Wednesday, January 26, 2011

It's the Economy, Stupid

from: Doing the math on Obama’s deficits - Washington Post (2/1/2012) 

Obama’s and Bush’s effects on the deficit in one graph  

GOP lies about the economy (3minutes from Cenk/Young Turks):


Analysis of the jobs picture, using Michelle Bachmann's Tea Party Response to the State of the Union as occasion to fact check routine conservative/republican/teaparty claims about the "Obama economy"

The Debt and Deficits
  • Big Lies: Democrats are spenders, Republicans are not. What?
  • George W. Bush's Tab (quotes Bruce Bartlett)- The Dish | By Andrew Sullivan - The Daily Beast - http://goo.gl/d2Yvc 
    • When you check reality, rather than the alternate universe an amnesiac press, you find Bush had a chance to pay off all our debt before we hit the crisis - - http://goo.gl/d2Yvc
  • CHART: Spending, Taxes, And Deficits Are All Lower Today Than When Obama Took Office | ThinkProgress -(5/15/2012) http://goo.gl/2e2fq
  • Doing the math on Obama’s deficits - The Washington Post (2/1/2012) (see graphs/numbers above)-- Bush policies: $5.1 Trillion.  Obama Policies: $983 Billion
    • When Obama took office, the national debt was about $10.5 trillion. Today, it’s about $15.2 trillion. Simple subtraction gets you the answer preferred by most of Obama’s opponents: $4.7 trillion.
    • But ask yourself: Which of Obama’s policies added $4.7 trillion to the debt? The stimulus? That was just a bit more than $800 billion. TARP? That passed under George W. Bush, and most of it has been repaid.
    • There is a way to tally the effects Obama has had on the deficit. Look at every piece of legislation he has signed into law. Every time Congress passes a bill, either the Congressional Budget Office or the Joint Committee on Taxation estimates the effect it will have on the budget over the next 10 years. And then they continue to estimate changes to those bills. If you know how to read their numbers, you can come up with an estimate that zeros in on the laws Obama has had a hand in.
    • Obama...is clearly responsible for the stimulus. The health-care law, too. When Obama entered office, the Bush tax cuts were already in place and two wars were ongoing. Is it fair to blame Obama for war costs four months after he was inaugurated, or tax collections 10 days after he took office?
    • [The] baseline includes everything that predated Obama and everything we knew about the path of the economy and the actual trajectory of spending through August 2011. Deviations from the baseline represent decisions made by the Obama administration. Then we measured the projected cost of Obama’s 
      policies. 
    • What is often assumed in this conversation is that all deficit spending is equal and all of it is bad. That’s not the case. Deficit spending when the economy is growing is different from deficit spending when the economy is in crisis.Nor is all deficit reduction alike. Sometimes, cutting the deficit will expand the economy. Sometimes, cutting the deficit will shrink the economy.
  • The 10 Most Important Charts in CBO's New Economic Report - Derek Thompson - Business - The Atlantic (2/1/2012) 
  • The Unemployment Rate is Down No Matter How You Measure It | Mother Jones (2/1/2012) 

October 2008: First draft of history.





