Posted on Nov 7, 2015
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I'm confused. Hasn't President Obama been disastrous for the American economy?
Since he was so bad for the America economy, can anyone explain the graphs?
http://www.electoral-vote.com/index.html
PS - Please don't tell me that the people who are running the website are "liberals" - I already know that and as far as I know a "liberal" 2 is identical to a "conservative" 2 (and that applies to any other number you want to name).
Since he was so bad for the America economy, can anyone explain the graphs?
http://www.electoral-vote.com/index.html
PS - Please don't tell me that the people who are running the website are "liberals" - I already know that and as far as I know a "liberal" 2 is identical to a "conservative" 2 (and that applies to any other number you want to name).
Posted in these groups: 
Barack Obama
Economy
Barack Obama Economy
Edited >1 y ago
Posted >1 y ago
Responses: 18
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It is fairly common knowledge among those who really care and look deeper than the 30 second sound-bites that the Unemployment numbers are grossly under-reported, and the Dow Jones is being artificially buoyed by Quatitative Easing (QE) and sleight of hand economic tricks.
The real Unemployment rate is likely somewhere in the mid-20% or higher. UE numbers only report those who have applied for new benefits and those who are currently receiving benefits. It does NOT report those who have exhausted their benefits (and are still unemployed), nor those who have stopped seeking employment. You cannot honestly say the UE rate is somewhere lower than 10% when 35+% of Americans are unemployed. The math simply does not support that.
As for the economy, it only appears to be stable and positive. The truth is that the stock market is being artificially inflated by the Fed buying its own T-Bills (which are losing value), the Fed artificially keeping interest rates low, and currency manipulation that is done by continuously printing money that has no value. The only thing that sets our currency apart from Monopoly money is that the government has said that US Currency has value. Yeah, OK. I will continue to buy precious metals...
So revel in the LameStream Media's pronouncements that all is well and things are rosy and happy. Just pay no attention to the man behind the curtain. And don't be surprised when it all comes crashing down.
The real Unemployment rate is likely somewhere in the mid-20% or higher. UE numbers only report those who have applied for new benefits and those who are currently receiving benefits. It does NOT report those who have exhausted their benefits (and are still unemployed), nor those who have stopped seeking employment. You cannot honestly say the UE rate is somewhere lower than 10% when 35+% of Americans are unemployed. The math simply does not support that.
As for the economy, it only appears to be stable and positive. The truth is that the stock market is being artificially inflated by the Fed buying its own T-Bills (which are losing value), the Fed artificially keeping interest rates low, and currency manipulation that is done by continuously printing money that has no value. The only thing that sets our currency apart from Monopoly money is that the government has said that US Currency has value. Yeah, OK. I will continue to buy precious metals...
So revel in the LameStream Media's pronouncements that all is well and things are rosy and happy. Just pay no attention to the man behind the curtain. And don't be surprised when it all comes crashing down.
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MAJ (Join to see)
COL Ted Mc You do realize that an 8% drop in Real Median Household Income is horrible right. Those are awful numbers for any president. Simple proof is that the economy per person has contracted even after the "collapse." Also GDP per capita has stagnated since 2011, but worst of all with all the talk of income redistribution those numbers have gotten so much worse. Under Obama's administration the poorer have a lower share of GDP, so none of the paltry growth we have seen is being distributed to the poor. This administration has been catastrophic to the incomes of the minorities and millennials.
https://en.wikipedia.org/wiki/Income_inequality_in_the_United_States#2009.E2.80.93present
https://en.wikipedia.org/wiki/Income_inequality_in_the_United_States#2009.E2.80.93present
Income inequality in the United States - Wikipedia, the free encyclopedia
Income inequality in the United States has increased significantly since the 1970s after several decades of stability, meaning the share of the nation's income received by higher income households has increased. This trend is evident with income measured both before taxes (market income) as well as after taxes and transfer payments. Income inequality has fluctuated considerably since measurements began around 1915, moving in an arc between...
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COL Ted Mc
MAJ (Join to see) - Captain; I don't dispute the fact that income disparity in the US has gotten worse (although the "real median family income" has been relatively static since 1999).
