Posts Tagged ‘Politics’

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America, When Will You Stop Fighting Your Freedoms?

October 28, 2008

With great respect, credit, and acknowledgment given to Ginsberg, and apologies for my postmodern destruction – a modern update on Ginsberg’s form. Any lines in quotes were lifted without change from Ginsberg’s America – all other phrases have been modified.

 

 

America I’ve given you nothing and now I’m all that’s left.

America seven hundered billion dollars and we’ve lost our sense, October 2, 2008.

I can’t lay down with my own mind.

America when will we end our internal war?

Go flog yourself with your petty talking points.

I don’t feel good and it bothers me.

I won’t write my poem till we’re in our right mind.

America when will you be anthemic?

When will you donate your clothes?

When will you stop digging your financial grave?

When will you be worthy of a million of your excesses?

America why are your news sources full of fears?

America when will you take your eggs from your idols?

I’m sick of your inane discourse.

When can I go into the supermarket and buy what I need?

America after all you and I are not more perfect than the next world.

Your machinations are too much for me.

You’ve made me want for a saint.

“There must be some other way to settle this argument.”

Buckley is in arrears and I don’t think he’ll come back it’s sinful.

Are you being sophomoric or is this some form of practical joke?

I’m trying to come to the purpose.

I refuse to give up my intellect.

America stop pushing we’ll figure out what we’re doing.

America the sky is not falling.

I haven’t read the newspapers for months, only their online daily trials and murders.

America I feel sentimental about Chief Wiggums.

America I used to be collateralized when I was a kid and I’m sorry.

I smoke new media every chance I get.

I sit in my house for days on end and stare at the roses on my LCD screen.

When I go to the MSM I get indoctrined but never get learned. 

“My mind is made up there’s going to be trouble.” 

You should have seen me reading Maddow. 

I can’t afford a psychoanalyst, but I’m perfectly right. 

I won’t believe in Laissez-Faire. 

I have mystical visions and comic inflations. 

America I still haven’t told you what you did to Uncle Sam after he left with Reason.

 

I’m addressing you. 

Are you going to let our emotional life be run by TMZ? 

I’m obsessed by TMZ. 

I read it every hour. 

Its homepage stares at me every time I slink past my email account. 

I read it on my phone in the bathroom of the Pasadena Public Library. 

It’s always telling me about irresponsibility. Movie stars are mediaworthy. Heiresses are mediaworthy. Everybody’s mediaworthy but me. 

“It occurs to me that I am America.” 
I am talking to my blog again.

 

Asia is bailing me out. 

I have only a chinaman’s chance. 

“I’d better consider my national resources.” 

My national resources consist of two joints of mass media millions of buzzwords 
an unpublishable no longer private literature that goes 1400 kbps and 
twentyfivethousand mental institutions. 

“I say nothing about my prisons nor the millions of underpriviliged who live in 
my flowerpots under the light of five hundred suns.”

I have abolished the freedom of language, tangential thought is the next to go. 

My ambition is to be President despite the fact that I read Agnostics.

 

America how can I write a holy litany in your angry mood? 

I will continue like your hegemony my catch phrases are as individual as its
conclusions more so they’re all different sexes 

America I will sell you hegemonies $2500 apiece no money down on your old thoughts 

America free Tom Brokaw 

America save the Socialist thinkers 

America Socrates must not die 

America you risk becoming the Scottsboro Boys. 

America when I was seven momma took me to privatized education they 
sold us music a handful per half hour a half hour costs a dollar and the 
recitals were free everybody was atonal and embarrassed about their performance
it was all so sincere you have no idea what a good thing the inspiration 
was in 1987 Ms. Jeanie was a grand old lady a real musical Mother 

Ayn Rand made me cry I once saw Intelligent Conservatism plain. Everybody must have been a spy. 

America you don’t really want to stay to war. 

America it’s them bad Terrorists. 

Them Terrorists them Terrorists and them Muslims. And them Terrorists. 

The Terrorist wants to eat us alive. The Terrorist’s power mad. He wants to take 
our cars from out our garages. 

He wants to grab Ohio. He needs a Red Reader’s Digest. He wants our 
auto plants in Lebanon. Him big bureaucracy raping our fillingstations. 

