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Definition: Where American spending was brought up to the level where it should be, without the necessary revenue to support it.

(As evidenced by 154,000 private sector jobs being created in July.)

The problem is not with spending. The problem is the lack of taxing of the top 1%. The spending seems to be doing its job.

You heard it from the Republicans from both sides of the rotunda. THIS BILL WILL CREATE JOBS.

Because it was said legitimately I took it hook, line, and sinker, and said… “good, we need more jobs….”

Four hours later, it came back up. Wait, a minute, how does trimming $100 billion a year out of our economy, create more jobs?

If the Fed cuts jobs, that’s fewer jobs. Who’s going to hire them? And if you create MORE jobs with this bill, you have to hire not only all the people you’ve cut, but many more besides…. Who’s hiring?

The same people who haven’t hired anyone back since 2008? After all, what incentive does corporate America have to hire people? They’re doing fine just as they are.. In a quarter where strong second-quarter earnings from companies like McDonald’s, General Electric and Caterpillar were just the latest proof that booming profits have allowed Corporate America to leave the Great Recession far behind, UNEMPLOYMENT WENT UP!

When the US Corporations banked $1.7 trillion in profits… UNEMPLOYMENT WENT UP!!!

Not to mention, when unemployment increases as the Fed itself begins to layoff workers, there will be less spending-money in those communities that experience layoffs.

Who hires when the revenue stream is predicted to collapse?

More than likely, those making a living off these same Federal employees, will be out of work too…..

Now we got, even more unemployment….

So how can Republicans stand in front of a microphone, and say this bill is a “job creator”… “It will grow more jobs”?

Someone explain it….. please!

In today’s political world, the embattled progressives are ironically in the same position American forces found themselves in Afghanistan around the time Obama was sworn in………

Things do not seem to be going well at all….

They did not get the Bush tax cuts off the books. Those tax cuts are still sending jobs overseas. They did not get single payer health care; insurers still limit health care. And now, many of the federal programs supporting the economies in their districts, are about to be eradicated….

“If only” Obama had stood tough!.. “If only” Democrats were better negotiators and didn’t give up everything at the drop of the hat… “If only” the Democrats worked harder last December to get the Bush tax cuts not reinstated. “If only” Democrats hadn’t lost the House last election, things would be different. “If only” Obama hadn’t sold us out! “If only” Obama had a spine. “If only” Democrats hadn’t caved and given Republicans 100% of what they want…“If only” the media would educate the public. “If only” truth was allowed on the airwaves….

The Progressives should not base their future strategy on “what-ifs” and “if only’s” as Progressives (especially here in Delaware) are prone to do. Such an approach is not “reality-based.”

It is instead, “hope-based”, which is to say in reality … “illusion-based”…

The illusion persists that Obama can “make” Republicans do what Progressive want. It equals the illusion that the US, can “make” the government of Karzai, do what everything we want…

In both cases, both progressives and the US, can’t force the issue. Instead, what they have to do, is out-argue, snuggle-up, and win the battle of the minds; they have to convince the respective populations that if they follow their way, the population will be better off.

With this bill, we now have a “reality” to assist with that convincing…

The core of all the arguing, is the hypothesis that America needs to tax it’s wealthy a little more.

When American’s go to the polls in 2012, they will have begun to feel the effects on the economy of what happens when one cuts $100 billion a year. Just like the balanced budget deficit bill of 1937 pushed America back into depression, so will this bill.

Progressives need to be out there saying, “We told you this would happen; see? We were right all along; all you have to do is tax the wealthy and this all goes away…..”

Unfortunately (or rather fortunately), there will not be a World War III to pull us out of this next upcoming depression… We will just have to spend Federal Dollars as if there was one. Which means, we have to return to the top marginal tax rates of 1941 – 1945…

So yes, there are no new revenues in this bill. Had there been, the reality would be that the House would have allowed a default.