As for why none of the benefits of the economic growth that has occurred have been distributed to "the poor", the simple fact is that "the poor" aren't "the investing class" and, as such, don't benefit from "the investments". (This is what's known as "Capitalism".).
I am sure that you are going to be able to find a lot of economic analysts who are going to be able to tell you that an 8% drop in "real median family income" works out to a drop of $2.190 (less than the price of coffee at Starbucks) per day for every $10,000 of "real family income". Of course, you are also going to have a hard time finding one of those economic analysts whose "real family income" actually dropped 8%.
As for why none of the benefits of the economic growth that has occurred have been distributed to "the poor", the simple fact is that "the poor" aren't "the investing class" and, as such, don't benefit from "the investments". (This is what's known as "Capitalism".).
I am sure that you are going to be able to find a lot of economic analysts who are going to be able to tell you that an 8% drop in "real median family income" works out to a drop of $2.190 (less than the price of coffee at Starbucks) per day for every $10,000 of "real family income". Of course, you are also going to have a hard time finding one of those economic analysts whose "real family income" actually dropped 8%.
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MAJ (Join to see)
COL Ted Mc Sir the 8% is taken from the website you posted. investing class is not Capitalism that is Crony Capitalism the current market form supported by both Republican and Democratic Parties. True Capitalism promotes liberty and growth. This Crony system establishes barriers to entry and taxes income rather than wealth resulting in a system where it is difficult to transverse class groups because of the tax on success. While that 8% is as you consider small it is still more than a used car payment. That is big. Anyone can feel free to promote our presidents successes but economic growth isn't one of them. Compound that with the recent jump in interest rates our economy isn't going to be rebounding any time soon. (I'm not saying the Republicans candidates would have done better just saying Economics isn't one of Obamas successes.
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COL Ted Mc
MAJ (Join to see) - Captain; I agree that the economic system (at least the macro parts of it) in the US today leans heavily towards "Crony/Monopoly Capitalism" and that that is supported by BOTH political parties (they just have different lists of who is a "Crony" and who isn't).
"Micro-Capitalism" does have a tendency to promote widespread improvements in living conditions but doesn't actually have much to do with politics (the wellspring of all "rights" and "freedoms"). It also seldom is capable of funding large projects.
"Macro-Capitalism", on the other hand, has a tendency to promote improvements in living conditions for a small sub-set of the population and DOES have a lot to do with politics (the wellspring of "advantages" and "preferences"). It can, however, fund large projects.
The "trick" is to keep the two in balance.
The problem with figures like "average real income change" is that they are AVERAGES. If 99 people suffer a 1% drop and 1 person experiences a 99% increase, then the AVERAGE remains unchanged. Quite frankly, given how close the American economy came to tanking, I think that Mr. Obama did reasonably well (not "great", but "reasonably well"). Mind you, since "Congress" has consistently resisted taking any steps which would prevent a repeat of the incipient crash (or the flooding of money out of the country) - shovelling tons of cash into corporate treasuries isn't quite the same thing - the "issue" is going to raise its head again.
[ASIDE - My "suggestion" in 2007/8 was that the Democrats not even bother to run a candidate for President of the United States of America and simply campaign on the slogan of "OK, you broke it now let's see you fix it.". The odds would have been that by 2012 there would only have been one functional political party in the US (and it could have been EITHER the Republicans or the Democrats).
As far as a "jump" in interest rates is concerned, you might find the linked table of "Real Interest Rates" interesting.
http://data.worldbank.org/indicator/FR.INR.RINR
"Micro-Capitalism" does have a tendency to promote widespread improvements in living conditions but doesn't actually have much to do with politics (the wellspring of all "rights" and "freedoms"). It also seldom is capable of funding large projects.
"Macro-Capitalism", on the other hand, has a tendency to promote improvements in living conditions for a small sub-set of the population and DOES have a lot to do with politics (the wellspring of "advantages" and "preferences"). It can, however, fund large projects.
The "trick" is to keep the two in balance.