That very good. Ugh. Her makes Immigrants learn read. Her need blasphemous spending bills. 
“Hah. Her make us all work sixteen hours a day. Help.” 

America this is no longer entertainment. 

America this is the impression I get from looking at the internet. 

“America is this correct?” 

I’d better get a second job. 

It’s true I don’t want to join the Army or flip patties in precision food 
factories, I’m farsighted and philanthropic anyway. 

America I’m putting my fear firmly at my heels.

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I Propose A Moratorium On The Words Democrat and Republican

October 28, 2008

The recent violent mindsets being shown by Americans lately have been more and more worrisome to watch with the continuing unchecked economic crisis. For those that have somehow forgotten about that little crisis thing, don’t feel bad. It may be because it’s hardly being touched by a lot of the MSM. A quick visit to Fox, CNN, and MSNBC finds only one of the three has a story in its main headlines about the economy or the bailout bill. Personally, I think enough people are fearful that it’s time to get the information out there a little more so we can start educating people what to do.

The bailout is barely performing its basic function of slowing the economic bloodspill. Markets run only when people have enough faith in them to put money into the system…and right now, people are still too scared to be doing this much. As such, the markets aren’t working. The system is in a state of failure right now. I say a state of failure because it is just that – a state, and one which will only last as long as mistrust and derision are the cultural zeitgeist. For those who have a little time, I highly recommend Robert Reich‘s lecture over at fora.tv. The title is what’s at stake in the election, and Reich certainly does show his personal opinion over who should win (he’s one of Obama’s advisors…not too surprising), but he does an amazing job of educating people in a calming way about what is going on. He comes at it from a very progressive point of view, but one which is well reasoned. One of his main points is that our main problem right now is not a lack of liquidity, it is a lack of trust.

If you’re still feeling adventurous, check out Naomi Klein’s lecture from Oct. 16th while you’re there. Klein has become one of the main voices behind the idea of “disaster capitalism”. One of her main points is that, in times of crisis, the tools that we pick up are not the newly created economic ideas – they are the ones that are available right now, and become a part of common enough thought to be voted in. As such, it’s all the more important that we all try and educate ourselves about the ideas that are going to be put forth, and make our voices heard by our representatives. Politicians are already worried about losing their jobs – lets make sure they’re still just as worried when they vote on the inevitable upcoming economic legislation. 

And if you want to go a little further, look into Paul Krugman and some of his financial articles over at the Times. Some of his political articles take a bit of a party line slant, but when it comes to matters of the economy, especially the global version of it we now live in, it’s hard to deny the Nobel Laureate’s thought. Please, let us remember – there are other ideas out there than the Keynsian/Friedman based ideologies that have dictated much of our previous policy.

But all of this relates to the title of this point, and to this growing violent underbelly. The feds interruption of the would-be assassins of one of our presidential candidates has made it far too evident that the mindset of derision has grown far too entrenched in our nation at current. While I do not blame politics for creating it, as the political future of our nation has placed politics in such a public eye, I do blame them for their actions. In a rare showing, John Stewart tonight did an amazing job of pointing out the amount of fear in both camps. Even with all his recent bias, I challenge anyone to argue against the overall point – that people fear what will happen if their guy doesn’t win. This fear is coming from both sides. And it is a fear that must be stopped. We cannot come together as a nation to face the challenges that are certainly ahead of us if we are acting out of fear.

Lately, much of the group-thought the nation seems to be experiencing has been, I believe, being flared by comments against Democrats or Republicans. Stump speeches are more and more turning to rhetoric that levies charges against the opposing party, and seems to ignore the opposing idea. Politicians have ceased to talk about their own policies, or even speak of their opponents policies and why they disagree with them. It has become nothing but partisan bickering – the Republicans destroyed the economy with their unfettered deregulation, the Democrats want to bring us into an era of Socialism – or even Marxism, as one reporter asked Joe Biden about today. But both parties have been in charge when deregulation was voted on, and both parties have voted on a rescue package that is one of the largest socialist expenses the country has ever seen, and includes partial nationalization of the banking system. It’s obvious the partisan attacks, and broad based words that are drumming up fears within the populous are not getting us anywhere productive. So, I propose that at least until after the election, all politicians do their part to unify the country and cease to use the words Republican or Democrat. I think it will be much more difficult for them to go negative when their opponent can’t be placed into a group-think mindset so easily. It might even restore some civility to the process. And it may, just may, even assuage some of the fears of much of the public about what will happen if “the other guy” wins.

