This week's Nation magazine is running a piece by the head of its intern program, Max Fraser, in which he suggests that the economic advisors who are assisting Senator Obama's campaign are helping him stake out a position on the subprime lending crisis 'to the right of not only populist Edwards but Clinton as well." Fraser notes that Obama's proposed solution to the mortgage mess is "short on aggressive government involvement and infused with conservative rhetoric about fiscal responsibility." He states that Obama has not called for a moratorium on foreclosures or a freezing of interest rates or the use of federal subsidies to help homeowners keep up with payments and restructure loans or some regulation of the financial industry -- Edwards and Clinton have offered variations on those themes. Instead Obama has proposed legislation against mortgage fraud, a tax credit for homeowners which amounts to about $500 on average and an additional fund that will help a certain limited number of homeowners. Fraser attributes Obama's constricted response to "the centrist politics of his three chief economic advisors and his campaign's ties to Wall Street institutions opposed to increased financial regulations" and points out that Obama has received almost $10 million in contributions from the finance insurance and real estate sector through October 2007. For the candidate of change and bold ideas, Obama's tepid response to the overwhelming mortgage crisis suggests a Republican-orientation rather than a Democratic one -- and should be subject to debate in the remaining presidential primaries.
I think that Edwards' populism is the most at odds with the economic thinking of the other two candidates. However, I do not really think Edwards ideas are realistic in the current global economic situation. Obama is a progressive but a realist, which is basically the approach that the Clinton administration took when it grew our economy for eight years in the 1990's.
Americans seem to believe we can have a costly war without any economic impact. Empires have usually failed because they bankrupted themselves on forign wars. The Romans, the French, the English, even the Soviets fell to the hubris of foreign intervention. The cost of supporting, through debt, a huge military and an Iraq war that will cost TWO Trillion before we get out is what will defeat us.
There is no free lunch. Irresponsible spending by individuals and government is the cause of the current economic meltdown.
What we have is an econmic hangover. My dollar buys at least 10% less internationally. Oil and housing costs have doubled. These are the real costs of the debt.
All Obama is saying is our country is based on Capitalism and we shouldn't bite the hand that feeds us. We should make the capitalists work for us by incentivizing not mandating. If that makes him "conservative", OK. We need someone who can make the old classifications moot.
The Washington Post economist panel gave Obama's plan an A- and Hillary's plan a C+. Others have given Obama high marks as well.
I for one do not want a Democrat who is going to raise my taxes exponentially to pay for the mistakes of subprime lenders and their prey.
Get over it. Obama's got a good plan that has more than a snowball in hell's chance of passing, unlike Hillary's "get the taxpayer to pay for it" approach.
I guess people want to see what they want to see - the grand delusion that because this man's skin can block vitamin D better than those with lighter complexions - that -by golly! he must be an agent for "change".
Meanwhile a whole new slew of believers will be rudely awaken to the fact that the more things "change" the more they remain the same.
The one obvious strategy is the one everyone ignores – stop penalizing corporations for putting activities in the U.S. Under current tax policy, a corporation can make 54% more profit operating in the Dominican Republic than in the U.S., even before considering the much lower wage rates abroad. We can reverse that incentive, and we can do it in a way that is revenue neutral, that favors the middle class, that encourages savings, and that reduces rather than increases corporate power. How? By allowing a deduction for dividends paid to shareholders, with the revenue offsets explained at www.sharedeconomicgrowth.org.
It’s time to demand that our political representatives drop their canned speaking points and take real action to improve the long term health of our economy.
http://www.washingtontimes.com/article/20080124/EDITORIAL/774081954
The whys of the mortgage crisis?
-> Subprime lenders (particularly brokers or companies large enough for a small warehouse line) didn't just lie to consumers - they lied to the folks that bought their bundles; the larger institutional lenders. How? Well, as we know via multiple scandals, documents were literally forged - income, assets, and debts.
-> The "Refi Boom," which encouraged the unethical practice of cooperation between mortgage brokers and property appraisers, artificially ballooning home prices just as the money got tight. Indeed, the "easy credit" mentality of ALL OF US caused us to view our homes as piggy banks, hence, a bandaid on revolving debt.
-> The Builders & the "Flippers" - 'Nuff said.
FINALLY, the law of unintended consequences dictates the fact that the housing market is not an island unto itself that has no impact on the larger economy. Remember how well rent controls worked in New York City? And that was just one city. Freezing interest rates is no worse than the "voodoo economics" of the Reaganites.
What the author apparently doesn't know is that BANKS DON'T WANT TO FORECLOSE on folks' homes. Why? Because everybody gets soaked - the homeowner the worst, but the bank, too, because they will never recoups their original investment.
YES, we should help homeowners that are in trouble.
STRICT INDUSTRY REGULATIONS - YES
TEMPORARY HELP WITH MORTGAGE PAYMENTS - YES
A GENERAL CAP ON INTEREST RATES - NO
A MORATORIUM ON FORECLOSURES . . .
That last one sounds great, but what will it do to the market? What sort of consequences might be associated with a policy that encourages the worst in the worst of us while only temporarily aiding the best of us? Is there a better way to approach this - one that looks at the larger equation AND protects the homeowner? I mean, I'm sure it will win votes, but it doesn't have the ring of smart policy.
http://www.opensecrets.org/pres08/contrib.asp?id=N00009638
This guy is no liberal, has no love for the wage-earning working class. It's all smoke and mirrors.
Capitalism only works when GREED IS CONTROLLED TO PROTECT THE INNOCENT FROM THE CRIMINALS, AND BIG BUSINESS IS ALL ABOUT CRIME AND PROFITS AT ANY COST.
First of all, please do tell us-
Is our current economic policy conservative or liberal?
If it's conservative, why is Hillary on record voting for it?
Do conservatives think Bush's economic policy is conservative?
Do liberals think Hillary's vote for the bankruptcy bill was a vote for MORE liberal policies or less liberal ones?
Was Bill Clintons tax cut for the rich a conservative or liberal policy?
Were the economic implications of a war of choice liberal or conservative?
Face it.
Both Bush and Hillary are big government establishmnet corporatists.
Trying to paint Hillary's policies as liberal and Obama's as conservative has ZERO relevance without a comparison to reality. Such a comparison would show your post reaches a conclusion unsubstantiated by the facts.
Since she doesn't really allocate any of the money in detail on her stimulus plan... Is it another Citigroup bailout with crumb droppings for their foreclosed victims?
Keep in mind, this crisis is not one that just appeared with George W. Bush. The seeds were planted even before Clinton and sprouted up increasingly during his tenure after the S & L Scandal. The banks leeched onto these to pull themselves out of S & L and grew throughout the rest of Clinton and up til now.....
So we can't be partisan about blame.. nor should we allow any candidate to claim the same. If they do, they're fundamentally lying.
That being said, nothing is going to solve the subprime crisis if it's going to be a bailout and back to business as usual. Some ruler-to-the-hand action on these banks and lenders should be mandatory.. as well as some sort of hand to those who found themselves victim to terrible business practices.