The problem with figures like "average real income change" is that they are AVERAGES. If 99 people suffer a 1% drop and 1 person experiences a 99% increase, then the AVERAGE remains unchanged. Quite frankly, given how close the American economy came to tanking, I think that Mr. Obama did reasonably well (not "great", but "reasonably well"). Mind you, since "Congress" has consistently resisted taking any steps which would prevent a repeat of the incipient crash (or the flooding of money out of the country) - shovelling tons of cash into corporate treasuries isn't quite the same thing - the "issue" is going to raise its head again.
[ASIDE - My "suggestion" in 2007/8 was that the Democrats not even bother to run a candidate for President of the United States of America and simply campaign on the slogan of "OK, you broke it now let's see you fix it.". The odds would have been that by 2012 there would only have been one functional political party in the US (and it could have been EITHER the Republicans or the Democrats).
As far as a "jump" in interest rates is concerned, you might find the linked table of "Real Interest Rates" interesting.
http://data.worldbank.org/indicator/FR.INR.RINR
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COL Ted Mc - Smoke and mirrors.
While there are some good stats that can be shown, there are many more that show the true status of the economy and it is not good, even with the erroneous/manipulated data put out by the administration.
While there are some good stats that can be shown, there are many more that show the true status of the economy and it is not good, even with the erroneous/manipulated data put out by the administration.
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COL Ted Mc
COL Jean (John) F. B. - Colonel; Agreed. If we ignore everything that doesn't fit precisely within our existing stereotypes then the world will always be the way we want it to be.
And, of course, it is completely unacceptable for "the administration" to "manipulate the data" by using exactly the same rules for data definition and collection as previous administrations did (and which showed previous administrations in a positive light).
And, of course, it is completely unacceptable for "the administration" to "manipulate the data" by using exactly the same rules for data definition and collection as previous administrations did (and which showed previous administrations in a positive light).
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Pres. Obama has been far from "disastrous" for the American economy. It has improved significantly by nearly every metric used to evaluate the economy since January 2009 (unemployment, stock indices, housing market, gas prices, and the list goes on). Whether that has anything to do with the President's policies is up for debate but it'a incorrect to assess that he has been "disastrous" for the economy.
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COL Ted Mc
2d Lt (Join to see) - Lieutenant; What you have to remember is that although the "non-Obama supporters" use the same names for numbers and directions as the "Obama supporters" do, those names don't mean the same thing to both sides of the issue. For example a 10% "unemployment rate" under Mr. Bush is, to a "non-Obama supporter" LOWER than a 5% "unemployment rate" under Mr. Obama and a $5Billion deficit under Mr. Obama is HIGHER than a $10Billion deficit under Mr. Bush.
Although BOTH the "non-Obama supporters" and the "Obama supporters" will agree that 2 plus 2 equals 4, they are not in agreement over the meaning of either "2" or "4"..
Although BOTH the "non-Obama supporters" and the "Obama supporters" will agree that 2 plus 2 equals 4, they are not in agreement over the meaning of either "2" or "4"..
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COL Jean (John) F. B.
COL Ted Mc - No, we all know and agree that 2+2=4. The issue is whether it is really "2", or has the data been manipulated to make it look like "2", when it is really something else.
The Obama Administration is the embodiment of the old joke/definition of a good accountant, who, when asked, what 2+2 equals, answers, "what would you like it to be".
The Obama Administration is the embodiment of the old joke/definition of a good accountant, who, when asked, what 2+2 equals, answers, "what would you like it to be".
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COL Ted Mc
COL Jean (John) F. B. - Colonel; 2 + 2 doesn't necessarily always equal 4. Sometimes 2 + 2 = 11 and some times 2 + 2 = 10 and sometimes 2 + 2 = 4.
Of course the data has been "manipulated" - it's been "manipulated" in exactly the same manner as it was being "manipulated" when Mr. Bush was President, and when Mr. Carter was President before him, and when Mr. Bush's father was President before him and when Mr. ....
The difference, of course, is that when "our guy" is in charge then we accept the data uncritically but when "their guy" is in charge we are totally disgusted at the way that the data is being "manipulated".
This is a classic case of "But that's different.".
Of course the data has been "manipulated" - it's been "manipulated" in exactly the same manner as it was being "manipulated" when Mr. Bush was President, and when Mr. Carter was President before him, and when Mr. Bush's father was President before him and when Mr. ....
