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Direckshun
06-01-2009, 06:52 PM
Krugman remains unafraid.

http://www.nytimes.com/2009/06/01/opinion/01krugman.html?em

Reagan Did It
By PAUL KRUGMAN
Published: May 31, 2009

“This bill is the most important legislation for financial institutions in the last 50 years. It provides a long-term solution for troubled thrift institutions. ... All in all, I think we hit the jackpot.” So declared Ronald Reagan in 1982, as he signed the Garn-St. Germain Depository Institutions Act.

He was, as it happened, wrong about solving the problems of the thrifts. On the contrary, the bill turned the modest-sized troubles of savings-and-loan institutions into an utter catastrophe. But he was right about the legislation’s significance. And as for that jackpot — well, it finally came more than 25 years later, in the form of the worst economic crisis since the Great Depression.

For the more one looks into the origins of the current disaster, the clearer it becomes that the key wrong turn — the turn that made crisis inevitable — took place in the early 1980s, during the Reagan years.

Attacks on Reaganomics usually focus on rising inequality and fiscal irresponsibility. Indeed, Reagan ushered in an era in which a small minority grew vastly rich, while working families saw only meager gains. He also broke with longstanding rules of fiscal prudence.

On the latter point: traditionally, the U.S. government ran significant budget deficits only in times of war or economic emergency. Federal debt as a percentage of G.D.P. fell steadily from the end of World War II until 1980. But indebtedness began rising under Reagan; it fell again in the Clinton years, but resumed its rise under the Bush administration, leaving us ill prepared for the emergency now upon us.

The increase in public debt was, however, dwarfed by the rise in private debt, made possible by financial deregulation. The change in America’s financial rules was Reagan’s biggest legacy. And it’s the gift that keeps on taking.

The immediate effect of Garn-St. Germain, as I said, was to turn the thrifts from a problem into a catastrophe. The S.& L. crisis has been written out of the Reagan hagiography, but the fact is that deregulation in effect gave the industry — whose deposits were federally insured — a license to gamble with taxpayers’ money, at best, or simply to loot it, at worst. By the time the government closed the books on the affair, taxpayers had lost $130 billion, back when that was a lot of money.

But there was also a longer-term effect. Reagan-era legislative changes essentially ended New Deal restrictions on mortgage lending — restrictions that, in particular, limited the ability of families to buy homes without putting a significant amount of money down.

These restrictions were put in place in the 1930s by political leaders who had just experienced a terrible financial crisis, and were trying to prevent another. But by 1980 the memory of the Depression had faded. Government, declared Reagan, is the problem, not the solution; the magic of the marketplace must be set free. And so the precautionary rules were scrapped.

Together with looser lending standards for other kinds of consumer credit, this led to a radical change in American behavior.

We weren’t always a nation of big debts and low savings: in the 1970s Americans saved almost 10 percent of their income, slightly more than in the 1960s. It was only after the Reagan deregulation that thrift gradually disappeared from the American way of life, culminating in the near-zero savings rate that prevailed on the eve of the great crisis. Household debt was only 60 percent of income when Reagan took office, about the same as it was during the Kennedy administration. By 2007 it was up to 119 percent.

All this, we were assured, was a good thing: sure, Americans were piling up debt, and they weren’t putting aside any of their income, but their finances looked fine once you took into account the rising values of their houses and their stock portfolios. Oops.

Now, the proximate causes of today’s economic crisis lie in events that took place long after Reagan left office — in the global savings glut created by surpluses in China and elsewhere, and in the giant housing bubble that savings glut helped inflate.

But it was the explosion of debt over the previous quarter-century that made the U.S. economy so vulnerable. Overstretched borrowers were bound to start defaulting in large numbers once the housing bubble burst and unemployment began to rise.

These defaults in turn wreaked havoc with a financial system that — also mainly thanks to Reagan-era deregulation — took on too much risk with too little capital.

There’s plenty of blame to go around these days. But the prime villains behind the mess we’re in were Reagan and his circle of advisers — men who forgot the lessons of America’s last great financial crisis, and condemned the rest of us to repeat it.

Ebolapox
06-01-2009, 06:53 PM
yep. it's all reagan's fault.