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PEW Report Shows Negative Media Bias Towards McCain

October 23, 2008

Yup, it’s true. For those who wish (and I encourage all to wish), you can read the full report here. I’ll hit the highlights for those who don’t have the time. 

Press treatment of Obama has been somewhat more positive than negative, but not markedly so.

But coverage of McCain has been heavily unfavorable — and has become more so over time. In the six weeks following the conventions through the final debate, unfavorable stories about McCain outweighed favorable ones by a factor of more than three-to-one — the most unfavorable of all four candidates — according to the study by the Pew Research Center’s Project for Excellence in Journalism.

For Obama during this period, just over a third of the stories were clearly positive in tone (36%), while a similar number (35%) were neutral or mixed. A smaller number (29%) were negative.

For McCain, by comparison, nearly six-in-ten stories studied were decidedly negative in nature (57%), while fewer than two-in-ten (14%) were positive.

Seems pretty straightforward, right? It’s proof that the media has a liberal bias. Except…wait…let’s read a little further….

 

Much of the increased attention for McCain derived from actions by the senator himself, actions that, in the end, generated mostly negative assessments. In many ways, the arc of the media narrative during this phase of the 2008 general election might be best described as a drama in which John McCain has acted and Barack Obama has reacted.

As for Alaska Gov. Sarah Palin, her coverage had an up and down trajectory, moving from quite positive, to very negative, to more mixed. Driving that tone toward a more unfavorable light were the probing of her public record and her encounters with the press. Little of her trouble came from coverage of her personal traits or family issues. In the end, she also received less than half the coverage of either presidential nominee, though about triple that of her vice presidential counterpart, Joe Biden.

Then, a little further on down…

Democratic vice presidential nominee Joe Biden was nearly the invisible man. His coverage enjoyed just one large moment, the vice presidential debate, which also provided the only positive or neutral contribution to his coverage. Aside from that week, the limited coverage he did receive was far more negative than Palin’s, and nearly as negative as McCain’s.

So…what does this mean? As McCain’s campaign tactics have changed and the percentage of ads and stump speeches with a negative tone increased, the media’s findings about the McCain campaign became increasingly negative. Also interesting to note, at this same time, the amount of coverage of McCain, in comparison to Obama, has evened out. Prior to the convention, Obama enjoyed 50% more coverage by the media than McCain did. So really, when it’s all added up, does this truly imply a negative bias towards McCain/Republicans? And does this report come as much of a surprise? Personally, I’d have to say no on both counts. However, there is one other finding from the report that I found much more interesting, and surprising.

The economy was hardly a singular lens through which the media perceived the race. Though it was the No. 1 campaign topic overall, in five out of the six weeks analyzed, other topics drew more media attention, and the economy accounted for not much more of the campaign newshole (18%) than did assessments of the candidates in the four debates (17%).

Horse race reporting, once again, made up the majority of coverage, but less so than earlier in the contest or in previous elections. Since the conventions ended, 53% of the newshole studied has focused on political matters, particularly tactics, strategy and polling — twice the coverage focused on policy (20%). The focus on tactics and horse race increased in the last three weeks as both campaigns became more negative in their rhetoric.

To me, that’s truly ridiculous. American’s continue to state the economy as the most important issue, and continue to want to see the campaigns address issues more than political horse racing and smear attacks. But, in all honesty, it is difficult to blame the media for this kind of coverage when the campaigns themselves seem to address fewer and fewer issues and policy related matters as time goes on. But while the media may not be to blame for their coverage, that doesn’t mean they shouldn’t hold themselves to a higher standard. Since I’m not a Nielsen family (and never have met one…who are these people anyways?) I can’t exactly send a message by not watching the coverage. But personally, I’m going to be contacting as many of the media outlets as I possibly can pointing out the above findings, and letting them know that I am appalled that they have continued to let their coverage be steered by the campaigns themselves, and until they start covering more issues and policy and less campaign tactics and smear stories, they at least won’t be getting any of my money through purchases of magazines/newspapers. The people of this nation deserve better, and it’s time we demand it.

