by Prescott Bush. But once he attempted some independent action, the CIA brought Nixon down with Watergate.
That aside, thanks for the link to the article. I plan to show it to a certain right-winger who thinks the problem can be blamed on all those poor people. I don't think credit default swaps are even on his radar.
..but, I'm fairly certain that by the time this whole financial fiasco plays itself out - and that will take years - many, many innocent people in America and across the globe will be losing their lives due to the thievery of the neo-cons and their cohorts in the international banking cabal.
These are the same people who like to start wars to "stimulate the economy" an put more money in their pockets.
So true Jo. These people can't run/hide from their own head voices. EVER.
That's only because I've always had a bad set of lungs.
Damn Gauloises Brunes!!!
American Heritage Foundation (Dec 5, 2003):
American Dream Downpayment Act: Fiscally Irresponsible and Redundant to Existing Homeownership Programs
[Remarkably prescient article warning of disaster]
The White House (Dec 16 2003):
President Bush Signs American Dream Downpayment Act of 2003
HUD News Release (Dec 16 2003):
BUSH SIGNS AMERICAN DREAM DOWNPAYMENT ACT
HUD Office of Community and Planning Development:
American Dream Downpayment Initiative
[Specifially targeting low income minorities with bad credit ratings, with two directors, one Afro-American, one Hispanic]
USA Today (Jan 20, 2004):
Bush seeks to increase minority homeownership
MSNBC (AP) (Mar 27, 2004):
Bush ties tax relief, home ownership
[On the campaign trail, trolling for minority electoral support]
rove lives in florida, right?
do they sell glaser safety slugs in florida? the warm weather and my own sense of justice beckon me.
I know Rove is from Texas, and theoretically, nothing good has came out of the state of Texas.
Please don't paint with so broad a brush. It's very ignorant. Thank you.
I'm from Texas, in fact I'm still there.
Perhaps it was easy to quickly judge that nothing good has came out of Texas more primarily because of George W. Bush, Karl Rove, Phil Gramm, et al. I stand corrected!
Ahhh, The Dixie Chicks... Duh!
[Deleted. I'm not sure why you feel the need to post off topic religious opining, but I don't care. Knock it off. Thanks-Sitemonitor]
I apologize if it offended anyone. My intent was to correlate Bush's remarks in an attempt to understand his actions. I disagree it was off topic, "Bush" was the topic no? What causes people to do what they do? Bushes "quote" when referred to same, were not my words but fact related to Bush's words.
Thank you for your opinion and action though.
[So any time Bush is mentioned in any context, you feel the extra long bible quote posts are ok? It's not the first time. We look at these posts and go "Huh?" There is not a clear correlation as to what you are referring. If you can show direct correlation, fine. Cut down the length, too, if you can meet the topic qualification. Self edit and link-Sitemonitor]
Would belief, heart and mind, explained much, without detail? I want you to say "Huh", I'm not gonna tell ya what to think, with all due respect you decide. Thank you once again for your understanding and advice as you've stated, I shall heed same.
When I continually see cell phone adverts from different carriers that have the same small print, same penalty gouge policies and nearly the same prices and contract terms, I get the impression that the Telecom Ownership Society has dodged a bullet.
They had all of the pay phones taken out, out-bidded the little guy for marketable spectrum and now it's the big 3 all over again but with India call centers.
The article says Lehmann went down because it was 'overwhelmed by toxic mortgages'.
The leaves a mistaken impression.
They went down because of Credit Default Swaps which are pseudo insurance contracts, more like side bets, on most anything but often on other derivatives such Collateralized Debt Obligations which as their basis have securitized mortgages divided into what are known as tranches.
The entire US Mortgage Market is 7.1 Trillion, it has lost 2 Trillion in value.
The credit default swap market is said to be $55 Trillion equal the GDP of the entire world.
The top 25 banks are said to hold $13 Trillion in Swaps.
The entire derivative market is said to be at the minimum $531 Trillion, TEN TIMES the GDP of the entire world. I doubt the number is known for certain, I have seen as high ONE QUADRILLION.
This is gambling, it is the Casino Capitalism the US has foisted on the world. Much of this was illegal until the Commodities Futures and Modernization Act of 2000, championed by Phil Gramm and signed by Bill Clinton.
These vast amounts of money do not exist, in actuality, but when the Swaps are triggered by events, such as the default of a given security, a corporate bond, a mortgage, whatever they cover, then they blow up. They are legal contracts, enforceable in a court. Go bankrupt and a bankruptcy Judge will tear them up or order them paid at pennies on the dollar. Or get the government to write checks for vast amounts of money.
The latter is what happened for everyone except Lehmann.
Who is the sucker here. The taxpayer, who is paying off the Fat Cats gambling debts.
The banks mortgage losses are multiplied by a factor ten to 50, maybe even one hundred to one on credit swaps versus mortgage default loss.