But the argument can now begin… anew,… starting tomorrow! That increases in taxes cause an increase in jobs….. Had another default issue been allowed to occur again before the election, that argument would have been held hostage once again…

Now, it can’t… It can’t…. The argument of “good taxation” will get out there. This future election will be all about job creation…..

The Tea Party and Progressives both make the same error. They feel that holding another side hostage to get their way, is acceptable. That is not how America works. Often we fail, to remember that America is the one who put the Republicans into the position they did. Likewise, it was the Americans who put Democrats in the same position, two years earlier.

This argument needs to be played out over the course of an election cycle. The Americans themselves need to weigh in on this argument. Each side must argue their case.

It comes down to Clinton’s way… versus Bush’s…..

Start changing minds.

I’m printing this article in full: tell me, where in America can you find journalism this “fair and balanced”?

Another crisis in the horizon?

A | A | A |
Winarno Zain, Jakarta | Tue, 07/19/2011 7:00 AM A | A | A |

It seems the world economy has faced endless threats preventing it from sailing smoothly into a strong recovery this year.

First there was the Greek debt crisis that jolted several major banks, and then a political uprising in the Middle East that pushed up oil prices, and then a tsunami in Japan that disrupted manufacturing activities in many countries.

The world economy has not fully dusted off the adverse impacts of these three events. Yet another headwind is looming large on the horizon. This time it is the possible default of the US government of its debt on Aug. 2, if the US Congress fails to approve an increase to its debt ceiling as requested by President Barack Obama. By that date, the US government debt would have reached its maximum allocated limit of US$14.3 trillion.

The current negotiation between representatives of Democratic and Republican parties on the US budget deficit has run into a deadlock, and so the possibility is real that there won’t be any substantial agreements reached, since the dateline is nearing. Major rating agencies such as Standard and Poor, and Moody’s have warned they are ready to downgrade the US government debt rating from top grade AAA.

This would be the first time in 90 years that the US government debt has been downgraded.

It is not hard to imagine what will happen if by Aug. 2 the US government has exhausted its credit ceiling and can not get additional debt to pay for its spending needs.

The US government would have to curb its spending, and because some of these relate to payments to government employees, pensioners and other social benefits, this would strike a severe blow to the consumer spending that is so essential to the US economic recovery.

With debt default and credit rating downgrades, it would be difficult for the US government to get loans. Faced with increasing risk, investors would ask for higher returns for US government bonds. This would push interest rate higher, further depressing the economic recovery.

The US dollar would plunge, triggering a surge in commodity prices and another round of inflation around the world. A deadly combination of inflation and economic stagnation could spin the world economy into a tailspin as happened in the early 1970’s.

How would this worst case scenario affect the Indonesian economy? As capital flows out of the US, investors have tended to seek safe havens elsewhere. Commodities, especially gold and oil, would be their first targets. Emerging markets could be the next destination of this capital flight, depending on the assessment of investors on the strength of its economy and their vulnerability and exposure to the US economic fallout.

But financial crises always result in a loss of confidence and produce negative sentiments in the financial markets. They put financial markets into disarray, and as investors panic, capital starts flowing out of emerging economies.

During the global financial crisis in 2008-2009, capital moved out from emerging economies back to the advanced economies. At that time, the US government bonds and commodities like gold were considered safe havens.

If the US government defaults on its debt payment this time, the question is will the situation change? Will the US government bonds still be considered a safe haven for investors? If not, then where else will they put their money? Or maybe they would prefer to keep their money in the same place and not move it anywhere. If so, the Indonesian economy could get some benefit and may not have to face another shock.

In the longer term, however, the situation may change. No country is immune to the negative ripples of a US economic crisis. As US imports plunge from weakening domestic demand, exports from emerging countries will also suffer. The extent to which these negative impacts affect each country will depend on their trading and banking exposure to the US economy.