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Weapons of Mass Distraction – Congress Brings CEOs to Town

October 7, 2008

The rescue package has been passed. May the blame game begin. Yesterday, the first round of CEOs was brought before Congress to be grilled about their role in the current financial crisis. Our Congress-people were full of fire and brimstone, grilling former Lehman Brothers CEO Richard Fuld about his personal gain while the markets failed. Henry Waxman lead the charge, slamming Fuld with statements like:

“It seems that the system worked for you, but it didn’t seem to work for the rest of the country and the taxpayers who now have to pay up to $700 billion to bail out our economy,” Waxman said. “We can’t continue to have a system where Wall Street executives privatize all the gains and then socialize all the losses.” 

and

“Your company is now bankrupt, our economy is now in a state of crisis, but you get to keep $480 million. I have a very basic question for you. Is this fair?”

Well, I’m certainly comforted. Comforted, at least, that business as usual is returning to Washington. Although Waxman’s figures may be about $200 million high, and there is no mention that the money was made over the span of 8 years, the answer to his question is obvious. Of course it’s not “fair”. But I am amazed at how easily we have allowed our attention to be misdirected by this attempt to bring a sense of “fairness” to the whole situation.

People around the country are now chanting for these CEOs to be “held accountable” for their actions. But what everyone seems to be forgetting is that there really isn’t much we can hold them accountable for, because the shady investments they made that caused the crash are not illegal. They aren’t illegal because the markets they were trading in (the same ones that have fallen into a state of disaster) were unregulated. As such, the hearings are little more than a perp walk for criminals who broke no laws.

But they are a great way for Congress to turn the anger of the American public on someone else. The more angry we are at CEO greed, the less likely we are to pull back the curtain and realize that Congress shares an equal, if not greater, amount of responsibility for what happened. By allowing unregulated trading in markets that were speculative by their very nature, the culture of corporate greed was nearly sanctioned. Are we really surprised that Wall Street moguls took advantage of a system with no rules in an attempt to make as much money as they possibly could? They were hired to make as much money for the company as possible. As investors, we demand it. These firms made this money by taking advantage of the system that was presented to them. Unfortunately, while they may have done so in ways that were irresponsible, it is likely that these methods were not illegal. So Congress is holding hearings in an attempt to put a face on the anger of the taxpayer …just as long as that face isn’t anyone in the government that allowed the market to exist with no rules or oversight in the first place. I’m certainly comforted.

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Fannie And Freddie Caused…What?

October 6, 2008

It has come to my attention lately that Fannie Mae, Freddie Mac, and programs designed to increase lending to lower and middle income homeowners are still one of the main scapegoats for the current financial crisis. It’s all over news sites and blogs, being used in political ads, and lots of people are buying it without taking the time to ask one simple question – how did Fannie and Freddie fail?

There is no doubt that the subprime loan industry grew out of control. Predatory lenders entered the market. Subprime loans that should never have been given were rampant. In 2006, the Wall Street Journal reported that 61% of subprime loans were given to people with high enough credit scores for prime loans. The reason for this is uncertain, and can be argued from many sides. One side insists that, thanks to policies instated under Carter and updated by Clinton, banks were encouraged to make these loans. Fannie and Freddie were encouraged by Housing and Urban Development to increase loans to lower income homeowners, even though they were riskier loans. Another side is that investors were increasingly entering the real estate market because profits were growing by leaps and bounds. And if you’re like me, you’ve been raised with the belief that the real estate market, since it deals in tangible assets that grow equity, is a safe market to invest in. But how do these arguments hold up?

First, let’s examine the “government regulations forced it” argument. The regulation (known as the CDA) people speak of was passed in 1977. It’s intent was to make banks enter into communities they currently would not lend to. Why they would not enter those communities is still debatable. The policy, however, is widely recognized, and was known as “redlining”. As both sides seem to be able to agree that redlining existed, and prevented residents of lower and middle income communities from being able to get the necessary financing to make home purchases, I’ll leave the “why” to open debate. I’ll leave the rest of the research on the CDA, and the ramifications of it, to the reader as well. It is evident, however, that the CDA did increase the number of loans given to people who might not be able to pay them back.

