One cartoon can be worth ten thousand words:
pretty funny ‘cept i think it was just big government that just bailed-out the private sector with public monies after the private sector got itself in trouble due to greed and malfeasance in a deregulated operating environment.
Actually it was the taxpayer that bailed out the Big banks that are playing with the taxpayers money.
Deregulation certainly played its part. It allowed the banks to give loans to people who had no business receiving them. That led to the individual who took a mortgage they knew they could not afford. A lot of blame to go around.
Deregulation had nothing to do with it, instead it was the government insuring these loans and the Fed’s artificial lowering of the interest rate that allowed banks to give to people who had no business receiving them. If the banks didn’t receive any special treatment and were instead allowed to fail like any other normal business that made these stupid decisions we would be much better off.
Bret– actually, those sub-primes were handed out as often as they were because Fannie and Freddie changed the rules on what sorts of homeowner loans they’d guarantee under the “prime” category. Used to be, you had to have 20% down on a house, coming from private equity, to get prime status on your loan. If a loan has prime status, Fannie and Freddie would promise to buy it on the secondary market– in essence, a federal seal of approval on the safety of the loan. In 2001, they changed it such that you could take out a loan for the 20%, use that to cover the equity requirement, and then get your loan at private status.
So a lot of homes where 100% of the payment was on credit were labeled as prime and insured by Fannie and Freddie as prime, despite those obviously not fitting a sensible definition. And banks were willing to make those loans because re-selling them on the secondary market was easy even before home loans got securitized. Banks were irresponsible, but it was the public sector’s interferences in the private sector (changing the rules on what’s “prime” (with the new definition promising security on a LOT of less-than-safe loans), while cutting interest rates (thank you, Federal Reserve).
I find it unlikely that private banks would have made that many loans to high-risk debtors, and then sold them on the secondary market and insured them as “prime” loans, if the government’s lapdogs hadn’t promised the banking industry they were safe. Mind you, Fannie and Freddie had been part of this industry for decades, and their word had been trustworthy by virtue of historical accuracy. If you trust an old friend to give you good advice, and always follow his advice,you’ll get burned when his advice goes bad. Which is pretty much what happened in 2008. The private sector trusted the public sector’s word, and the public sector was horribly, horribly wrong.
That’s a good assessment of what happened. I tend to look at it from the personal responsibility side. There were many people who extended themselves, financially, beyond the point of responsibility.
Chris – – The banks couldn’t be allowed to fail because they held the people’s money. It was the repeal of Glass-Steagall in 1999 that removed the separation of commercial and investment banks, allowing them to speculate with depositor money.
Where do you think that “public money” came from, Barack Obama’s ass?
Right, because the private sector consists entirely of incompetent bankers and bankrupt car companies. It must not include all of us who earned the money that the government stole to fund the bailouts.
Except Obama hasn’t said Captialism doesn’t work. And the growth of Government has actually been SLOWER under Obama than under the last several Presidents. Sigh…
My friend, it’s a cartoon. Government regulations certainly slows the private sector, the EPA does the same. As to Obama actually saying “capitalism doesn’t work.” Well, he never actually said to foreign countries “I’m sorry” but many still feel he went on an apology tour. Sentiment can be louder than actual words. In the end, Its a cartoon. One that makes people think.
I realize the cartoon is attempting to imply sentiment, not claiming that “Capitalism Doesn’t Work” is a direct quote. I don’t believe that’s representative of Obama’s actual sentiment, but rather of how Obama’s political opponents try to *characterize* Obama. And I think that viewing all regulations as being damaging to the economy because they might place issues like environmental protection or public safety ahead of corporate profit is ridiculous. Of course there are unnecessary and inefficient regulations that should be reformed. But the suggestion that the EPA is inherently bad for the economy is… cartoonishly simple.
This, of course, leads to the debate; “which regulations are necessary?” Which goes beyond a simple cartoon. I understand your point.
This doesn’t oversimplify an extremely complicated and generally misunderstood issue to further a political argument that isn’t based on fact at all! Thanks I got a chuckle. /sarcasm
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