What is disturbing about this debt talk is the use of this debate as a political game. This is especially apparent in the Republican stance.

Economist, market analyst and CEOs of financial institutions and even the IMF itself have warned that if Congress fails to raise the ceiling of the US government debt, the world economy would slip into deep recession.

The Republicans did not fully accept Obama’s proposal to raise the debt ceiling. They only agree on a smaller number, but even it was given with some conditions. The Republicans asked Obama not to raise taxes, especially for the wealthy, and Obama should cut social spending, a sacred cow for the Democrats.

By using tit for tat tactics in the negotiation and by seemingly ignoring the impending consequences and dangers, the Republicans were trying to push Obama into an intricate political dilemma.

If the US economy slip into another crisis, economic contraction would be inevitable. Corporate bankruptcies would spread, and jobless rate would surge.

A presidential election is still slightly more than one year away, and Obama’s reelection prospects are solid. But his popularity rating is highly dependent on the unemployment rate. That is why the Republicans think the only way for them to erode Obama’s popularity now is by pushing the US economy into crisis.

As the stakes are high, the two political parties should temporarily set aside their ideologies and adopt a pragmatic stance for the interests of saving the world economy from another catastrophe.

President Obama demonstrated his willingness to compromise his political ideology during the global financial crisis of 2008-2009. Being a Democrat, Obama’s political inclination is generally anti-big business.

Obama realized that it was reckless lending by some big banks on Wall Street that triggered the financial crisis. But he also realized that saving these banks from bankruptcy was key to saving the world economy from further disaster.

His decision to pour $800 billion of taxpayer’s money to bail out these banks was hard to swallow by his fellow party members, but it worked. Now it is expected that the Republicans will be willing to do likewise.

The writer is an economist.

Senator Hatch’s own words….

“We’ve been down this road before,” he said. “In 1990 Congress and the president struck a deficit reduction deal that combined spending cuts with tax increases. Unfortunately, while the tax hikes remained, the spending restraint did not, and our debt has marched higher.”

The Reality:

Graph showing Republicans are Sole Cause of Bad Government and ever since Bush we've been fucked
Courtesy of TPM

So if you knock off the 74% overspent on both wars, and knock off the 32% overspent on the Medicare Medical Profit Enhancement Act signed by Bush in 2003, spending is flat relative to GDP.

Revenue isn’t… Hatch says it worked great then… As reality shows, the only difference between then and now, is we aren’t taxing enough… Any Republican who says we are taxing too much, is like Hatch, a big, fat liar….

Poor Roger Clemens: Apparently it’s more of a crime to lie before Congress, than it is for a member of Congress to blatantly lie on CNN to the American people?

Did he just say (1:00) “although the tax hikes remained (uhh, is he so old his memory skipped over the Bush tax cuts?) … our spending cuts (see above chart) did not?

Caught in the act, Big Fat Liar…. Got some water to pour on to your pants?
Republicans Now Scramble for Damage Control over All The Lies They've Told To The American People
Image Courtesy of Cape Cod Living

High Price of Gas At the Pump

Yesterday, before Judge Pauley of the United District Court of the Southern District of New York, a motion was filed by the US Commodity Futures Trading Commission, against a consortium of hedge funds that ran up the price of oil during the winter of 2008.

The defendants manipulated the market by buying up roughly two thirds of the supply passing through the Cushing terminal, holding on to it to create the impression supplies were short, then dumping it onto the market, after betting it would sell short.

They performed the caper in January 08 and March 08. They were unable to find funding to finance it during February 08. Once they were notified in April that they had been placed under investigation, this consortium stopped.

This is just one group. imagine 30 to 40 groups all doing the same thing…

That this is done is now common knowledge, Out there are those who still erroneously believe supply and demand affect oil prices.. They refuse to acknowledge that oil was $145 a barrel, then $45 dollars once the funds got sold off to keep from going bankrupt..