Next, let’s examine the “speculative investors inflated the market” argument. Since this one has fewer emotional issues surrounding it, it will be a little easier to examine here. It is well known that investment and second property purchases were increasing throughout 2005 and 2006. By 2007, the Wall Street Journal reported on the fall of these markets. Simple economic principles tell us that, when purchases (demand) are higher than available commodities (supply), prices go up. And it doesn’t take a social scientist to notice that “flipping” houses was the en vogue get rich quick market of the early part of this decade. There were entire television shows devoted to it, and any insomniac could not help but be inundated by infomercials selling us schemes on how to flip houses for profit. It stands to reason that increased demand would raise prices.

So, what does all this have to do with Fannie and Freddie? From what I can find…not much. Here’s the problem. Fannie Mae and Freddie Mac held a combined total of around $500 billion in loans. The problem here is…none of these were the subprime loans everyone is so busy screaming about. In fact, as has been pointed out in the NY Times, Fannie and Freddie were not allowed to give subprime loans. It’s part of their charter. Believe it or not, no one in our government was stupid enough to allow Fannie and Freddie to give this sort of high risk loan. Amazing, I know…but occasionally, our elected officials get something right. As it turns out, most of Fannie and Freddie’s loan holdings are what is known as Alt-A loans. Alt-A loans are given when an applicant doesn’t meet one of the criteria to get a Prime mortgage loan. For instance, small business owners are often times not able to provide the usual paystub as proof of income, even though they make enough to safely take out the loan they are applying for. Alt-A loans allow the loan officer to, after review of the application, grant these people a loan at a rate that is generally 1% above prime rate for the first two years, and then falls to prime rate if all payments have been made in good faith. Beyond even this, the rate of defaults on subprime loans is nowhere near high enough to bring about the downfall of Fannie and Freddie.

Conclusions? Fannie and Freddie didn’t fail because of subprime loans or risky lending to homeowners. They fell because of much larger market conditions surrounding the CDOs, Credit Swaps, and MBSs that I’ve already discussed in the “How We Got In This Basket” series of essays. As I didn’t want to make this post too link heavy, the sources for the numbers on Fannie and Freddie aren’t linked. If anyone would like to see them and is having trouble finding them, just let me know and I’ll post a list of sources here.

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Israel Refuses To Talk About Nuclear Weapons…Again.

October 5, 2008

CNN has just posted a story about a meeting that just happened of 145 nations at the UN. This meeting was a general conference of the International Atomic Energy Agency (IAEA). The IAEA is the main regulatory agency in charge of global peaceful and weapons based atomic programs. After them, there is no internationally recognized organization to go in and check the nuclear status of countries like Iran. Without IAEA inspections, we just have to “take their word for it”. As has happened in years past, a grouping of Islamic nations has attempted to take Israel to task on the issue of atomic weapons. This has again brought up an interesting and commonly ignored aspect of Middle Eastern politics…what I will call the Middle Eastern Nuclear Arms Race (MENAR). Mostly because I think MENAR is fun to say.

To begin with, we need to know what nations in the Middle East possess nuclear weapons. The official answer is India and Pakistan. But there’s an officially unspoken side, too. This is not to suggest that India and Pakistan do not possess nuclear weapons. India began nuclear testing in 1974. Pakistan in 1998. Both have publicly acknowledged their programs, and demonstrated that they have a nuclear arsenal and the means to deliver it within a short range, and possibly more. What is more commonly unknown is the likely nuclear weapons stockpile of Israel. First, let’s look at what is publicly known about atomic weapons development in the Middle East.

Once India started nuclear testing in 1974, it was almost inevitable that Pakistan would follow. After all, the two have been rivals since their creation over 6 decades ago. Not ideal, but neither India nor Pakistan has ever shown much aggression outside of their own conflict with each other. India is on reasonably friendly terms with Israel, leaving Pakistan the only nation of the two which might pose a threat to. But even Jewish global analysis groups have determined that Pakistan’s lack of diplomacy with Israel stems from fear of creating internal tensions and increasing tensions with other Arab nations. There is a possible danger of nuclear technology from Pakistan getting into the hands of other, more dangerous nations. This is one of the many reasons it is important that the US maintain close ties with Pakistan. While it would be wonderful if Pakistan and India would mutually destroy their nukes, there is about as much likelihood of that as there is of the US and Russia destroying our arsenals. As such, the basic policy is to control the situation as much as possible through diplomacy.