The article also fails to mention in April 2004 the SEC changed the debt to capital ratio for the investment banks from 12:1 to 30:1, or even higher. So they could buy more Mortgage Backed Securities.
This combined with the Swap loss ration of up to 100:1 is why the Investment banks were incinerated. It wasn't the mortgages, they would have survived that.
We sold this crap to the entire world, except for China which didn't fall for the scam.
The entire developed world is printing money frantically to fill the voids created by these derivatives and swap losses, they are vast.
Iceland went completely bankrupt. The UK is not far behind. The US could go bankrupt.
Some people, somewhere are getting fantastically rich off of all this.
It is was the side bets.
The side bets incinerated the Banks, Fannie and Freddie and AIG which is still suffering losses from Swaps.
Here is Joseph Stiglitz.
The question is not why did Lehmann go bankrupt, the question is why did they let it go bankrupt.
My answer is the 'Shock Doctrine'. Allow a catastrophe and then take advantage of it. Ergo the $700 BIllion Heist by Paulson the Plunderer.
The other reason they let Lehmann go down is Hugo Chavez had a bundle stored with them. That I have yet to prove.
Incidentally, the Credit Default Swap Market is still in full bloom, although they don't for the ridiculously low amounts of pennies on the dollar. The prices are way up.
I would welcome any correction to any of my numbers.
It's awfully quaint how simple facts keep getting lost in the narrative isn't it? It's so much easier to blame homeownership on the problem and not Wall Street gamblers.
It's all about the math. Did any of today's GOP learn about basic adding and subtracting before they took political offices? It's certainly what you learn before accounting and economics. The question is now, how will Obama make better allocations of government spending to stimulte the economy for everyone, especially the working/middle class?
The GOP with the Saudis set up the plan after Daddy Bush lost the White House. Nothing worked so they went to plan B. Get Clinton out and use God's name to do it. Americans are religios and beleave if God says it then it's ok. The plan worked so well many more join in. As Americans watched the GOP try to impeach Clinton for a personal affair the GOP started bringing up with God wanted. Then they put the idiot in the campaign saying God wanted Americans to vote for George W. Bush. It worked. Cheney came along for the ride as CEO of Halliburton and other US businesses join him in the secret meetings. It's so easy to trick uneducated people. The Bush Administration appointed those who knew nothing but were loyal. The Republican controlled Congress gave the famous blank check. The scam was now on as Iraq was the next target. Why? Cheney wanted oil and Israel wanted land to be in the position to bomb Iran. Yes it was a very successful 8 years as now Americans see the results. Even today the paid Media/White House blame Bill Clinton and Obama for the current recession. It was Bill Clinton who invaded Iraq and got 4000 soldiers killed. Yes Americans are rated very low in educatiion compaired to other Countries. After seeing how well the Bush Mafia did for 8 years it makes sense. Thank God we woke up and voted an honest educated President/Vice President in office who will working for the American people. Maybe bring back reading American History or even a book.
But, I heard on Fox News that it was the Democrats in Congress who caused this mess! Specifically, the queer guy and the dude from CT. If they hadn't ordered Fanny and Freddy to give loans to all those poor people, we wouldn't have a problem, right?
Fox News wouldn't lie to me, would they?
I'm the last to stick up for the Bush Administration or Fox News but the idea that our Democratic leadership would have done a damn thing about regulating the housing market is laughable.
I totally agree that Bush's policies are a big part of the mess, but we can't pretend the "queer guy and dude from CT" even batted an eyelash the past eight years of watching this fiasco grow out of control. Dodd was great during the Telecom showdown and Frank is one of my favorites on most issues. But on this credit crisis they've been either blind or corrupt.
Fox News on the other hand, they know nothing but how to lie. Anything else manifests convulsions and spontaneous bowel movements delivered upon them by a vengeful god. Thus O'Reilly and Hannity's hostile opposition to any such truth-telling.
OK, we'll accept the notion that mortgages were foisted onto the banks, that they were forced to give mortgages that no one in their right mind would give, except for the mandate by Congress ...
Then, why, when these mortgages were bundled into securities, were they given the highest investment grade of "AAA", especially since, absent the congressional mandate, no one in their right mind would grant these mortgages? Fox doesn't want to explain that to me.
I was watching something, and it ended and the Maury Povich show started, and there is some woman who had 5 sires already tested to see if they were the father, and was about to test the 6th, and I said to myself, these are the Republicans that Fox is credible with. These is a lot of fairytales being spun out there, but Fox in in their own league.
So we can't afford to help people losing their homes, but we can send Mexico $400m for the bullshit known as the 'War on Drugs?'
Shit. we're closing schools in our state, rationing health care, not enough food in the food banks, and these assholes, these stone cold motherfuckers, are fighting an imaginary enemy with real money?