There are those out there who still think we need to drill, drill, drill, like drilling will lower the price at the pump… It won’t, It can’t, . But instead of opening ocean floor to drilling, there still is something the Federal Government can do to make our lives easier when it comes to putting gas into our cars…

They can bet the entire Federal Debt on the fact that gas will rapidly drop in price, then dump a considerable amount of the Strategic Petroleum Reserves onto the Market… As the price of gas plummets from $3.87 to $1.47 a gallon, and bankrupts each and every hedge fund, both domestic and international, so much so, that across both sides of Wall Street, the sound of light caliber pistol fire echoes from building to building, cubicle to cubicle, … it forces the price of oil to again become determined by supply and demand. As all the moneys of the hedge funders start back-flowing into the US Treasury, and as each of us breathe easier every time we pull up to the pump, we, by pursuing this action, take care of the problem of high prices at the pump once and for all.

I mean if private companies can do it to take money out of our pocket each time we pump gas, the Federal Government can do the opposite to put money back into our pockets…

This is the second time… The first was 2008, but now, because of Republican gains in Congress, it is happening again… It would be wise to remember: just as we had to fight Germany twice in half a century because we didn’t finish the war the first time… this time, in our second war with the hedge funds, it would be wise to accept nothing less than unconditional surrender on their part.

A lesson needs to be taught! That lesson is: you don’t screw over everyday Americans.

Yesterday’s small step in US District Court, begins the process of educating America as to just exactly why, and by who, they are paying over $2.40 a gallon higher than they should……

And let us all stop this nonsense that gasoline prices are not manipulated…. They are. I’ve shown you the proof.

Next time someone tells you they aren’t, do them a huge favor. punch them hard and hurt them a little….

Today the White House issued this Executive Order.

“Should the debt ceiling not be lifted in time by May 16, in order to prevent the Treasury from running out of funds, I am hereby using the emergency powers given to the Chief Executive by the Constitution, to temporarily suspend the Bush Tax Cuts until: 1) either we can legally borrow the funds to continue paying on our commitments, or 2) we bring our debt down to the 2008 level by having much more tax revenue pour in.

This is in effect, immediately, and I have instructed the IRS to recalculate all 2010 tax forms over the level of $2 million dollars, and asses those individuals and companies, for the differences.

We must take this action because Republicans want to pay politics with your lives. As Chief Executive, I am responsible to you, not them. I won’t let that happen.

With these tax cuts out of the way, and with our austerity programs already in effect, that windfall of profit the Treasury will receive, will be entirely funneled towards the paying off our debt.

This policy will continue until Republicans can act reasonably and in a productive fashion.

Barack Obama.

It the government is not stopgap-funded by this date, it shuts down.

This year really doesn’t have a current budget…. yet. The Tea Partiers want to slash $100 billion out of this year alone. Republicans gave them the go ahead to try.

That is most of the discretionary budget.

There as been an academic argument for 30 years over whether big or little government is better.

This argument is divided, not so much along partisan lines, but along rural versus urban lines.

It makes a lot of sense really. In urban areas, there isn’t enough government. Too much crime, congestion, toxic waste,… all confront those citizens daily. How you going to combat them? Cut police? Cut highway funds? Cut environmental specialists?

No.

Now jump to mid America. Take Kansas City for example. Nearest City, St. Louis… a six hour drive across nothing. Go west, you see nothing for 10 hours till you hit Denver. Go north, 14 hours and you hit the Twin Cities. Go South, 800 miles…. first city… Dallas. And Kansas City? It has a franchise football team and franchise baseball team, but it is smaller then Wilmington Delaware’s greater metropolitan area….

And in between, …. lots, and I mean lots, of empty space….. very few people. North Dakota averages 10 people per square mile. When government intrudes into these people’s lives, they look at all the empty space around them, and say: “Out of all this space, you are actually bothering me? So what if my tractor leaks a drop or two of oil! My nearest neighbor is 20 miles away, and his next nearest is 30 miles beyond that! Now get off my land!”

