After the Bailout: a $5 Trillion New New Deal?

Obama is a THIRD BUSH TERM

Whoever wins this election is gonna get bushwhacked by all the deficits, total debt, trade deficits, weakening dollar, high energy costs, military commitments, mortgage bailout, etc.

Obama's insticts are to tax/spend and will slow the economy further as he and the Dems in Congress continue the economic slide of the USA further. He is gonna be Bush III or Jimmy Carter, take your pick.

He has done nothing with his life other than campaign, vote present, and dodge EVERY challenge that has faced him in government. He has no balls, is all talk and no leadership.

Watch as foreign investors continue to pull money out of the USA as financial regulation, high corporate taxes, and the weakening dollar dog us for more years.

Tom of AL @ Oct 06, 2008 15:50:27 PM

Enough is Enough!

I didn't sign on to the first one. I'm not signing on to the 2nd.

D. Advocate of IL @ Oct 06, 2008 15:28:35 PM

If I had any money to invest in the markets...I'd be putting it all in companies making or selling things like pitchforks, torches, tar, feathers, rope and firearms.

Those sound like the only truly safe investments to be had for the forseeable future...

Wes S. of MO @ Oct 06, 2008 15:25:20 PM

The Truth

I find it unproductive to blame either party. It's much more productive and truthful to blame them both. Every bill that's passed carries "riders" that spend billions of unnecessary dollars on pet projects for their supporters or home states. In common language, these are called earmarks. One of the worst offenders is John Murtha, a democrat. Even Obama has dipped into this well of public funds for personal gain. There is only one member of Congress that I know of that does not go to this well, John McCain. While I'm no big supporter of John McCain, the truth is the truth. It's simply a matter of public record.

James of SC @ Oct 06, 2008 15:22:46 PM

LOL

Fatesrider of CA...That's one of the most silly things I've heard in a while. I suggest you read up on what exactly got us out of the Deppression (Hint; It wasn't FDR's policies) before that silly retort. Don't mistake W's spending policies with al republican presidents.

Joe of VA @ Oct 06, 2008 15:21:34 PM

the real problem

The Community Reinvestment Ac tis a federal law that requires banks and savings and loan associations to make loans throughout their entire market area and prohibits them from targeting only wealthier neighborhoods with their services. The Act was passed in 1977 under the Carter administration. That would be a democrat administration with democrats controlling both houses.

In early 1993 President Bill Clinton ordered new regulations for the CRA which would increase access to mortgage credit for inner city and distressed rural communities. The new rules went into effect on January 31, 1995 and featured: requiring strictly numerical assessments to get a satisfactory CRA rating; using federal home-loan data broken down by neighborhood, income group, and race; encouraging community groups to complain when banks were not loaning enough to specified neighborhood, income group, and race; allowing community groups that marketed loans to targeted groups to collect a fee from the banks. Prior to the CRA expansion authorization under President Clinton and the Democrats, home prices increased with inflation, but after the CRA expansion authorization, home prices became unhinged from inflation. The CRA caused home prices to rise too fast as economicfundamentals did not support the “wedge” or spread between the Consumer Price Index (CPI) and the price of homes. What supported the high home prices was regulation motivated credit.

Banks were forced to loan to consumers who were not credit worthy with "no verification of income or assets; little consideration of the applicant's ability to make payments. The people losing their homes are victims not of 'predatory lenders,' but of government-sponsored -- in fact government-mandated -- political correctness. The Senate Banking Committee has estimated that, as a result of CRA, $9.5 billion so far has gone to pay for services and salaries of the nonprofit groups involved." Activist organizations such as ACORN get shakedown payments, community influence and stature from being a reliable source for loan money and get what amount to "broker's commissions" for doing so. Lending decisions were removed from bankers and handed over to activists as the activists were given a powerful seat at the table. ACORN in part, not banks alone, now controlled who got CRA mandated loans.

As the amount of subprime loans went up, and home prices increased, the country’s overall mortgage portfolio began to deteriorate and become inherently more risky. Bankers began making loans that were 90 percent, or even 100 percent of the value of the property. Appraisal firms were pressured to over-value properties, justifying a loan amount that would give the borrower the money he or she needed. Whether the borrower could afford the payments, or whether the real underlying value of the property justified the loan, were completely different matters. “Stated income” loans were made that merely required the borrower to tell the bank how much he or she made—no supporting documentation needed. Adjustable Rate Mortgages (ARMs) that initially required interest only payments enabled borrowers to qualify for bigger mortgages. Of course, when payments were adjusted upwards at a later date to provide for principal repayments or higher interest rates, they often became too high for the borrower, leading to payment defaults. And finally, so-called “Ninja” loans were made to borrowers with “no income, no jobs, and no assets.”

Because bankers could sell off loans to Fannie Mae, Freddie Mac or Wall Street underwriters anxious to underwrite MBS and CDOs, the bankers no longer had to live with the loans they had made. They could simply make the loans, collect the associated origination fees (the higher-risk loans typically carried the highest fees), and then pass on the responsibility for the future performance of the loans to others. By bundling a group of mortgages together, the risk of any one loan going bad was reduced, or so the theory went.

With so many risky new loans being made, though, it was only a matter of time before delinquency rates began to increase and real estate values to crack.

In 2003, the Bush Administration proposed a new agency to oversee and regulate Freddie Mac and Fanie Mae, (the government sponsored companies that are the two largest players in the mortgage lending industry) This would have been the most significant regulatory overhaul in the housing finance industry since the S and L crisis a decade ago.

The Democrats stopped it…supporters of Freddie Mac and Fannie Mae said efforts to regulate the lenders tightly under the proposed agency might diminish their ability to finance loans for lower-income families.

Barney Frank (D-MA)

“The more people exaggerate these problems, the more pressure there is on these companies (Freddie and Fannie), the less we will see in terms of “affordable housing.”

Melvin Watt (D-NC)

“…and in the process weakening the bargaining power of poorer families and their ability to get “affordable housing.”

In 2005, John McCain warned of the pending mortgage collapse. He co-sponsored a bill…The Housing Enterprise Regulatory Act of 2005.

(Google it at www.govtrack.usBillS-190)

The bill would have regulated Fannie May and Freddie Mac, but again the Democrats blocked it and it never became law.

This is a democrat party problem pure and simple.

bestweather of FL @ Oct 06, 2008 15:11:40 PM

It'll never be enough

It'll never be enough taxes. But always too much for the taxpayer. Businesses will just pass along the costs, and hunker down for the long term. Go overseas. And as things slow down, the government will need more. Eventually all of it. Socialized bureaucracy. Not so much an ideaology, just a way to guarantee your job for life while putting on the appearance of being a public servant.

Yeah, the spending has been out of hand for a while. I for one would love to give up the earmarks and pork my congressmen have been bringing home for years. But...thats how they buy their votes so far, and it seems to always get swept under the rug...besides, all the other congressmen and states are doing it too!

Pardon my sarcasm, but, that's just one of the things that have to change, besides the incremental annual growth in federal budgets.

frankg of @ Oct 06, 2008 15:09:12 PM

and there's the rub...

"Frankly, I don't mind paying more in taxes if I know the money is going to be spent wisely."

and what could possibly make you think that the federal government has any capability to spend money wisely? nothing in their past indicates that they do.

b of IL @ Oct 06, 2008 15:07:34 PM