The difference, of course, is that when "our guy" is in charge then we accept the data uncritically but when "their guy" is in charge we are totally disgusted at the way that the data is being "manipulated".
This is a classic case of "But that's different.".
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I think if you overlaid a graph of who was in the majority in Congress at what time, it would be very telling.
To answer the question directly, to say that the economy is a product of Bush's policies or President Obama's policies vastly oversimplifies a very complex model that has cycles and is affected by world events.
I can think of about a hundred people who have more of an effect on the economy than political leaders do. Politicians have large bearing on three segments today: Health care, government itself, and defense. and that power is not concentrated in any single person.
To answer the question directly, to say that the economy is a product of Bush's policies or President Obama's policies vastly oversimplifies a very complex model that has cycles and is affected by world events.
I can think of about a hundred people who have more of an effect on the economy than political leaders do. Politicians have large bearing on three segments today: Health care, government itself, and defense. and that power is not concentrated in any single person.
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COL Ted Mc
1SG (Join to see) - First; If "having the majority" actually meant anything when "the majority" was less than sufficient to FORCE passage of legislation, I'd agree with you unconditionally. However, under the way that the Legislative Branch ACTUALLY functions, it's more about who is the most willing to hand out financial goodies than it is about who has "majority" control.
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1SG (Join to see)
COL Ted Mc - In 2009, the Democrats enjoyed a supermajority in both houses, including a filibuster-proof one in the Senate until the election of Scott Brown to fill Ted Kennedy's vacant seat. With that power, they passed mountains of spending bills, some without a single Republican in favor.
Prior to that, from 2006-2008 Democrats had significant majorities as well, and used that to attempt to alter Mr Bush's policies. One could make an argument that the paralysis and finger-pointing delayed a decent government response to obvious trouble signs in the real estate and venture capital markets as early as late 2007.
To say that the inauguration of President Obama was a panacea that "fixed" the economy ignores vast amounts of data and other factors that were at play.
Prior to that, from 2006-2008 Democrats had significant majorities as well, and used that to attempt to alter Mr Bush's policies. One could make an argument that the paralysis and finger-pointing delayed a decent government response to obvious trouble signs in the real estate and venture capital markets as early as late 2007.
To say that the inauguration of President Obama was a panacea that "fixed" the economy ignores vast amounts of data and other factors that were at play.
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COL Ted Mc
1SG (Join to see) - Indeed, and the charts show that that was the beginning of the reversal.
When else has a single party enjoyed the same favourable conditions?
When else has a single party enjoyed the same favourable conditions?
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yes , he abused his power and spend billions on worthless contracts and wherever and in the middle east.
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Anyone who's read the numbers over the years knows Obamas been an amazing president with horrible PR (read: a Republican Jihad of disrespect and obstructionism). He's been ice skating uphill and still pulled off a gold medal...
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COL Jean (John) F. B.
SFC Michael Hasbun - There are none so blind as those who do not see.
Obama is the most inept, divisive, corrupt, immoral, and racist president this country has ever had. It will take decades to undo the damage he and his Administration and sheeple have inflicted on this country.
Obama is the most inept, divisive, corrupt, immoral, and racist president this country has ever had. It will take decades to undo the damage he and his Administration and sheeple have inflicted on this country.
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PO2 Mark Saffell
There it is. Break out the standard liberal reply. Sad Michael that you resort to name calling a Col rather than be able to provide facts to debate the man.
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SFC Michael Hasbun
I did? What did I call him? I don't believe I've ever said a word about him. I mocked his nonsensical rant which no statistics bear out, certainly, but I don't discuss people, only issues.
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Perhaps an optimistic conservative would say, but imagine how much better those graphs would be if a fiscal conservative were president.
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COL Ted Mc
COL Sam Russell - Colonel; I just stumbled across the linked article and thought that you might find the thoughts about who was the most "fiscally conservative" president interesting.
. . .
What what about primary spending?
[see table at the to;\p
By that measure, we get even better results. There’s actually been a slight downward trend in the fiscal burden of government during the Obama years.
http://www.cato.org/blog/obama-really-most-frugal-president-over-past-50-years
. . .
What what about primary spending?
