The Big Stimulus
// / Justin Raimondo
30-Jan-2009 (2 comments)

January 30, 2009 The Big Stimulus

Get rid of the empire

by Justin Raimondo

The talk is all of stimuli and other matters economic
– how do we re-inflate the balloon of American prosperity? Reality has taken
a hat-pin to it, and trillions
have gone up in the smoke of foreclosed mortgages and credit-default swaps.

Panaceas are not lacking. Paul
says it doesn't matter what we spend our money on, as long as we
throw it away rapidly and without forethought. I have no doubt that soon we'll
be hearing the ghost of Huey Long promising "Every
man a king!
" I fully expect the Townsend Plan to come back at some
point, along, perhaps, with a revival of interest in pre-Leninist forms of Marxism.

Along these lines, President Obama and his party have come up with a "stimulus
," and I must pause to remark how important ... >>>

recommended by smhb



Fiscal Fiasco

by smhb on

Im fully familiar with the info you provided but tnx for sharing.

DW Duke

Fiscal Fiasco

by DW Duke on

SMBH:  The following is an excerpt of an article that will be published in the Riverside County Bar Association Magazine and a number of other publications in February.  It addresses the cause of this fiasco:

The Cause of the Current Economic Crisis

After the Great Depression, the Roosevelt administration introduced the New Deal legislation designed to prevent the United States from ever experiencing another Depression.   One of the most important Acts of the New Deal legislation was the Glass-Steagal Act of 1933, (part of the Banking Act of 1933) which established the Federal Deposit Insurance Corporation and included provisions designed to prevent speculative investments by banking institutions.  Over the next half of a century many of these provisions were repealed as a result of deregulation by Congress.  Significant portions of Regulation Q (12 CFR part 217) of the Glass-Steagal Act which allowed the Federal Reserve to place limits on the interest rates that banks could pay, were repealed by the Depository Institutions Deregulation and Monetary Control Act of 1980.   Provisions that prohibited bank holding companies from owning other financial institutions were repealed by the Gramm-Leach –Bliley Act of 1999 which was signed into law by President Clinton that same year.   The net result was that by the year 2000 the banking and mortgage industry had been so deregulated that many of the New Deal provisions designed to prevent another Great Depression no longer existed. 

The aftermath of deregulation of the banking industry was an explosion of the number of adjustable rate mortgages, subprime lending, stated income loans (where verification of income is not required), zero money down loans, cash back at closing loans and many other practices that made mortgage fraud as easy as withdrawing money from an atm.  Combined with this was the selling of loans from the original lender such that much less care was taken when originating the loan to assure that the borrower was credit worthy.  These unhealthy conditions eventually lead to double digit inflation in the housing industry combined with the ease of credit and many home owners found themselves in houses they simply could not afford.  When the bubble burst many openly admitted that they knew they would not be able to afford the payments once the loan adjusted but they had planned to refinance before the loan adjusted or if not, to have enjoyed the experience of home ownership while it lasted.   When the housing market crashed most home owners found that either they did not have enough equity in their homes to refinance or that they could not obtain a loan due to the tremendous tightening of credit. 


Copyright, 2009 DW Duke