maybe because once again they allowed a republican and a man without honor to decive them .
On Jan 1, 11:19 am, chirpinginnc <[email protected]> wrote: > Gee, I wonder why the Congressional Democratic leaders--Reid and > Pelosi--were screaming at the top of their lungs that the package must > be passed--asap. Are they not on board with their newly-elected > president? > > On Jan 1, 10:52 am, mike 532 <[email protected]> wrote: > > > > > Was the "Credit Crunch" a Myth Used to Sell a Trillion-Dollar Scam? > > http://www.truthout.org:80/123108D > > Even as the media continue to repeat the claim that credit has frozen > > up, evidence has emerged suggesting the entire story is wrong. > > > There is something approaching a consensus that the Paulson Plan > > -- also known as the Troubled Asset Relief Program, or TARP -- was a > > boondoggle of an intervention that's flailed from one approach to the > > next, with little oversight and less effect on the financial > > meltdown. > > > But perhaps even more troubling than the ad hoc nature of its > > implementation is the suspicion that has recently emerged that TARP > > -- > > hundreds of billions of dollars worth so far -- was sold to Congress > > and the public based on a Big Lie. > > > President George W. Bush, fabulist-in-chief, articulated the > > rationale for the program in that trademark way of his -- as if > > addressing a nation of slow-witted 12-year-olds -- on Sept. 24: > > "Major > > financial institutions have teetered on the edge of collapse ... > > [and] > > began holding onto their money, and lending dried up, and the gears > > of > > the American financial system began grinding to a halt." Bush said > > that if Congress didn't give Treasury Secretary Hank Paulson the > > trillion dollars (give or take) for which he was asking, the results > > would be disastrous: "Even if you have good credit history, it would > > be more difficult for you to get the loans you need to buy a car or > > send your children to college. And ultimately, our country could > > experience a long and painful recession." > > > For the most part, the press has continued to echo Bush's central > > assertion that there's a "credit crunch" preventing even qualified > > borrowers -- that's the key point -- from getting loans, and it's now > > part of the conventional wisdom. > > > But a number of economists are questionioning the factual basis > > of > > the credit crunch narrative. Columnist David Sirota recently looked > > at > > those claims and concluded that Americans "had been punk'd" -- that > > "the major claims about a credit crisis that justified Congress > > cutting a trillion-dollar blank check to Wall Street were > > demonstrably > > false," and the threat of a systemic banking crash was used by the > > Bush administration to overcome popular resistance to the "bailout." > > > It's a reasonable conclusion; this is an administration that used > > the threat of thousands of al-Qaida sleeper cells in the United > > States > > to sell Congress on the Patriot Act, the specter of mushroom clouds > > rising over American cities to push through the Iraq war resolution > > and the supposedly imminent crash of the Social Security system to > > push for privatizing Americans' retirement savings. > > > But the question comes down to what they knew and when they knew > > it. The analyses that suggest the whole credit crunch narrative is > > false are based on data that lagged behind the numbers that > > policymakers had available, in real time, back in September. So the > > question -- probably unanswerable at this point -- comes down to > > whether or not they looked at the situation and in good faith > > believed > > that pumping hundreds of billions of dollars into the banking system > > would contain the damage and save an economy teetering on the brink > > of > > collapse. > > > What Else Could Be Happening? > > > Of course, no one disputes the fact that as the economy has > > tanked, the number of new loans being issued to American families and > > businesses has plummeted. But is because credit has dried up for > > qualified borrowers? > > > Economist Dean Baker doesn't think so. He explains the situation > > in simple terms: The media, he argues, "are blaming the economic > > collapse on a 'credit crunch' instead of the more obvious problem > > that > > consumers just lost $6 trillion of housing wealth and another $8 > > trillion of stock wealth." It's a commonsense argument: much of the > > economic growth of the Bush era existed on paper only, built on the > > rise of a massive bubble in real estate values rather than growth in > > productive industries. When all that ephemeral wealth vaporized -- > > and > > with the economy shedding jobs like a dog with dermatitis -- > > consumers > > stopped buying, and businesses, anticipating a long slowdown, stopped > > seeking the loans that they might have otherwise tapped to expand > > their operations. > > > Whether good borrowers can't get credit from banks because the > > latter are hoarding cash or lending has stopped because of a drop-off > > in demand for new loans is not some wonky academic debate; it's of > > crucial significance. Because if lending to qualified parties has > > truly frozen, then even if the specific implementation