But 2 million drops a day into a city’s drinking water, “ain’t” a good thing.

So,…. in this example, we see the divide separating the cheerleaders of both big and small government.

It truly is not the Democrat Party versus the Republicans: it’s an urban/rural standoff. What works for one, does not work for the other.

And it’s about time that all the pregame bullshit talk…. “my philosophy is better than your philosophy”, the crap we’ve heard since 1994, gets put to the test.

It’s time to flip the coin: Heads will pick receiving or kicking; tails will pick which side of field. Clock starts with the first kick of the ball..

So let’s see what happens when the government shuts down. It will be the republicans fault if it does. They will need 67 Senate votes to persist in their charade.

Lets see how those rural states, from whence these tea partiers hail, can survive without their urban subsidy. Yes, the solid blue states, the Democratic ones, those very ones that believe in big government, are also the very one subsidizing the red rural states with their Federal money. Republicans get defensive and cry like Boehner, upon hearing the very words: “redistribution of wealth”. But as you can see from here, wealth is redistributed from rich states to poor states all the time, and has been since their creation.

Urban subsidizes rural; not the other way around. Mississippi gets $2.02 dollars back for every dollar they send in to the Federal treasury. Delaware (the state that bucked the Tea Party trend because their citizens read blogs, not mainstream media), for every dollar it sends in, gets a paltry $.77 cents back….

So shut it down I say. Don’t blink. Maybe the Republicans have been right all these years…. Let’s shut down government, don’t drag it out, don’t water down the effort, don’t cause an economic malaise that stretches forever, …. Don’t compromise! Make the Republicans close the money spigot to their states, and let’s see, once and for all, whether or not, we need big government.

Let’s these states that continually vote Republican over and over again without any iota of what they’re doing, find out, once and for all, that they’ve been wrong all these years…

Once beaten in front of the world( someone buy Boehner some tissues), we can get on with fixing this country the right way, progressively, bringing prosperity back to the middle class where it belongs….

If Republicans won’t compromise, …. let them shut her down.

It’s clear as day.

When you have no engine in your car, you have to put one in… When banks aren’t lending, when the private sector is incapable of spending, the government has to..

It is called deficit spending. It’s been done before. Whereas we suffered a horrible Great Depression, Sweden emerged from theirs in 1934 by using just such a Keynesian approach towards deficit spending. While America suffered through dust bowls, “Grapes of Wrath”, Hoovervilles, soup kitchens, and one out of every four workers unemployed, Sweden was thriving and its citizens were living quite comfortably.

America finally… five years later, had no choice but to follow suit after the Japanese bombed Pearl Harbor. We too spent money we didn’t have and guess what? From 1939 to 1941, U.S. manufacturing shot up a phenomenal 50 percent!

So what happens to those people who have no choice but to work, when the government gives them a job? They spend…. soon,… more people have to work… who spend… so even more people have to work,… who spend … so even more people than the more people spending money previously, have to work. … and they spend.

Republicans clamor we need more jobs… Mike Castle even hands out a giant check he voted against! LOL.. But they are all lined up against the very engine that brought us out of The Great Depression… How silly is that?

They say… we’ll owe sooooooooooooooo much money… Hello…Excuse me? Uhhh, have you ever bought a … house? Don’t you personally owe soooooooooooooooo much money? A $200,000 dollar house cost over $455,000 by the time the last payment is made. But…… how long would it take you, forced to spend more than you currently make just to live, to save $200,000 cash just to buy that house outright?

Right…. you couldn’t…

The same principal applies to economics. If you need to spend money for jobs right now…. and don’t have it… when and where will those jobs come from?

They won’t. Duh.

Therefore when Bonini says “Delaware spends more per person than any other state, excluding Alaska and Hawaii…” and that “the No. 1 employer in Delaware is the state itself, and the number of people employed by the state has doubled in the past 12 years” … right now we should be grateful… not troubled. Because we too are making some of that money those people are spending.

