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1

There's nothing like a high-stakes game of hot potato.

Posted by keshmeshi | July 14, 2008 6:33 PM
2

Freddie Mac, IndyMac, Bernie Mac... I am really confused.

Posted by DOUG. | July 14, 2008 6:35 PM
3

This is one of the most cogent and lucid expositions on the current state of the mortgage crisis/credit crunch I have ever read.

Bravo.

Posted by Jubilation T. Cornball | July 14, 2008 6:36 PM
4

This sort of commentary is what keeps me reading Slog, even when the rest of the Stranger staff is busy arguing about Streetcar (not streetcars, which would at least be of importance.)

Posted by Thank you | July 14, 2008 6:44 PM
5

It'll be interesting to see if our duly elected politicians do a damn thing about this. I mean, why bother? It's like when city governments have to pay out multimillion-dollar settlements to the victims of police brutality or the families of victims of police shootings. The taxpayers get to eat it and the police department gets to keep abusive and trigger-happy cops on the payroll.

Posted by keshmeshi | July 14, 2008 6:45 PM
6

@5, keshmeshi, our duly elected politicians will do something about it when our duly elected politicians are not duly funded by the industries in question.

As to what timeline that entails, your guess is as good as mine.

Posted by Jubilation T. Cornball | July 14, 2008 6:57 PM
7

Mr. Golob.

I think your posts are some of the most consistently interesting and informative on Slog. Kudos, sir.

Posted by bearseatbeats | July 14, 2008 6:57 PM
8

@3,

That is the crunchiest thing I have ever read.

Posted by Cap'n Crunch | July 14, 2008 7:00 PM
9

@6,

That is the timeliest thing I've ever read.

Posted by Morris Day | July 14, 2008 7:02 PM
10

@6,

Yeah, but another Great Depression could be the type of thing to get them to finally ignore those industries, more or less. Not that I'm hoping for that. Lord knows my job wouldn't survive that kind of calamity.

Posted by keshmeshi | July 14, 2008 7:04 PM
11

@10, nor mine. The good news, though, is I could get some gig with a neo-WPA and write travel essays about Italy and get paid to do so.

Hmmm, the Depression is beginning to sound better every minute...

Posted by Jubilation T. Cornball | July 14, 2008 7:11 PM
12

Don't forget Long Term Capital Management.

Ah, nostalgia for The Depression. What the heck, World War Two wasn't that bad

Posted by six shooter | July 14, 2008 7:20 PM
13

As I alluded in my comment on the earth-shatteringly important "OMG! Did you hear what Bernie Mac said?" post from earlier today, I'm really interested why nobody in the press seems to have questioned John McCain's Chief Economic Advisor Phil Gramm's role as one of the leading advocates, during his term in the Senate, of the deregulation that led to this crisis, and his subsequent role as a lobbyist for the banking firms that profited from it (and are no doubt queuing up at the trough for that free tax-payer bailout money as we speak.)

I think the fact that one of the leading candidates has as his chief advisor one of the prime architects of this ongoing fiasco is certainly newsworthy, even moreso than his widely-reported insensitive comments about our "mental recession." It's not just that he doesn't care -- he has actively aided and abetted these criminals, who, having successfully fleeced their investors, are setting about fleecing the American taxpayer and in the process selling them down the river to the Chinese. And he is charged with charting the economic future of this country if his candidate gets elected.

Posted by flamingbanjo | July 14, 2008 7:41 PM
14

That's the first time I've ever read an explanation of what's going on and understood it first time through. This is why I love you Science.

And yes, I AM furious.

Posted by Lobot | July 14, 2008 7:43 PM
15

Oh come on, you're just whining, like the rest of America.

This shit makes me want to see Phil Gramm's head split open on the sidewalk like a fucking rotten melon.

Posted by Westside forever | July 14, 2008 7:56 PM
16

Not one tax dollar went to Bear Sterns, nor Indy. Not a single one.

Bear got a short term repo from the Fed( which is not taxpayer supported, its actually the other way around), and Indy is getting support from the FDIC which is funded from premiums paid by banks.

AS for Fannie and Freddie, right now they are just getting available credit form the Fed(no tax dollars) and the treasury(which I guess results in some risk to the taxpayer. However bond s a floated to cover these and both have a good deal of assets, its just a liquidity issue.

But yeah letting them fall equals Great Depression 2.

Posted by Giffy | July 14, 2008 8:24 PM
17

Welcome to America, the next third world country.

Posted by yucca flower | July 14, 2008 8:30 PM
18

Also the money outlaid by the Fed was repaid. It was just to let Bear meat its obligation until JP absorbed it. Like a payday loan

@17, when our bank and credit problems surpass Japan, which would require a doubling of the national debt relative to GDP we can start to talk about such things.

Posted by Giffy | July 14, 2008 8:33 PM
19

Interesting that some writer for the Stranger is so certain about the causes of the Great Depression while professional economists are still unsure. Thanks for your more-government-is-the-answer bullshit. In case your misinformed ass didn't realize it, the GSE's were created under FDR after the Great Depression. Moron!