[see table at the to;\p
By that measure, we get even better results. There’s actually been a slight downward trend in the fiscal burden of government during the Obama years.
http://www.cato.org/blog/obama-really-most-frugal-president-over-past-50-years
Is Obama Really the Most Frugal President of the Past 50 Years?!?
It turns out Obama is only middle-of-the-pack in an era of big-spending government.
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SGM David W. Carr LOM, DMSM MP SGT
How can this possible be true when Bush spent the holidays on his ranch in Crawford. the Obamas jet set all over the place not too mention all the czars and increased staff. take a look at the previous trips they made taking separate planes at taxpayer expense. Would love to see the bills for the dogs that fly separately and mother-in-law living in The White House enjoying all the luxuries and unearned benefits
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COL Ted Mc
SGM David W. Carr LOM, DMSM MP SGT - Sergeant Major: Good fiscal management?
If Mr. Obama spends 20% more on the expenses for the Presidency and 1% less on the expenses for the rest of the country, do the total expenses go up or down?
For the last year that the figures are available the Brits spent around $58,000,000 on the Royal Family while Obama spent around 1.4 BILLION DOLLARS on the White House.
That 1.4 BILLION DOLLARS is a massive increase over the paltry $1,592,875,254.00 that Mr. Bush spent.
http://www.outsidethebeltway.com/the-presidency-costs-taxpayers-a-lot-but-thats-not-obamas-fault/
If Mr. Obama spends 20% more on the expenses for the Presidency and 1% less on the expenses for the rest of the country, do the total expenses go up or down?
For the last year that the figures are available the Brits spent around $58,000,000 on the Royal Family while Obama spent around 1.4 BILLION DOLLARS on the White House.
That 1.4 BILLION DOLLARS is a massive increase over the paltry $1,592,875,254.00 that Mr. Bush spent.
http://www.outsidethebeltway.com/the-presidency-costs-taxpayers-a-lot-but-thats-not-obamas-fault/
The Presidency Costs Taxpayers A Lot, But That’s Not Obama’s Fault
The Presidency costs taxpayers a lot of money, but that's been true for many, many years now.
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COL Ted Mc
PV2 Scott Goodpasture - Private; The graphs don't "disregard" anything that they aren't actually measuring.
You might be interested in this article
http://www.justfacts.com/nationaldebt.asp
You might be interested in this article
http://www.justfacts.com/nationaldebt.asp
Comprehensive and meticulously documented facts about the national debt. Learn about various measures of the national debt, contributing factors, consequences, and more.
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Your first graph is of the Bureau of Labor Statistics (BLS) U3. This fails to count people such as those whose unemployment has run out, who've given up looking for work and people who are working part time because they can't find full time employment, amongst others. That number hasn't gone below 9% since Obama's been in office. Moreover, the skyrocketing percentage of people working part time has inflated these numbers, especially since there are so many people working multiple part-time jobs that are being over-counted. NOTHING in that graph changes the fact that the employed, as a percentage of the total population, is at its lowest level since Carter was President.
Your second graph reflects money being dumped into the system by the Fed via 'quantitative easing.' Also, since when is it a good to make the rich richer at the expense of the poor?
Your second graph reflects money being dumped into the system by the Fed via 'quantitative easing.' Also, since when is it a good to make the rich richer at the expense of the poor?
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COL Ted Mc
1LT Aaron Barr - Lieutenant; I agree that those people aren't counted during Mr. Obama's presidency.
On the other hand they weren't counted during Mr. Bush's presidency either.
So, other than the fact that the "real" unemployment rate is NEVER reported by any government, what is your point?
When you ask "...since when is it a good to make the rich richer at the expense of the poor?", I guess that the only answer that I can give you is "Since the invention of unregulated, free enterprise, oligarchy, capitalism.".
Say what you will about the magnitude of the figures, the patterns remain constant.
On the other hand they weren't counted during Mr. Bush's presidency either.
So, other than the fact that the "real" unemployment rate is NEVER reported by any government, what is your point?
When you ask "...since when is it a good to make the rich richer at the expense of the poor?", I guess that the only answer that I can give you is "Since the invention of unregulated, free enterprise, oligarchy, capitalism.".