BucEyedPea
06-01-2009, 06:59 PM
That bogus article is on a major libertarian site and being torn to shreds.

Here we have "the" master inflator, Krugman, blaming RR. Comedy gold.

SBK
06-01-2009, 07:56 PM
There's not a person here who has fallen harder for Lord Barry than our friend Direckshun.

redsurfer11
06-01-2009, 08:13 PM
There's not a person here who has fallen harder for Lord Barry than our friend Direckshun.

I'd bet he has the Obama commemorative dinner plate set.

KC native
06-01-2009, 08:29 PM
That bogus article is on a major libertarian site and being torn to shreds.

Here we have "the" master inflator, Krugman, blaming RR. Comedy gold.

There's not a person here who has fallen harder for Lord Barry than our friend Direckshun.

I'd bet he has the Obama commemorative dinner plate set.

So, no comments about Reagan eliminating the down payment requirement on a house since that's the main point of the article?

KC native
06-01-2009, 08:35 PM
That bogus article is on a major libertarian site and being torn to shreds.


Missed this on the first pass. Link please. This should be good for some comedy :popcorn:

Direckshun
06-01-2009, 09:21 PM
So, no comments about Reagan eliminating the down payment requirement on a house since that's the main point of the article?

None.

prhom
06-01-2009, 09:28 PM
So, no comments about Reagan eliminating the down payment requirement on a house since that's the main point of the article?

Just because Reagan did it doesn't make it right. There's a comment...

Taco John
06-01-2009, 10:20 PM
Krugman the Story Teller
Posted by Bill Anderson at June 1, 2009 07:09 AM

Paul Krugman often will wind a very big lie around a kernel of truth, and in his column today, he does not disappoint. Now, here is someone who openly extols the "virtues" of inflation and complains that the real problem today is that the government is not inflating enough.

Today, he turns his guns back on his favorite bug-a-boo, Ronald Reagan, promoting the Krugman myth that all was well in the banking system until Reagan and his "magic of the marketplace" ideologues turned finance into a free-for-all. And, like always, Krugman denies the real history of financial deregulation and creates his own morality tale.

Krugman: But there was also a longer-term effect. Reagan-era legislative changes essentially ended New Deal restrictions on mortgage lending — restrictions that, in particular, limited the ability of families to buy homes without putting a significant amount of money down.

These restrictions were put in place in the 1930s by political leaders who had just experienced a terrible financial crisis, and were trying to prevent another. But by 1980 the memory of the Depression had faded. Government, declared Reagan, is the problem, not the solution; the magic of the marketplace must be set free. And so the precautionary rules were scrapped.

It all began, Krugman claims, with the 1982 passage of the Garn-St. Germaine Act. Well, not exactly. Much of the major deregulation of the financial system began before then, and it came because inflation was driving people out of the regulated savings accounts and into money market accounts. (I am sure Krugman believes anything outside of the government financial cartel should have been outlawed, but that is another post.)

Furthermore, most of the players in financial deregulation were not conservative ideologues, no matter how many times Krugman tries to convince us that they were. Ted Kennedy, not exactly a well-known conservative free-marketeer, was the main force behind airline, trucking, and railroad deregulation, and a lot of the heavy lifting came in 1980, a year before Reagan took office, and at a time when Democrats controlled all of the government.

Krugman gives us another howler here:

Krugman: We weren’t always a nation of big debts and low savings: in the 1970s Americans saved almost 10 percent of their income, slightly more than in the 1960s. It was only after the Reagan deregulation that thrift gradually disappeared from the American way of life, culminating in the near-zero savings rate that prevailed on the eve of the great crisis.

Now, this is coming from someone who claims that there really is a "paradox of thrift" and that government should inflate to force people to stop saving and start spending. Krugman is someone with no sense of shame whatsoever, but I must admit that he always gets away with his howlers because the political classes, the "elite" academics, and the mainstream media have anointed him with the title of "seer."

alanm
06-01-2009, 11:10 PM
Krugman the Story Teller
Posted by Bill Anderson at June 1, 2009 07:09 AM

Paul Krugman often will wind a very big lie around a kernel of truth, and in his column today, he does not disappoint. Now, here is someone who openly extols the "virtues" of inflation and complains that the real problem today is that the government is not inflating enough.

