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I have no idea why the Democrats aren't attacking Bush continually over the state of the economy and the US Dollar. The two reasons that come to mind are that they're either utterly incompetent or disgustingly pusillanimous. Neither's a good option.

Really, I don't know why there's no liberal party in this country that's not afraid to start pushing the slogan that there are now two types of people associated with the Republican Party: millionaires and suckers. In fact, I'd even say that the Republicans have swerved so far from the "limited government" idea that traditional conservatives espouse that it's hard to classify the party anymore. Let's take a look at a few numbers.

The war in Iraq has already cost $500 billion. Joseph Stiglitz and Linda Blimes have estimated that the Iraq war will eventually cost $3 trillion. I believe this is one of three things that will eventually cause another Great Depression-scale period for this country. The $500 bil that's already been spent is absorbable, barely- though I think it would've been far better spent on darn near anything else, whether it was investing in alternative energy infrastructure(I also am amazed by Bush's ineptitude regarding the Strategic Petroleum Reserve) and research or paying down the other $9 trillion of national debt.

The Dems should also be hammering on the Republicans on the Bear Stearns bailout. Having the Fed guarantee $30 billion of Bear Stearns' assets...well, this is, to put it bluntly, corporate welfare. Heads JP Morgan Chase wins. Tails the American taxpayer loses, to the tune of about $100 each. $30 billion is a fuckton of money. By comparison, Temporary Assistance for Needy Families(TANF)- what's commonly known as welfare- costs about $16.5 billion a year. The next time any "compassionate conservative" opens his or her piehole about welfare, they should be hammered with the Bear Stearns bailout. The Republican management believes that the free market is the best allocator of resources...until it's their own that takes it in the nuts.

Bear Stearns is only the beginning, of course. I'm not exactly impressed by what I've been hearing about the Lehman Brothers' portfolio, for example. By the time the smoke clears, I expect at least one and possibly as many as three major investment banks requiring federal intervention. The taxpayer, of course, will foot the bill. If I didn't think massive inflation was going to be an issue and if I had more of a bankroll, I'd seriously consider buying puts.

The Republicans wanted deregulation. They got it. And now the subprime debacle is giving them all the deregulated market they want. The next time deregulation comes up, the Democrats need to bring up the subprime meltdown.

Finally...the tax cuts. The class warfare nature of the tax cuts has been discussed in tons of outlets. I've also mentioned how Bush departed from the usual taxation pattern during wartime. But given that our Idiot-in-Chief wants to make his cuts permanent...that'll hit us for another $1 trillion a year over the next decade. What slight chance we'd have of avoiding the complete collapse of the USD would be gone. The Democrats should be emphasizing this every time tax cuts are mentioned.

Why can't we have a _real_ liberal party in this country, not these cowardly, idiotic Democrats?

Date: 2008-04-14 07:13 pm (UTC)
From: [identity profile] sammka.livejournal.com
For every consumer in this crisis that chose to get a mortgage they couldn't afford (and in this case choice is dubious, since banks tended to spend LOTS of time convincing people they in fact could afford a loan) there's a bank that not only chose to lend to someone who they knew couldn't afford the mortgage, but also chose to be undersecured. Banks are sophisticated financial institutions and can understand what happens when a lot of people suddenly can't afford their houses and a crapload of houses go on the market. Subprime mortgage buyers are not. And yet they still made grave mistakes regarding whether the loans were sound investments. If the banks were adequately secured, people who realized they were living beyond their means could just sell the house, most likely at least for what they owed on it. Which is what people have been doing for years until the current meltdown.

This is a similar problem with the credit card industry (which I agree is doomed for crisis) - credit card companies seem to think that just making consumer bankruptcy more difficult will make their investments safer. They've actually quite openly stated that they are more interested in preventing bankruptcy through stricter laws than through simply not making risky, high-interest loans, and that this is all because the sub-prime credit card borrowers make them the most money.

Date: 2008-04-14 08:16 pm (UTC)
From: [identity profile] dolohov.livejournal.com
I still maintain that it was a choice, though. Whatever the banks did to persuade people, they still had to walk through those doors in the first place, and they still needed to sign their names on the forms. They may have chosen out of ignorance or vanity or misapplied optimism, but they still chose, and that still has to count for something.

The loaning banks were secured just fine, though. The biggest problem is that because of all these financial "products" they had a reverse incentive: they were repackaging and selling off all their loans, and so their incentive was to get as many loans as possible within this designation. And because the "subprime" designation is so absurdly wide, it was actually somewhat reasonable of buyers to assume that they were not that risky, because most mortgages aren't. (Since it's either "prime" or "subprime", and the cutoff is a credit score of 650-700, most mortgages fall under "subprime", including some very safe bets that fall in that category due to short credit histories or old problems with repayment such as an illness) That's the thing, except for the lenders themselves, pretty much everyone along the line made reasonable but faulty assumptions. And even with the lenders, it was the series of decisions rather than any single one.

The house price decline is what precipitated this crisis, though; all of a sudden people who were living above their means *couldn't* just bail. This wasn't a surprise, prices had to come down eventually, and a lot of the worst cases were people who bought at the height of the bubble.

I think the credit card industry is becoming a pyramid scheme these days. They're racing to sign up new people, and paying their transactions based on the presumption that their current customer base will continue paying fees. (Hell, every day I come home to a new offer to go further into debt at even more exorbitant rates) But even if people don't go bankrupt, they will still eventually die, and increasing numbers of them will die with assets insufficient to cover their debts. Even if they outlaw bankruptcy entirely, I still think they're doomed -- and given Visa's recent IPO, maybe they agree with me.

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Just Another Idiot

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