The quest of other Arab nations to develop nuclear capability is also known. We know from IAEA inspections after the first gulf war that Iraq at one time had nuclear ambitions. It is now known that Syria had programs for nuclear development that have been at least somewhat destroyed. But Syria doesn’t seem to have gotten any further than attempting to enrich the fuel that would be needed to build a nuke. And Iraq didn’t get close to a bomb either. From everything we have found, they ceased development after the first gulf war, and weren’t beyond enrichment stages at that time. Then there is the unknown issue of Iran. We just don’t know what’s going on there. We know what it could be. But we can’t get in there to check.

But what of Israel? Publicly, Israel has no nuclear arms. Public tests have not been performed. What proof is there? To begin with, Jimmy Carter, the National Resources Defense Council, the Center for Defense Information, and even ousted Israeli Prime Minister Ehud Olmert  all say they exist. Even the USAF has published papers about the existence of Israels nuclear weapons. The truth is that Israel has been known to have a nuclear arsenal for years. However, for many reasons, the official policy has been to neither confirm nor deny whether the nukes exist. And the international community has accepted this. Israel’s official statement is that it will not be the first nation to “introduce” nuclear weapons to the Middle East. It could be argued that this has already been done, seeing as how India and Pakistan have publicly held tests and make no secret that they possess nukes. But let’s leave that argument by the wayside for the moment.

What are the possible reasons for not declaring nuclear status? Israel, India, and Pakistan are the only three nations that did not sign the Nuclear Non-Proliferation Treaty, so they could not be held accountable for breaking it. For those who wonder about North Korea – North Korea reluctantly agreed to the treaty, broke it, and then withdrew from it. One main reason Israel maintains this “don’t ask, ’cause we won’t tell” policy on its nuclear arsenal is the United States policy towards nations that possess Weapons of Mass Destruction. If Israel announced to the world that it had nukes, the US would be put in a very sticky situation. Our official policy says that we will not give military aid to nations with WMDs. But, according to Israeli reports, the US is giving $2.42 billion in military aid to Israel in 2008. Since Israel is seen as the most important US ally in the Middle East, and Israel relies on US military aid to keep ahead of other nations in the region, it is pretty easy to see why no one wants to be forced to end this relationship. It is, in the view of many, part of what has helped maintain the shaky balance in the region thus far.

However, as usual, this causes me to ask a few questions. Since it is so widely known that Israel has a nuclear arsenal, can we fault other nations in the Middle East who are enemies of the state of Israel from wanting to amass their own nuclear arsenal? The widely held theory of nuclear strategy has always been, in its simplest form, that as long as opposing forces know each side has nuclear weapons, both sides will be extremely unlikely to use them. This is known as Mutually Assured Destruction (MAD). For MAD to work, each side in a conflict has to have enough firepower to assure the destruction of the other. So, since Israel has nukes, aren’t the nuclear ambitions of Iran little more than an attempt to bring about the same balance in the region that fueled Soviet and US nuclear programs during the Cold War? It can be argued that the US never publicly said it would “wipe Russia off the map”. But, since MAD was the operating procedure of both sides, it can just as easily be argued that we simply aimed the gun without rattling the saber.

Maybe it’s time for all sides to sit down with the IAEA and, without fear of penalty, acknowledge the nuclear programs they have and turn them over to IAEA officials for proper dismantling. I know…meetings like that would mean sitting down with the leaders of a lot of nations who don’t like each other. And in order to get everyone to the table, it would probably have to be done without pre-conditions. But pre-conditions does not mean without an understanding that the mutual goal is to prevent a nuclear arms race in the Middle East. After all, does either side really want to enter into a world where there is mutually assured destruction of the Holy Land?

Maybe these are merely the thoughts of an idealist who has no real understanding of the deeper undercurrents of the situation. Or maybe, with a lot of behind the scenes work by a lot of lower level dignitaries, and the offering of quite a few “incentives” (as we all know, money talks), we can find a way to ensure a slightly less MAD world. Personally, I’d be happy to see the US spend $100 billion on incentives in a heart beat if it got all these nations to give up their nuclear arsenals and intentions. That, in my opinion, would do far more for the stability of the region and the security of the United States than any nation building we may ever undertake.