Today, he turns his guns back on his favorite bug-a-boo, Ronald Reagan, promoting the Krugman myth that all was well in the banking system until Reagan and his "magic of the marketplace" ideologues turned finance into a free-for-all. And, like always, Krugman denies the real history of financial deregulation and creates his own morality tale.
Krugman: But there was also a longer-term effect. Reagan-era legislative changes essentially ended New Deal restrictions on mortgage lending — restrictions that, in particular, limited the ability of families to buy homes without putting a significant amount of money down.

These restrictions were put in place in the 1930s by political leaders who had just experienced a terrible financial crisis, and were trying to prevent another. But by 1980 the memory of the Depression had faded. Government, declared Reagan, is the problem, not the solution; the magic of the marketplace must be set free. And so the precautionary rules were scrapped. It all began, Krugman claims, with the 1982 passage of the Garn-St. Germaine Act. Well, not exactly. Much of the major deregulation of the financial system began before then, and it came because inflation was driving people out of the regulated savings accounts and into money market accounts. (I am sure Krugman believes anything outside of the government financial cartel should have been outlawed, but that is another post.)

Furthermore, most of the players in financial deregulation were not conservative ideologues, no matter how many times Krugman tries to convince us that they were. Ted Kennedy, not exactly a well-known conservative free-marketeer, was the main force behind airline, trucking, and railroad deregulation, and a lot of the heavy lifting came in 1980, a year before Reagan took office, and at a time when Democrats controlled all of the government.

Krugman gives us another howler here:

Krugman: We weren’t always a nation of big debts and low savings: in the 1970s Americans saved almost 10 percent of their income, slightly more than in the 1960s. It was only after the Reagan deregulation that thrift gradually disappeared from the American way of life, culminating in the near-zero savings rate that prevailed on the eve of the great crisis.

Now, this is coming from someone who claims that there really is a "paradox of thrift" and that government should inflate to force people to stop saving and start spending. Krugman is someone with no sense of shame whatsoever, but I must admit that he always gets away with his howlers because the political classes, the "elite" academics, and the mainstream media have anointed him with the title of "seer."

As this thread slowly sinks off the 1st page. :D

KC native
06-01-2009, 11:23 PM
Krugman the Story Teller
Posted by Bill Anderson at June 1, 2009 07:09 AM

Paul Krugman often will wind a very big lie around a kernel of truth, and in his column today, he does not disappoint. Now, here is someone who openly extols the "virtues" of inflation and complains that the real problem today is that the government is not inflating enough.

Today, he turns his guns back on his favorite bug-a-boo, Ronald Reagan, promoting the Krugman myth that all was well in the banking system until Reagan and his "magic of the marketplace" ideologues turned finance into a free-for-all. And, like always, Krugman denies the real history of financial deregulation and creates his own morality tale.

Krugman: But there was also a longer-term effect. Reagan-era legislative changes essentially ended New Deal restrictions on mortgage lending — restrictions that, in particular, limited the ability of families to buy homes without putting a significant amount of money down.

These restrictions were put in place in the 1930s by political leaders who had just experienced a terrible financial crisis, and were trying to prevent another. But by 1980 the memory of the Depression had faded. Government, declared Reagan, is the problem, not the solution; the magic of the marketplace must be set free. And so the precautionary rules were scrapped.

It all began, Krugman claims, with the 1982 passage of the Garn-St. Germaine Act. Well, not exactly. Much of the major deregulation of the financial system began before then, and it came because inflation was driving people out of the regulated savings accounts and into money market accounts. (I am sure Krugman believes anything outside of the government financial cartel should have been outlawed, but that is another post.)

Furthermore, most of the players in financial deregulation were not conservative ideologues, no matter how many times Krugman tries to convince us that they were. Ted Kennedy, not exactly a well-known conservative free-marketeer, was the main force behind airline, trucking, and railroad deregulation, and a lot of the heavy lifting came in 1980, a year before Reagan took office, and at a time when Democrats controlled all of the government.

