Barack Obama and the Ex-Presidents

B Gail of Il is clearly uninformed as to the underlying cause of the economic situation we're in. Either that or she's just ignorant and has failed do anything except spout off with the old (and getting older) refrain "It's Bush's fault".

This situation has nothing to do with Bush economic policy but has to do with a failure of the financial system to run normal checks and analysis on the loans that they gave out over the last 15 years because of implicit and explicit guarantees mandated by the federal government.

Beginning with Bill Clinton in 1996 and ending with Barney Frank and Chris Dodd last year, Freddie Mac and Fannie Mae were obligated (to an ever increasing number), by the federal government to make more "affordable housing loans" . Now, neither institution actually wrote individual residential mortgages, but they did purchase the loans that had already been made and that had been packaged by other lenders, some of them unscrupulous, because both Freddie and Fannie HAD TO BUY THEM.

Knowing that Fannie and Freddie were obligated to buy so large a number of "affordable housing loans" (i.e. -loans made to non credit-worthy borrowers with no real ability to repay them), emboldened many lenders and allowed them the freedom of approving loans that they would never had made under normal circumstances, because the loans were implicitly guaranteed by the federal government through Fannie and Freddie.

With implicit government backing and so many unqualified borrowers buying houses the competition to write loans became greater and the standards for approving loans diminshed even farther. Money became cheaper and more available which lead to the real estate boon that drove housing prices up throughout the country from 1999-2006.

As housing values appreciated, people assumed that the equity that magically had appeared in their houses was never going to go away and so they borrowed money against their homes in the form of home equity loans and second mortgages. They went out, spent that money carelessly, assuming that their home values would only continue to rise. Unfortunately the bubble began to deflate as actual income failed to rise with increasing household debt and as people began to default on their payments -- credit cards, then home equity loans and then mortgages, the bubble finally burst; housing values began to decrease and suddenly the party was over.

Fannie and Freddie were at the core of the meltdown and led us into even deeper problems when the non-consumer credit markets froze (out of fear and a sudden interest in caution), after the bankruptcy of Lehman Brothers, which the Fed should not have allowed to fail.

So B Gail of Illinois, ths was not Bush's fault as you have naively been led to believe. It is the fault of the government backers/protectors of Fannie and Freddie (Barney Frank, Chris Dodd and Barack Obama), and the basic greed of the general population. Obama cannot spend our way out of this.

chris cole of CA 4:32PM January 09, 2009

I never cease to be amazed at how changing the status quo brings out the worse in those who have enjoyed the status quo. We are in the mess we're in because of the the dynasty of the Bushes, the reign of rich CEOs with their powerful lobbyists, and the complete and total apathy of the American people. Now we are something fresh and new: a "real" American in the most powerful position in this country, not some rich spoiled brat who even today, continues to do things his own way, a people energized by his leadership who are tuned in and ready to participate again (have any of us living seen it like this before?), a new leader who has the respect of the majority of this nation (huge change), and a world that is as excited about this change as many of us are.

I just look forward to those disappointed by the complete and utter failure of their champions to lead this country understanding that their new leader's success is their success as well. See, the rest of us understand that when our leader succeeds at making life better for the majority of the people, it's good for everyone. Your leaders only thought about their few, and if you'd admit it, you'd realize that most of your "group" lost as much as the rest of us during that past 8 years.

I hope that our adult population begins to act like grownups, stops spouting the propaganda of those who have used them to the detriment of our nation, and begins to contribute to the political process. When we turn from this dark time, not only will we be better off, but so will our children's children.

B Gail of IL 1:41PM January 09, 2009

Yes, "God help us through this darkness." George Bush has left the country in total turmoil, so I pray that PE Obama has the wisdom and confidence to find ways for him and his team to lead us to the light.

If he is successful, so will all the American people.

Candy of FL 8:30PM January 08, 2009

Best to disregard the last two posts. Slaps from the disgruntled are wastes of your time.

of 3:25PM January 08, 2009