 "It was Mortgages to Poor People that Caused the Crisis/Collapse"; Fannie, Freddie
  • No. It was the credit default swaps. See above, and this explainer of "JonCo": buying insurance against your crap and offloading them. 
  • But for more on subprime mortgages...The Giant Pool of Money | This American Life - (May 2008) http://goo.gl/GZUeM
    • A special program about the housing crisis produced in a special collaboration with NPR News. We explain it all to you. What does the housing crisis have to do with the turmoil on Wall Street? Why did banks make half-million dollar loans to people without jobs or income? And why is everyone talking so much about the 1930s?
    • (for shorter version: Financial Crisis Explained: Subprime Mortgage - YouTube (OCt 2008)  http://goo.gl/N8nVE )
  • Another Frightening Show About the Economy | This American Life (Oct 2008) http://goo.gl/G6P8q
    • what happened this week, including what regulators could've done to prevent this financial crisis from happening in the first place. You can learn more about the daily ins and outs and join the discussion on the Planet Money blog.
  • SEC Charges Fannie, Freddie Executives with Fraud [Why aren't the Too Big to Fail banks being charged?] (12/18/2011) 
  • Blue Mass Group | Root cause of the Great Recession explained simply (HINT: not so much Fannie, Freddie) (11/19/2010)
  • So much for "responsibility"... Walking Away From Million-Dollar Mortgages - NYTimes.com (7/8/2010) -- biggest defaulters are the rich
  • Blue Mass Group | Did Fannie, Freddie and Barney Frank Cause the Housing Bubble? Probably not (7/20/2010)
  • Dear GOP: Fannie, Freddie Did Not Cause the Financial Crisis | Mother Jones (5/19/2010) 
  • Gingrich and Romney Trade Barbs on Fannie and Freddie - NYTimes.com (1/27/
    2012) 
    • Fannie and Freddie were not the cause of the housing crisis, and at best contributed only slightly to the raft of foreclosures that has savaged the economies of Florida and other states.
    • That was made clear in the report last year from the Financial Crisis Inquiry Commission, which found that Fannie and Freddie participated in risky mortgages only by following rather than leading Wall Street and other lenders.
  • Inequality and crash: How exactly did inequality fuel the crisis? | The Economist (Aug2010)
    • As we all know, the collapse of housing prices didn't, in itself, cause the global financial crisis. The financial crisis was caused by the interlinkage between housing prices and vast quantities of derivatives based on those prices, and on the value of the loans taken out to finance them, held by a global web of financial institutions trying (in theory) to hedge themselves against...the risk of a collapse in housing prices. 
    • That leaves the question of what was wrong with the housing market. Obviously, it was extending too much credit to people who had no realistic prospect of paying back their debts. Why? Here, there are two stories. The first story is the one told in the year after the collapse by people who were close to the mortgage market. That story is that mortgage originators no longer had any interest in whether or not homeowners could actually pay back their mortgages, since they were selling those mortgages immediately to mortgage bundlers, who then sold them to banks, who then turned them into collateralised debt obligations (CDOs) and sold them to hedge funds, who, beginning in 2005 or so, started taking out CDSs on the CDOs. 
    • The second story developed a bit later than the first story. In this story, what was wrong with the housing market was that government had encouraged or forced banks to lend to subprime borrowers...Initially, those who argued that government had caused the problems in the housing market focused on the Community Reinvestment Act, which required banks to make loans in lower-income neighbourhoods. The problem with that story was that the CRA was passed in 1977. It's true that the Clinton Administration began pushing banks to meet higher CRA targets in 1995, and the Bush administration continued those policies. But the CRA only covered banks. By the late 1990s, when the housing bubble got started, most mortgages didn't come from banks; they came from independent mortgage lenders not covered by the CRA. Those independent lenders were making the great majority of the subprime loans. In fact, subprime lending was more frequent outside the CRA areas than inside them: "While banks did engage in subprime lending in their [CRA] assessment areas, they did so at a lower rate than the market in general and accounted for only a small fraction of subprime loans to lower-income borrowers and lower-income neighborhoods. The data suggest that far from being forced into risky corners of the market, the institutions under the scrutiny of the CRA were crowded out by unregulated lenders." Fundamentally, if the CRA were forcing banks to lend to people they considered unprofitable, one would have expected to hear bankers complaining about it. I have never seen a single quote from a mortgage issuer in the years 2002-2005 complaining that subprime lending was unprofitable, that it was driving up rates on prime mortgages, or that they would rather get out of that sector. Rather the opposite. 
    • Others focused not on the CRA story, but on the role played by Fannie Mae and Freddie Mac in promoting homeownership.
"We're Broke!!"
  • Bond Market Shows Why Boehner Saying We're Broke Is Only Figure of Speech - Bloomberg  3/2011
  • The Hollow Cry of "Broke" (NYT Ed, 3/2011)
    •  A country with a deficit is not necessarily any more “broke” than a family with a mortgage or a college loan. ...The federal deficit is too large for comfort, and most states are struggling to balance their books. Some of that is because of excessive spending, and much is because the recession has driven down tax revenues. But a substantial part was caused by deliberate decisions by state and federal lawmakers to drain government of resources by handing out huge tax cuts, mostly to the rich. As governments begin to stagger from the self-induced hemorrhaging, Republican politicians like Mr. Boehner and Mr. Walker cry poverty and use it as an excuse to break unions and kill programs they never liked in flush years. 
"Small Businesses"/Obama is antibusiness
  • Think Progress: Conservative Economists Claim Taxing The Rich Hurts Small Businesses; Small Businesses Disagree  http://bit.ly/OFOimR  (Aug 2012)
  • Count Bechtel, Price Waterhouse as "Small Businesses" (TPM, 9/2010)
  • Will Blog for Food: Keith Olberman Exposes Republican 'Small Business' Scam (9/2010) Kochs too!
  • Krugman, Pathos of the Plutocrat - NYTimes.com (July 2012) http://goo.gl/IQF9R
    • It’s no secret that, at this point, many of America’s richest men — including some former Obama supporters — hate, just hate, President Obama. Why? Well, according to them, it’s because he “demonizes” business — or as Mitt Romney put it earlier this week, he “attacks success.” Listening to them, you’d think that the president was the second coming of Huey Long, preaching class hatred and the need to soak the rich. // Needless to say, this is crazy. In fact, Mr. Obama always bends over backward to declare his support for free enterprise and his belief that getting rich is perfectly fine. All that he has done is to suggest that sometimes businesses behave badly, and that this is one reason we need things like financial regulation. No matter: even this hint that sometimes the rich aren’t completely praiseworthy has been enough to drive plutocrats wild. For two years or more, Wall Street in particular has been crying: “Ma! He’s looking at me funny!” // Wait, there’s more. Not only do many of the superrich feel deeply aggrieved at the notion that anyone in their class might face criticism, they also insist that their perception that Mr. Obama doesn’t like them is at the root of our economic problems. Businesses aren’t investing, they say, because business leaders don’t feel valued. Mr. Romney repeated this line, too, arguing that because the president attacks success “we have less success.” // This, too, is crazy (and it’s disturbing that Mr. Romney appears to share this delusional view about what ails our economy).
Deficits, Inflation, QE2
Obama and Business
Clinton's Economy
Free Trade, Free Markets, NAFTA
Other
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