Krugman gives us another howler here:

Krugman: We weren’t always a nation of big debts and low savings: in the 1970s Americans saved almost 10 percent of their income, slightly more than in the 1960s. It was only after the Reagan deregulation that thrift gradually disappeared from the American way of life, culminating in the near-zero savings rate that prevailed on the eve of the great crisis.

Now, this is coming from someone who claims that there really is a "paradox of thrift" and that government should inflate to force people to stop saving and start spending. Krugman is someone with no sense of shame whatsoever, but I must admit that he always gets away with his howlers because the political classes, the "elite" academics, and the mainstream media have anointed him with the title of "seer."

It's real nice of this author to point out flaws but not offer a counter argument. If this satisfies your need for a rebuttal you are a blind moron.

First off, he says it didn't start with the act that Krugman cited. Well, then where did it begin? What act before that removed the down payment requirement for home loans? Krugman's point was this current crisis has a lot of it's roots under Reagan and a good portion could be traced back to the elimination of the down payment requirement.

Second, he claims that Krugman blames all of this on conservative ideologues. Unfortunately for this critique that's not what Krugman is saying.

So again we have a shallow ad hominem filled critique with absolutely no refutation of Krugman's claims. In other words it's a big bucket of fail.

ISUJeff
06-01-2009, 11:31 PM
Krugman's point was this current crisis has a lot of it's roots under Reagan and a good portion could be traced back to the elimination of the down payment requirement.

It's not the elimination of the down payment that's the issue. It's the idiots that couldn't make the down payment but still took out a loan to "fake" a down payment. Therefore avoiding the mortgage insurance. And the idiots banks that gave these loans.
If every one w/o 20% down was still required to have the insurance, this situation would not have occurred.
I don't know who's to blame for allowing all the trick loans, but at the same time, what ever happened to personal responsibility?

KC native
06-01-2009, 11:37 PM
It's not the elimination of the down payment that's the issue. It's the idiots that couldn't make the down payment but still took out a loan to "fake" a down payment. Therefore avoiding the mortgage insurance. And the idiots banks that gave these loans.
If every one w/o 20% down was still required to have the insurance, this situation would not have occurred.
I don't know who's to blame for allowing all the trick loans, but at the same time, what ever happened to personal responsibility?

The lender is in a position of authority. The responsibility for diligent underwriting falls on them not the borrower.

ISUJeff
06-01-2009, 11:45 PM
I said the idiot banks as well.

But are you saying it's the banks fault if I can't pay my loan? If I bought more house than I could afford? If I found a way around PMI? It's a two way street. Not just one side is to blame.

And also, getting rid of the 20% allows more people to buy homes. Benefiting more than just the rich. That's not normally something Reagan gets blamed for.

KC native
06-02-2009, 12:20 AM
I said the idiot banks as well.

But are you saying it's the banks fault if I can't pay my loan? If I bought more house than I could afford? If I found a way around PMI? It's a two way street. Not just one side is to blame.

And also, getting rid of the 20% allows more people to buy homes. Benefiting more than just the rich. That's not normally something Reagan gets blamed for.

Yes I am. Loan officers found ways to circumvent PMI. Your average person off the street isn't going to have the knowledge walking into the deal to know how to get around that.

Next, an underwriter is responsible for verifying your income, verifying the appraisal, and ensuring that the loan will be repaid. If they do the proper underwriting on the loans then they wouldn't be loaning to people who can't afford the home.

Now, there are going to be isolated individuals who gamed the system but by and large this falls on the banks.

stevieray
06-02-2009, 12:31 AM
I'd rather read Thomas Sowell.

Taco John
06-02-2009, 12:59 AM
The lender is in a position of authority. The responsibility for diligent underwriting falls on them not the borrower.


You have it exactly backwards.

googlegoogle
06-02-2009, 01:57 AM
Why is there no on in the media challenging the idiot known as Paul Krugman?

Anyone seen any attacks or rebuttals on that fool? Give me a link.

BucEyedPea
06-02-2009, 06:40 AM
None.