When he says…. “Tough economic times have prompted people to get involved in the political process,” it’s hilarious…. Especially when you look at this… on the Republican side… THEY ARE ALMOST ALL MILLIONAIRES…. (C’mon… It’s Delaware… Even if you’re Republican you gotta laugh)…

But, when he says … “The fact that people are making tough economic decisions in their personal family lives is bringing attention to the fact that the government is not,” it shows he doesn’t understand government’s role in the economy. It unfortunately shows us all that he doesn’t either read, or understand, American history.

And… that is what makes him a dangerous person to put in as our State Treasurer. He’s a great guy, and I certainly wish him well, but now is just not right time for someone who does not understand deficit spending to be running our state’s Treasury. Thirty years from now… based on my best estimates…that will be his time.

Duffy is God’s answer to a prayer.. I miss the old days of blogging when we were debating principals instead of people… Duffy has stuck to the old line of debating principals with facts, and that is what makes him special in the eyes of bloggers everywhere…

Since the passing of Steve Newton, he has been the only one to challenge me in any argument, and usually some pretty good stuff comes out of both sides during the exchange… I have respected that.. Cause once again, opinions mean dick. Facts are what we steer by.. It is my hope that in responding to his challenge that an answer may make itself apparent.. Who knows? It may not come from me… But if I’m the catalyst for bringing it out in the open, then… none of this was in vain..

Why I like to debate Duffy is simple.. Neither side, he or I, is concretely set in their opinions… We accept it when the other side makes sense… I usually go into such debates having no idea where they’ll end up… I hope the rest of you enjoy the ride as welI….

That said..

Duffy leads: Wall Street’s problems were caused by Fannie and Freddie loaning money to people they knew couldn’t pay and moreover, forcing banks to lend money to people who couldn’t pay. That was not deregulation but misregulation

kavips rebutt’s:Uh… Mr. President. That’s not entirely accurate.

First off, the Community Reinvestment Act of 1977 was developed for, and locked in on, urban developmental areas and had no part of the subprime boom, which primarily occurred out in western desert regions where owning 4 to 5 investment homes was normal… Those homes were overwhelmingly funded by loan originators NOT SUBJECT to the act… We all know the crises was not because people couldn’t afford a payment on their house. It came about, because with no occupants, people could not afford the payments of 4 to 5 houses….. Instead of one loan per borrower turning up in default; four to five were.
Investment Homes lead forclosures not inner city Residences

Second off, The housing bubble reached its point of maximum inflation in 2005.
The Housing Bubble Starts to Dive in 2005
Courtesy of NYT

Third off, During those exact same years, Fannie and Freddie were sidelined by Congressional pressure, and saw a sharp drop in their share of loans secured by the Feds… Follow the dotted line on the very bottom of the graph…
Freddie and Fannie on the lowest line
Courtesy of NYT

Fourth off; During those exact same years, private secures, like Delaware’s own AIG, grabbed the lions share of the market.
Private, not Public Insurers Caused the Crash
Courtesy of NYT

Remember these graphs for later on when I discuss the results of deregulation, versus regulation… But like it or not, these graphs conclusively show that private insurers, who thanks to Marie Evans, we now know were deregulated by Phil Gramm in the 2000 Omnibus Bill, were the primary cause of the worlds financial collapse.. Probably put best by these words of AIG’s spokesperson, who when asked why they didn’t have sufficient funds to cover losses, said point blank, “We were deregulated. We were no laws requiring us to keep any funds, ..so we spent it…”

Duffy leads: The loosely regulated hedge funds escaped this mess largely unscathed. Why? They can’t count on a bailout like the big banks. The Too Big To Fail banks were counting on a bailout (not unlike the S&L bailouts which started on the Republican’s watch) and they got them.