Say what you will about the magnitude of the figures, the patterns remain constant.
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The charts have yet to fill in the last year of the Obama presidency. It is a little early to draw a good comparison.
I recommend extending these charts to the left, and compare the S&P 500 and unemployment rates with the years of the Clinton presidency. Remember the dot-com bubble crash of 2000?
I question if blame for the housing bubble and the associated sub-prime mortgage crisis of 2008 should be directed at the President. It seems to me that much of the problems could be directed at world wide banking processes.
I recommend extending these charts to the left, and compare the S&P 500 and unemployment rates with the years of the Clinton presidency. Remember the dot-com bubble crash of 2000?
I question if blame for the housing bubble and the associated sub-prime mortgage crisis of 2008 should be directed at the President. It seems to me that much of the problems could be directed at world wide banking processes.
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COL Ted Mc
COL Korey Jackson - Colonel; I quite agree that the charts don't show the things that we don't have the data for yet (or for things that haven't happened yet).
I've included a graphic for the S&P 500 [ https://upload.wikimedia.org/wikipedia/en/a/a3/Daily_Linear_Chart_of_S%26P_500_from_1950_to_2013.png ] and there is a link to (a really nice chart of) the US unemployment rate below.
http://www.macrotrends.net/1316/unemployment-rate-historical-chart
Strangely enough some of the worldwide banks were MUCH less affected than the US banks were. The "worldwide" banks that adopted the US model of "heavy leverage, low reserves, high risk, and 'junk' securities" were the ones that were hit the hardest. The 'worldwide' banks that kept to the traditional/conservative practices of actually attempting to make only those loans that had a good chance of being repaid were hit MUCH less hard than the US banks.
I've included a graphic for the S&P 500 [ https://upload.wikimedia.org/wikipedia/en/a/a3/Daily_Linear_Chart_of_S%26P_500_from_1950_to_2013.png ] and there is a link to (a really nice chart of) the US unemployment rate below.
http://www.macrotrends.net/1316/unemployment-rate-historical-chart
Strangely enough some of the worldwide banks were MUCH less affected than the US banks were. The "worldwide" banks that adopted the US model of "heavy leverage, low reserves, high risk, and 'junk' securities" were the ones that were hit the hardest. The 'worldwide' banks that kept to the traditional/conservative practices of actually attempting to make only those loans that had a good chance of being repaid were hit MUCH less hard than the US banks.
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COL Korey Jackson
COL Ted Mc -
Good points, good background data.
If we review the last associated data with the previous two years of full-two term presidential periods (1993-2000 (Clinton), and 2001-2009 (Bush)) - they begin with lows in unemployment, and generally end with rising unemployment; similarly, there are peaks in the S&P and dramatic falls in value.
I pray that nothing similar happens within this last year of the Obama presidential period.
Your point about the "worldwide banking system" is well-taken. There were and are excellent banks outside of the USA with traditional, solid, and conservative practices.
Still, the housing bubble (caused in some part by sub-prime mortgage sales) was also a significant issue for many countries beyond the USA, to include France, Ireland, Greece, the United Kingdom, Spain, the Netherlands, New Zealand, Romania, China, India, United Arab Emirates, etc. I should have more accurately referred to the "shadow banking system" rather than the worldwide banking system, which many believe aggravated the sub-prime mortgage crisis and led to a global credit crunch.
Good points, good background data.
If we review the last associated data with the previous two years of full-two term presidential periods (1993-2000 (Clinton), and 2001-2009 (Bush)) - they begin with lows in unemployment, and generally end with rising unemployment; similarly, there are peaks in the S&P and dramatic falls in value.
I pray that nothing similar happens within this last year of the Obama presidential period.
Your point about the "worldwide banking system" is well-taken. There were and are excellent banks outside of the USA with traditional, solid, and conservative practices.
Still, the housing bubble (caused in some part by sub-prime mortgage sales) was also a significant issue for many countries beyond the USA, to include France, Ireland, Greece, the United Kingdom, Spain, the Netherlands, New Zealand, Romania, China, India, United Arab Emirates, etc. I should have more accurately referred to the "shadow banking system" rather than the worldwide banking system, which many believe aggravated the sub-prime mortgage crisis and led to a global credit crunch.