Didn't Reagan have a Democratic congress? Don't we have legislative supremacy?

patteeu
06-02-2009, 06:46 AM
Ask Krugman why it took so long for Reagan's dastardly deed (accomplished with overwhelming democrat support btw) to do it's number on our system? And then ask him why all the politicians, especially the America-loving democrats, who have been in positions of power since then didn't do something to defuse this ticking time bomb. In fact, ask him why he didn't write this column 5 or 6 years ago so we could have avoided all of this messiness and Obama could have started his glorious reign without all these inherited (as he constantly reminds us) difficulties that distract him and make it difficult for him to make America a fantabulous wonderland for all the good Americans (who make less than $250,000 per year).

BucEyedPea
06-02-2009, 06:51 AM
Why is there no on in the media challenging the idiot known as Paul Krugman?

Anyone seen any attacks or rebuttals on that fool? Give me a link.

I've seen two several by llibertarians so far. They criticize both parties well enough. Don't forget it's Krugman who is behind this spend, spend, spend our way out of this mess and who is also blaming people saving their money as a cause too.

Reagan Did What? The [pinko] Fantasies of Paul Krugman (http://lewrockwell.com/anderson/anderson251.html)

Krugman claims that until Reagan was elected, the U.S. financial system was in great shape and that government-created cartels in finance, communications, and transportation had enabled us to have a wonderful "equal-benefits-for-all" economy. (He's a flaming pinko too)

On doing away with down payments on mortgages:
Uh, there is a problem here. The creation of annie Mae and the Federal Housing Administration during the New Deal lowered lending standards from what they had been before. Yes, contrary to our Nobel Laureate's latest whopper, FDR for the first time made the government the co-signer to mortgages, which made is possible for banks to offer mortgages with lower interest rates and less money down.


Furthermore, the push for easy credit during the 1960s and 1970s came mostly from the liberal wing of the Democratic Party, and especially from Hubert Humphrey, who believed that there should be almost no limits on bank credit at all, with the government being the Great Co-Signer. Banks already were offering mortgages with little or no money down, as long as they came through FHA or the Veterans Administration.

As much as the left likes to diss de-regulation, and the right loves to malign Jimmy Carter on this ....it was actually Carter that started us on the road to deregulation ( which led to improvements in our economy and the end of the energy crisis)


Financial deregulation was not a creation of "pro-free market" Republican administrations. Instead, it began in the late 1970s, being pushed by entities like one of Krugman's employers, the New York Times, which editorialized against Regulation Q, which put caps in the amount of interest that banks could offer in savings accounts. Ted Kennedy was the main force behind the deregulation of trucking, railroads, and airlines, and at last check, I think he still is a Democrat.

Jimmy Carter began the process of deregulating oil prices, and deregulation in telecommunications was well underway before Reagan was sworn into office. The highly-regulated financial cartels that Krugman praises already were proving incapable of financing the coming high-tech companies that were the engine of economic growth during the 1980s and 1990s. For example, CNN, Cellular One, MCI, Apple Computers, and other companies were financed outside of the regulated banking cartel that Krugman so praises.


In other words, Krugman believes that the heavily-regulated, high-inflation economy of 1979 and 1980 was just wonderful, a veritable wonderland. Perhaps some readers might want to go back to those days and just read what was being written then. Unemployment was moving toward double digits, and inflation was doing the same.

Contra Krugman, this was not a time of economic growth. It was an era of stagnation, as the New Deal cartels pretty much had run into the wall. Krugman can deny it all he wants, but the facts are there for anyone to see.

However, Krugman’s fantasy that deregulation was the brainchild of ideological conservatives really is not true, not that it matters to him or anyone else at the New York Times. LMAO

William L. Anderson, Ph.D. teaches economics at Frostburg State University in Maryland

patteeu
06-02-2009, 06:54 AM
It's real nice of this author to point out flaws but not offer a counter argument. If this satisfies your need for a rebuttal you are a blind moron.

First off, he says it didn't start with the act that Krugman cited. Well, then where did it begin? What act before that removed the down payment requirement for home loans? Krugman's point was this current crisis has a lot of it's roots under Reagan and a good portion could be traced back to the elimination of the down payment requirement.

Second, he claims that Krugman blames all of this on conservative ideologues. Unfortunately for this critique that's not what Krugman is saying.

So again we have a shallow ad hominem filled critique with absolutely no refutation of Krugman's claims. In other words it's a big bucket of fail.