kavips rebutt’s:Uh… Mr. President. That’s not entirely accurate. I agree that the hedge funds did survive better than the banks. Not because of bailouts, but because they sold short during the crises and made billions while firms closed and people got thrown out of work. There is nothing wrong with that; I did the same. In fact close readers may remember my warnings that the crises was impending almost a year earlier. Very close readers may remember my telling them exactly when to sell, and at what point the stock market would rebound… I must say: I called it rather well. 🙂

“Hedge funds were not in my understanding, at fault in the credit crisis,” said David Ruder, former chairman of the Securities and Exchange Commission. “At the most what they did was to sell securities when some of their investments were declining and they needed to have liquid funds. They were not the architects of these problems.”

De regulated hedge funds are not the issue… De-regulated, excessively leveraged, mortgage securities, are a different story however… They, not the banks that held them, are the cause of the crises…Years from now, when academics search for causes of the stock market crash of 2008, they will focus on the pivotal role of mortgage-backed securities. These exotic financial instruments allowed a downturn in U.S. home prices to morph into a contagion that brought down Bear Stearns a year ago this month – and more recently have brought the global banking system to its knees.

Where you err is when you state that banks too big to fail, assumed they would be bailed out… By implication, you say imply they failed from squandering money, and wanted the bailouts.. But your tax dollars didn’t flow directly to the bottom line.

The roughly $200 billion the Treasury Department has handed out to battered banks was swapped for a special class of stock that pays a 5 percent dividend (rising to 9 percent after five years.) As of April 15, the Treasury had collected about $2.5 billion in dividend payments on its investment.

So in that sense, the bailout money represents an expense for banks. That’s one reason a number of banks have said they want to give the money back as soon as possible.

You say big banks were counting on a bailout, and they got them? That didn’t happen to these banks. New Mexico, Georgia, and Florida each lost a bank just last Friday. That brings to 8, the number of banks failed in June. Unfortunately if a bank is failing, it can’t bet on itself to fail, as can a hedge fund.

Duffy leads: Banks have successfully lobbied to get their losses absorbed by taxpayers and gains are kept private. How nice for them. They felt comfortable making insane gambles because they knew they’d be bailed out. Most of them were right. Also remember that it was Bill Clinton who tore down the wall between retail and investment banking. The idea was to give banks more stability as they typically perform as exact opposites in bull and bear markets. (FWIW, I think that was a good idea and I can tell you first hand that two of the Fortune 100 banks I worked for were carried by retail banking in bear years. They may not have had bonuses those years but they didn’t have layoffs either)

kavips rebutt’s:Uh… Mr. President. That’s not entirely accurate. The idea is that the banks made bad decisions knowing taxpayers would bail them out is the issue that is inaccurate. For the record, I have no qualms that it was the Clinton legacy who tore down the wall between banks and investment banking. Like you, I feel it was a good idea to do so… Again the problem was not primarily with banks making loans to people who could not pay.. Although, it was as late as October 2009, when I was made aware of one private Bank in Denver still exaggerating income to make loans look good enough on paper to get approval of securitization. What caused the collapse was the leveraging of those loans as securities, so that as the housing market became overextended, and the ARM jumped past the low cost opening years, the damage was 100 times worse because of leveraging. What made the collapse criminal, was that the insurance most financial institutions had bought from AIG, to cover such an improbable event, had already spent by that companies executives, out on bonuses to themselves. What made it doubly criminal, was that when they received government dollars through a taxpayer bailout, those same executives assumed it was to first go towards paying their bonuses again. However, very recent events may give some cover to the argument that some collusion was implicit in the bailing out of Goldman Sacs and AIG… Basically, once bailed out, AIG paid Goldman Sacs for shares twice as much as they were worth. The documents also indicate that regulators ignored recommendations from their own advisers to force the banks to accept losses on their A.I.G. deals and instead paid the banks in full for the contracts.