I spent the better part of the evening reading analyzes from a number of different economists…they all had good points. WSJ noted the rules of accounting had changed, and the computer model didn’t always reflect “real” data. IBD noted that Bill Clinton and the Democrats wanted to implement their social programs with low income lending so that people would be able to afford housing and live the American Dream.
MoneyMorning gave a good overview of the three major influences on lending.
The 3 headed monster: Congress, US Treasury, and the Federal Housing Authority.
http://www.moneymorning.com/2008/09/13/u.s.-economy-are-we-nearing-the-end-of-the-american-dream/——————————-
Congress:
Feb. 11, 1998: To simplify the process and make mortgages available to more people in high-priced urban areas, HUD wants the limit for Federal Housing Administration (FHA) insured home mortgages to be raised and unified across the country.
The proposal, explained at the National Home Builders convention in Dallas and then to reporters during a conference call with Housing Secretary Andrew Cuomo last week, is expected to be formally proposed by President Bill Clinton during his budget presentation on February 3rd.
http://findarticles.com/p/articles/mi_m3601/is_/ai_20476375
Then there is FHA S3173 introduced by Hillary Clinton, 2006.
Economic Recovery Act of 2008 - passed through Congress and the Senate, with a weak dollar and inflation. Easy lending even to those with previous credit problems was indeed the “American Dream.” Ads today still advertise low lending rates to home buyers.
Congress is as much to blame as anyone- Bush tried to reform Freddie and Fannie in 2004 according to Investor’s Business Daily, but Congress was having none of it.
Obama and Congress can spit fire and try to blame it all on President Bush–but there is plenty of blame to go around. McCain blames greed and corruption and there was some of that too.
So where are we now?
Food and gasoline prices are up and will continue to climb. All energy prices are up. Inflation is as real as it gets. We have a weak dollar, interests rates are holding steady, and we hope we can climb out of the mess, but is there any wonder we’re in the mess we’re in?
Will Wall Street ever look the same?
So far neither presidential candidate is offering solutions, they are blaming. The economists I read didn’t offer solutions either except for personal investments. (MoneyMorning)
“In effect, Congress, the U.S. Treasury and the FHA have elected to take out a subprime mortgage on the economy’s future – with already strapped taxpayers footing the bill.”
http://www.moneymorning.com/2008/09/13/u.s.-economy-are-we-nearing-the-end-of-the-american-dream/
see also: http://www.ibdeditorials.com/IBDArticles.aspx?id=306545173352598
and: http://www.ibdeditorials.com/IBDArticles.aspx?id=306459403179446&kw=aig,bailout
pecanpii