There's no reason for the government to force a private lender to require a down payment. Private lenders continued to require down payments on many loans throughout the Reagan years and well after. If the private lender has a realistic view of the risk involved, the private lender will be the one insisting on a down payment. The current problems arose because lenders lost that sense of risk. That lost sense of risk is being exacerbated right now by all the bailouts.

patteeu
06-02-2009, 06:56 AM
The lender is in a position of authority. The responsibility for diligent underwriting falls on them not the borrower.

I thought it was Ronald Reagan's fault!

You accidentally said something smart.

BucEyedPea
06-02-2009, 06:57 AM
I wonder if Krugman is a red inside. They're the biggest liars in all of history.

HonestChieffan
06-02-2009, 06:59 AM
I thought it was Ronald Reagan's fault!

You accidentally said something smart.

My sources say it was actually Nancy Reagan who steamrolled this through and worked hand in hand with the Bilderburgs and a small group of investment advisors who had the assignment of providing disinformation if ever discovered.

They are out there. Beware.

patteeu
06-02-2009, 06:59 AM
You have it exactly backwards.

Not backwards, just incomplete. Both parties are responsible for their own negative consequences.

BucEyedPea
06-02-2009, 07:07 AM
Not backwards, just incomplete. Both parties are responsible for their own negative consequences.

I was thinking the same thing.

BucEyedPea
06-02-2009, 07:08 AM
What's more incredible is how many on the left think like Krugman and that this is true.
Especially the one under age 30.

ISUJeff
06-02-2009, 07:50 AM
Not backwards, just incomplete. Both parties are responsible for their own negative consequences.

Thank you. That's all I was trying to get across.

And that allowing people other than the "rich" to buy homes isn't the cause. Not taking proper precautions is.

Baby Lee
06-02-2009, 08:06 AM
Saw this a mile away, subprime and other risky loans were NOT NOT NOT the problem, until they could go back and find something a dirty pirate hooker Republican did to 'set it all in motion'
I guess Barney, Barack and ACORN just fell under Ronnie's svengali sway and took his work on opening access to home ownership to the logical extension of passing out homes to any and everyone. That was that mean ol' Repubs master plan all along.

Its hilarious that the talking points are one day, Repubs hate poor people, then another, Repubs are responsible for financial ruin by lessening standards for home ownership.

I think I'll have this cake, right after I eat it.

HonestChieffan
06-02-2009, 08:55 AM
Not backwards, just incomplete. Both parties are responsible for their own negative consequences.

Bush is responsible for Obama's negative consequences. Get it right dammit.

Taco John
06-02-2009, 11:22 AM
Not backwards, just incomplete. Both parties are responsible for their own negative consequences.


I think it's backwards to say that the "position of authority belongs to the lender." Every person who takes out a loan has the last say in the matter when it comes time to put a name on the line. That's the person in a position of authority. Whether they take that authority seriously or not is another matter altogether.

KC native
06-02-2009, 11:54 AM
I think it's backwards to say that the "position of authority belongs to the lender." Every person who takes out a loan has the last say in the matter when it comes time to put a name on the line. That's the person in a position of authority. Whether they take that authority seriously or not is another matter altogether.

If they can't afford the loan then the lender shouldn't be making the loan. Without the loan the buyer can't purchase the house. The lender is the one with the power in this equation.

KC native
06-02-2009, 11:56 AM
I thought it was Ronald Reagan's fault!

You accidentally said something smart.

It's not all Reagan's fault. I've consistently iterated my position as this crisis has many causes and they all melted together at the perfectly wrong time. There is more than enough blame for both sides of the aisle.

googlegoogle
06-02-2009, 03:13 PM
I love Socialists(high taxers) who talk like they know sh**. Krugman is the leader of the Socialist economists.

Where in the world does Socialism work?

It doesn't but it buys votes.

alanm
06-02-2009, 11:58 PM
What's more incredible is how many on the left think like Krugman and that this is true.
Especially the one under age 30.You mean the ones still under 30, single with no children.
It's amazing how liberal in your views one is at that age. I was one once.
Then I was forced to step into the real world. One tends to become more conservative in the face of reality. ;)