Fabulous priorities.
Don't forget to include the $7 blllion we give Pakistan's military so it can train and arm al-Qaeda.
http://www.truthout.org/article/us-military-a...
For America.
Seems like it only took a couple of months for folks to remember this story. I have been waiting to see how long it would take.
Seems like Dems and some Independents may be in the WH, Congress, and Senate for a really LONG time to come, but for how long?
don't forget the Bush Zero Down Payment Intiative
http://www.hud.gov/news/release.cfm?content=p...
karl rove is on o'reilly blaming fannie and freddie and that the 40 trillion derviatives market was a good thing.
Bush and company fed Congress the same twisted Intel on their banking bungles just like they did reasons to invade Iraq.
Congressional Banking oversight is not actually controlling what Presidential cabinet does or says.
Don't worry Bush and Cheney have already picked another Clinton Holdover to take the rap. We all Know Clinton Did It??
Ya gotta give Clinton his dues. He did nothing to reverse any Republican policies. He actually added to them. Welfare reform. Corporate deregulation. Free trade. All flourished under Clinton. If it was Republican Congress responsible, then the current mess must be Democratic Congress responsibilities.
I call bullshit.
1st, The GOP had all branches of gov't until 06.
2nd, In 06, the GOP maintained a strong enough presence in the Senate to go ahead with the record amount of filibusters.
They stonewalled the new Congress. You know that.
Although, I do have to agree with you in one part.
The Dems should have been more aggressive. At least in making the public more aware of the resistance coming from the GOP.
Everything I stated was true, so if the buck stops with Bush on the last 2 terms, the buck has to stop with Clinton, not? AND, the last 8 years, the Dems in Congress have not only rolled over, but openly supported almost everything Bush has done. Does that not make them just as responsible? As you know, I'm not partisan, and never have been. It tends to cloud things up and make whatever party a person supports, almost always innocent, when nothing could be further from the truth. Doesn't matter where you live, these people are all in an exclusive "club" mentality, and the normal everyday taxpayer isn't in it.
The GOP had both houses until 06. They lied to both the politicians and the public. Remember the intel?
They lied. If anything the Dems weren't smart enough to do their own research on a number of matters. Yes they are culpable. Most of them anyway.
Clinton. He left office with a budget surplus. That's a fact.
He also left a very low unemployment rate.
He's no saint, that's for damn sure.
But this current situation falls at the feet of the GOP.
Don't forget, the GOP took both houses in 94.
Credit where credit is due.
Did Clinton not change the methods for reporting Unemployed to the point of it being totally innacurate? That was my understanding. I remember well how the GOP carried on, but I also know that Clinton really didn't put up much of a fight. Not a Clinton fan, regardless of his party. He always seemed really sleazy politically, his entire career. But you are right. GOP ruled bad, and with majorities.
That's a new one too me.
I've never heard that one before. Where did you hear that one?
Not bad for a sleazy politician.
During the administration of William Jefferson Clinton, the U.S. enjoyed more peace and economic well being than at any time in its history. He was the first Democratic president since Franklin D. Roosevelt to win a second term. He could point to the lowest unemployment rate in modern times, the lowest inflation in 30 years, the highest home ownership in the country's history, dropping crime rates in many places, and reduced welfare rolls. He proposed the first balanced budget in decades and achieved a budget surplus. As part of a plan to celebrate the millennium in 2000, Clinton called for a great national initiative to end racial discrimination.
After the failure in his second year of a huge program of health care reform, Clinton shifted emphasis, declaring "the era of big government is over." He sought legislation to upgrade education, to protect jobs of parents who must care for sick children, to restrict handgun sales, and to strengthen environmental rules.
I thought you would like to read this.
OK, off to work. Have a great day folks.
Yeah, it sure is sad that loyalty is like the new competence at the expense of the taxpayers.
Sounds like boosh has been owned by the NYT.
Has been a scam. You start with an incompetent president, vice president, and everyone they appointed was appointed for loyalty. None could even come close to being considered competent.
Top that off with the willingness to be led by the PNAC and various and sundry think tanks, that's an oxymoron if there ever was one.
You get mistakes compounded by ego and never having ever been responsible for anything in their lifetimes and you get the perfect storm of Idiocy and lunacy that has been the bush years. God how could anyone have ever been so stupid or so hate filled to have voted for this incompetent fool!
Although, Scott McLellen seemed to have came out of the closet to explain as a Bush-insider the hubris going on in the run-up to war after 9/11. There's probably many revelations of how loyalty replaced competence in his book, "What Happened".
for ordinary citizens on how we could help in his war on terror... he said: "GO SHOPPING."
Compute the Relative Value of a U.S. Dollar
Look at some reported facts.
US Dollar value > http://www.measuringworth.com/uscompare/
VS
GOLD MARKET AND PRICE 1800-2008 > http://www.finfacts.ie/Private/curency/goldma...