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How We Got In This Basket I

October 5, 2008

The following is a four part series on the history and reasons behind the current financial crisis. It was my goal to examine the issue from all sides without emotional or political bias. The 4 part essay that follows is the end result of weeks of research in an attempt to understand this very complex problem. It was my goal to understand the factors that brought this about without blaming any one person or party. There is plenty of blame to go around on all sides, and enough failed policy to provide years worth of kindling. I think that solutions for problems this large cannot be reached by pointing fingers in any one direction. Instead, they come from understanding how the current situation has developed, and all of the factors that contributed to it. It is almost impossible to fix something without first inspecting it.

Part I – Introduction

Like many Americans, when I first heard of the idea of giving a $700 billion bailout to Wall Street, I was livid. “What?”, I thought, “Why should we have to bail out these corporate fat cats and risk all this taxpayer money? Can’t we just let people reap what they’ve sewn? And even if we have to use our money to make these loans good, then why don’t we just bail out the individual homeowners, and let the corporate greed take the losses it’s created?”

But as things progressed, and I did a little more research, I began to understand that the problem we face now is not so much that these loans are defaulting at unacceptably high rates. Yes, that is part of the problem, and was definitely the first widely reported finite indicator (along with shrinking home values) of the fallout that was beginning. And if those bad loans were turned into good loans years ago, and the market slowed in an orderly fashion, it might have helped. But it has all gotten so much bigger. 

It is my personal belief that before attempting to understand the problems of today, we must understand the problems faced by those who came before us, and how people reacted to them. So, the next step was to learn about financial crises of the past, beginning with the Panic of 1909 up through the dot com bubble of the 90s. Don’t worry, no history lecture here. The info is readily available on the net. If you really care to understand the full history of it, just start Googling. Education is readily available, and cheaper than ever. You just have to be willing to look a little further to make sure the information you’re getting comes from reliable sources. Don’t just check the source, check the sources the source used.

After getting a basic enough understanding on the crises of past, and the reactions to them, I decided it was time to delve head first into the modern day. For those interested in getting some more analysis of past crises, try Googling “Keynsian Economics”, “Friedman Schwartz”, and/or “Great Depression” in various combinations. Also, add “Bernanke” to that equation. Our current Fed Chairman, who’s importance in this crisis is undeniable, has given a few speeches on these topics. Many of his views stem from these theories. But please, read a few rebuttals to them as well. 

What I’ve found says to me that we’ve been letting this basket get woven around us for a while. In essence, this is all related to unfettered deregulation. It’s been going on for years. This does not mean deregulation is always a bad thing. There are many convincing arguments for a market that is not overly regulated. Deregulation without oversight, however, has a track record of ending poorly.

The deregulations of the late 1970s and 1980s are the very ones that created the ability of lenders to issue the current subprime loans that are part of the problem. It was the writing of things like NINJA, 100% (and later 120% and more) interest loans, no downpayment loans, ARMs and the like that has lead to increasing numbers of defaults and foreclosures. If you haven’t taken the time to understand what all these are, I’d recommend it. Helps to understand where it’s all coming from. Alt-A loans also enter into the equation, but there is a distinction between true Alt-A loans and subprime loans.

There are many other factors in the mortgage fallout. Inflating housing prices, the ever increasing buying and eventual sales of investment property by speculators, and the loosening and computerization of underwriting standards for riskier loans have all contributed to the subprime crisis. The market was flooded. It could not maintain, and the bubble burst. Values began to fall.

It is impossible to refinance a loan on which the principle (based on purchase price of the property) is greater than the current market value of the house. Due to a market that was increasingly based on speculation, some loans were given betting that refinancing would be possible after the 2 year period of the initial terms expired. As refinancing became increasingly impossible, and the lighter initial terms of loans began to expire, these new homeowners faced greatly increased payments. Defaults and foreclosures ensued, feeding the cycle of dropping values. And around and around went the merry-go-round, feeding its own downfall.

But I began to wonder…if this is really the cause of the crisis we’re in, and this is the bad paper, why are we talking about bailing out Wall Street? Just doesn’t make sense, right? And what made the banks think they could safely make these loans in the first place? The reason, from what I can see, is because this isn’t remotely the worst of the bad paper. Nor were the ’80s the end of our flings with unchecked deregulation.