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COL Ted Mc
COL Korey Jackson - Colonel; Your points about "cyclics" are well taken. Many of the problems with "analyses" is that the "analyst" only looks at one particular part of a cycle (the part that proves what they want to prove [if there isn't one, then the data is "irrelevant"]).
I think that it's necessary to separate "sub-prime mortgages" and "bundled sub-prime mortgage backed securities sales". With the first then the lender at least has the possibility of recouping a significant portion of their loan by realizing on the mortgage and actually acquiring real property (the old adage "Buy land, God has stopped making it." is still valid) while with the second the lender tends to end up with some really pretty wallpaper.
Most "bank lending" is predicated upon the knowledge that a SMALL percentage of the loans will default. (Credit cards are predicated upon the knowledge that a large percentage of the loans will default.) The sub-prime mortgages were predicated on not caring if any of the loans defaulted because what was important was for A to have a piece of paper that said "X owes Y $Z" which could then be sold to B for $Z-p at which point B would then bundle it with a bunch of other "X owes Y $Z" pieces of paper and sell the lot off for $Z-p+Q (which in some cases turned out to be higher than the total of all the $Zs in the bunch) - and, besides, it was now going to be C's problem.
Considering the scandal over setting the international foreign exchange rates and the participation of almost every major American bank in the events which almost led up to a generalized bank failure (with the "bad banks" dragging the "good banks" down with them [and which was averted almost solely due to "Welfare For The Rich"]) I think that a more appropriate term for "shadow banking system" would be "shady banking system".
The average person does not appear to realize that the amount of REAL "money" available is generally pretty limited in the rate that it can be expanded. HOWEVER the amount of "currency" which is available is limited only by the degree to which people aren't prepared to laugh at its pretencion to value. In this regard the American Dollar has a decided advantage.
BUT if that advantage is lost then all (economic) hell is going to break out.
Unfortunately it appears that the American populace has become addicted to its "McDonald's and Reality TV" in the same way that the Roman populace became addicted to its "Bread and Circuses". Equally unfortunately it appears that American politics is following the Roman model where the way to the top was to buy the support of the masses by pandering to their baser natures and financing the buying by
"looting the non-Romans".
I think that it's necessary to separate "sub-prime mortgages" and "bundled sub-prime mortgage backed securities sales". With the first then the lender at least has the possibility of recouping a significant portion of their loan by realizing on the mortgage and actually acquiring real property (the old adage "Buy land, God has stopped making it." is still valid) while with the second the lender tends to end up with some really pretty wallpaper.
Most "bank lending" is predicated upon the knowledge that a SMALL percentage of the loans will default. (Credit cards are predicated upon the knowledge that a large percentage of the loans will default.) The sub-prime mortgages were predicated on not caring if any of the loans defaulted because what was important was for A to have a piece of paper that said "X owes Y $Z" which could then be sold to B for $Z-p at which point B would then bundle it with a bunch of other "X owes Y $Z" pieces of paper and sell the lot off for $Z-p+Q (which in some cases turned out to be higher than the total of all the $Zs in the bunch) - and, besides, it was now going to be C's problem.
Considering the scandal over setting the international foreign exchange rates and the participation of almost every major American bank in the events which almost led up to a generalized bank failure (with the "bad banks" dragging the "good banks" down with them [and which was averted almost solely due to "Welfare For The Rich"]) I think that a more appropriate term for "shadow banking system" would be "shady banking system".
The average person does not appear to realize that the amount of REAL "money" available is generally pretty limited in the rate that it can be expanded. HOWEVER the amount of "currency" which is available is limited only by the degree to which people aren't prepared to laugh at its pretencion to value. In this regard the American Dollar has a decided advantage.
BUT if that advantage is lost then all (economic) hell is going to break out.
Unfortunately it appears that the American populace has become addicted to its "McDonald's and Reality TV" in the same way that the Roman populace became addicted to its "Bread and Circuses". Equally unfortunately it appears that American politics is following the Roman model where the way to the top was to buy the support of the masses by pandering to their baser natures and financing the buying by
"looting the non-Romans".
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