of the Paulson > > Plan was deeply flawed, its broad approach -- "recapitalizing" banks > > in various ways, buying up some of their crappy paper and > > guaranteeing > > some of their transactions -- is fundamentally sound. > > > If, on the other hand, the primary problem is that people are > > broke and maxed out on debt, and firms aren't looking for money to > > expand, then the kind of massive stimulus package being considered by > > the Obama transition team and congressional Dems -- largely designed > > to stimulate demand from the bottom up, with public works projects, > > tax cuts for working families, aid to tapped-out state and municipal > > governments and new money for unemployment and food stamps -- is > > obviously the best approach to take. > > > Broadly speaking, these are the parameters of the debate in > > Washington, and that means that properly diagnosing the underlying > > problem is crucially important. > > > Is the Credit Crunch a Big Lie? > > > There's plenty of evidence that Baker's right. He points out that > > even though mortgage rates have plummeted, the number of applications > > for new loans has dropped to very low levels and argues it's "the > > most > > glaring refutation of the claim that people are unable to get > > credit." > > If creditworthy applicants were being denied loans by banks unable or > > unwilling to lend, Baker explains, "then the ratio of mortgage > > applications to home sales should be soaring" as qualified homebuyers > > apply to multiple banks for a loan. "Since there is no notable > > increase in this ratio, access to credit is obviously not an issue." > > > Again, this is common sense. Consumer spending drives about 70 > > percent of the U.S. economy, and in recent years, much of that > > spending was financed by people taking chunks of home equity out of > > their properties -- people might have been eating in fancy > > restaurants, but they were essentially eating their living rooms to > > do > > so. > > > That the American people don't have the appetite to go deeper > > into > > debt than they already are in order to make new purchases is hard to > > dispute. In November, consumer prices across the board fell at a > > record rate for the second month in a row. And even with mortgage > > rates plummeting, so many homeowners are "underwater" -- owing more > > on > > their homes than they're worth -- that they're unable to refinance > > because the equity isn't there. Paul Schuster, a vice president at > > Marketplace Home Mortgage, told the St. Paul Pioneer Press, "What I'm > > really concerned about is the job picture ... If (people) don't feel > > good about their jobs, rates aren't going to matter." > > > The National Federal of Independent Business' November survey of > > small-business owners found no evidence of a credit crunch to date, > > concluding that if "credit is going untapped, it's largely because > > company operators are not choosing to pursue the credit. It's not > > that > > companies can't get the extra money, it's that they don't want or > > need > > it because of the broader slowdown in economic activity." > > > The credit crunch narrative -- and the justification for creating > > Paulson's $700 billion TARP honeypot -- is built on three related > > assertions: 1) banks, fearing that they'll be unable to meet their > > own > > financial obligations, aren't lending money to one another; 2) > > they're > > also not lending to the public at large -- neither to firms nor > > individuals; and 3) businesses are further unable to raise money > > through ordinary channels because investors aren't eager to buy up > > corporate debt, including commercial paper issued by companies with > > decent balance sheets. > > > Economists at the Federal Reserve Bank of Minnesota's research > > department -- V.V. Chari and Patrick Kehoe of the University of > > Minnesota, and Northwestern University's Lawrence Christiano -- > > crunched the Fed's numbers in an examination of these bits of > > conventional wisdom (PDF), and concluded that all three claims are > > myths. > > > The researchers found that "interbank lending is healthy" and > > "bank credit has not declined during the financial crisis"; that > > they've seen "no evidence that the financial crisis has affected > > lending to non-financial businesses" and that "while commercial paper > > issued by financial institutions has declined, commercial paper > > issued > > by non-financial institutions is essentially unchanged during the > > financial crisis." The researchers called on lawmakers to "articulate > > the precise nature of the market failure they see, [and] to present > > hard evidence that differentiates their view of the data from other > > views." > > > That finding was backed up by a study issued by Celent Financial > > Services, a > > ... > > read more »- Hide quoted text - > > - Show quoted text - --~--~---------~--~----~------------~-------~--~----~ Thanks for being part of "PoliticalForum" at Google Groups. For options & help see http://groups.google.com/group/PoliticalForum * Visit our other community at http://www.PoliticalForum.com/ * It's active and moderated. Register and vote in our polls. * Read the latest breaking news, and more. -~----------~----~----~----~------~----~------~--~---