Pay particular attention too dates.
I couldn't read the main NYT story, but I could read the article in the Digby response.
"Digby: responds
The New York Times published a great article this week-end about Bush's contribution to the economic meltdown... which says among other things... "Wall Street chieftains who loaded up on mortgage-backed securities without regard to the risk."
We're getting a lot of yarns lately spewed by the mainstream media to get our focus off the primary cause of the mortgage meltdown. To summarize:
1.) Mortgage originators create no money down, no income verification required, interest only, no recourse, etc mortgages.
2.) Investment bankers bundle these mortgages into mortgage backed securities
3.) The rating agencies graded these securities as "AAA", the highest investment grade.
4.) The securities are sold to investors at a premium due to the "AAA" rating. Had the securities been correctly graded as junk bond, there would have been no profit in the scheme, and hence, no incentive to generate new no money down, no income verification required, interest only, no recourse, etc mortgages.
I'm seeing the mainstream media deflecting attention from the root cause of this fiasco, the rating of "AAA" that created the profitability in this scheme. Had these securities been graded as junk bond, there would have been no profitability, and hence, mortgage originators wouldn't have been scrambling to get more borrowers. Had the securities been graded as junk bond, the matter never would have reached the scale that it did.
Accordingly, I think that it needs to be determine whether the investment banks and the rating agencies combined to defraud investors by assigning an "AAA" rating, with knowledge that these mortgage backed securities weren't entitled to such a rating.
I think that ideologies have a part in the economic meltdown. In particular, I think the running up of the deficits would have caused problems eventually. But the present situation was currently and directly the result of the "AAA" rating to the mortgage backed securities that created the profitability in the scheme. Now, certainly, there does seem to be a prevailing ideology among Republicans that white collar crime was blessed by Jesus, and the the Justice Dept should be entirely focused on denying minority voters the right to vote. But, I'm hoping that the Obama administration convenes a grand jury to investigate whether investor fraud occurred as a result of this "AAA" rating assigned to these mortgage backed securities.
When I said "The New York Times published a great article this week-end about Bush's contribution to the economic meltdown... which says among other things... "Wall Street chieftains who loaded up on mortgage-backed securities without regard to the risk." "
...one point I left out was that the risk HAD been assessed, by the rating agencies, and the risk was deemed "AAA", the lowest risk.
Well, I think that the C&L posters have moved on but I should say that I enjoyed your comments. Also, I take issue with Amato's preamble -- specifically,
'While the scam worked, it infused tremendous amounts of cash into the economy . . "
Actually, the mortgage-backed securities as you describe them, were indeed sold and there was "cash" exchanged but the basic problem is that little if any of this "cash" wsas backed up by a good (product, commodity, asset, etc.). The entire shambles was a classic pyramid scheme fueled by speculators and condoned by the failed elites, some of whom did study the history of unfettered markets and its devastating effects. The whole lot of them are fraud artists and many of them are criminals.
I don't know about that. I think the derivatives may have been a pyramid scheme. However, the mortgages and resulting inflated real estate prices seems to me better classified as a "bubble" much as was the Nasdaq in 2000, when we were being told that it was a "new economy" and that "earnings don't matter".
I didn't see any criminality in the Nasdaq bubble, but I suspect criminality in the current bubble, because the rating of the mortgage backed securities of "AAA" created the profitability, and hence the bubble. www.pbs.org/now - Credit and Credibility
In the PBS show, it covered the rating agencies role in the subprime mortgage meltdown. Apparantly, the same criteria that was applied to other securities graded "AAA" wasn't applied to these mortgage backed securities. Consequently, these securities didn't perform the same as other "AAA" securities. So, the justice department needs to decide that when these rating agencies graded these no recourse, interest only, no down payment, no income verification needed securities with the highest investment grade of "AAA", whether they did so with knowledge that they weren't entitled to such a rating, in order to defraud investors.
I finally got into the article and it's the same one posted over the weekend. It's hogwash. It does point to the ideologies that contributed to the secondary causes, but the primary cause is as old as mankind - namely, an item of value was misrepresented in order to sell it for more than it was worth.
In the particular matter, these subprime mortgages were bundled into securities and graded "AAA", even though they weren't entitled to that rating so that they could be sold at a profit. If that "AAA" rating hadn't been applied, mortgage originators wouldn't have been scrambling to originate new loans. This scheme is not that complicated.
Oh sorry, this isn't DailyKos. Never mind.
CSPAN Junkie. has coverage of the rating agencies at their site here. > http://cspanjunkie.org/?p=884
Everyone wanted a piece of the pie and they'll just blame it on human error.
"This is what comes of having the president's political hit man intimately involved in policy."
Considering the far too convenient death of Mike Connell, Rove may be more than just a "political" hit man.
Login or Register to post comments.