Posted by dude | July 14, 2008 8:38 PM
20

I'm generally sympathetic to the idea of heavier regulation, but a few points:

1. The underlying problem is the real estate bubble and its aftermath. The problems in the real estate market are not confined to the subprime sector. The real estate bubble was going to happen with or without a regulated mortgage industry (barring truly draconian regulations), and most of the subprime lending didn't kick in until the bubble was well underway (thus making it much more toxic than it would normally be). So we would be feeling a lot of economic pain right now in any case, with the difference that the credit markets might be functioning a bit better if they had been well-regulated from the outset.

2. Why aren't people buying the Fannie Mae and Freddy Mac RMBS's? After all, "each loan is carefully vetted and matched to the borrowers ability to pay and honest valuation of the property." If that's true, and the RMBS still won't sell, then what good would it have done to impose disclosure in the first place?

I think consumer-protection regulations would have helped a lot, in terms of reducing suffering, and I think financial regulations could have helped in theory. It's hard to see, though, what those regulations would have accomplished, since the "responsible" banks are getting plowed under just as fast as the banks dealing in toxic subprime garbage.

Posted by minderbender | July 14, 2008 8:42 PM
21

Letting Freddie and Fannie fail would basically bring the real estate market to a full stop. Nowadays no bank wants to hold onto a mortgage, no matter how solid the loan, and without some secondary market for those loans, no mortgages will get written.

I think there are ways to keep them afloat while making the current stockholders pay a lot of the price. For example, in return for capital/liquidity the government should get a huge piece of stock and dilute the current stock to almost nothing.

Note that WAMU stockholders have lost more than $35 billion in the stock's value in the past year, and that's exactly what needs to happen here!

Posted by bob | July 14, 2008 8:44 PM
22

Sigh. Giffy (@16 and 18), JPMorgan only bears the first $1 billion in risk on Bear Stearns, the taxpayers bear the rest. It looks as though the losses will be greater than $1 billion, so that's our money.

dude (@19), when Freddy Mac and Fannie Mae were created, they were government entities and they required a ridiculously high percentage down payment on home mortgages (I think it was more than 50%). It was in the 60s that they were (partially) privatized, and their standards have slowly eroded since then.

To everyone interested in this issue, I highly recommend the Calculated Risk blog, though it can be a little overwhelming at first.

Posted by minderbender | July 14, 2008 8:47 PM
23

@22, please point to the budget line in the federal budget that went to Bear Sterns. Hell please point to the budget item that goes to the Fed.

Posted by Giffy | July 14, 2008 8:49 PM
24

Here is a blog post on the subject. I was wrong about one thing: JPMorgan bears the first $1.15 billion in losses.

The Fed pays its surplus to the US Treasury, so any losses it sustains are ultimately borne by the taxpayers.

Posted by minderbender | July 14, 2008 8:52 PM
25

If Fannie and Freddie cannot be allowed to fail, are not subject to the "self-regulation" of the market, they should not be publicly traded companies. There wasn't a reason in the world to privatize them, except to make some people some money.

Posted by Terry | July 14, 2008 8:55 PM
26

@24, sort of, its more complex then that, but even taking what you say at face value, that is not a an accurate way of phrasing it. If a company loses money and therefore does not pay its taxes that is not the same as the loses being born by the taxpayer. But yeah about 30b a year goes from the fed to the treasury ,but most of that came form the treasury initially as interest on bonds.

Also, so far, the assets held by the Fed have lost about 3% of their value. Bear had a plenty of capital it failed because of a crisis of trust due to possible liquidity issues.

Posted by Giffy | July 14, 2008 9:00 PM
27

Great post. Reading it made me want to binge eat.

Posted by octaviastkid | July 14, 2008 9:09 PM
28

The point is that if the Fed loses $2 billion, taxpayers are worse off by $2 billion, however you want to label the event. I mean, if you don't see it that way, then it's free money, right? We could have the Fed spend $10 billion on mass transit or whatever, at no cost to the taxpayer (except for the $10 billion less that the Fed would pay into the general treasury).

As for Bear Stearns, I think it's too soon to say whether it was insolvent or merely illiquid. Either way, the mere fact of bearing risk is costly, and to my knowledge the Fed does not get any upside.

Posted by minderbender | July 14, 2008 9:10 PM
29

@28, if we wanted to the Treasury could issue a bunch of bonds to the Fed in exchange for cash and spend it on whatever he fuck they want. Hell they could get hundreds of billions this way and so long as the Fed doesn't sell the bonds the interest is refunded. We could even call it the national debt.

As for the Fed's upside, I would call avoiding a collapse of the global financial system a pretty good upside. At least for those with jobs, retirement funds, or money in banks.

Posted by Giffy | July 14, 2008 9:34 PM
30

Oh sure, this might seem important to you... but none of these financial people are secret Muslims!!

Posted by CP | July 14, 2008 9:43 PM
31

Okay, so I'm furious. Now what? Write an angry letter to my senator? Run on the bank? What the fuck are the furious supposed to do about this?

Posted by Steagle | July 14, 2008 9:44 PM
32

I imagine most people are bored by this, but nothing about the way the Fed is funded generates free money that can be spent without costing the taxpayers one way or another.

And yes, the logic of a bailout is that it generates some sort of social benefit, but that is very different from there being a direct financial benefit to the government. We have a situation where, as they say, the risks are socialized and the profits are privatized. The logic is:

1. Banks (and other financial institutions) are lightly regulated and are thus able to take whatever risks they think will maximize their profits (without regard for society's overall welfare).

2. When banks, particularly big banks, fail, they imperil our entire economy. We can't allow them to fail the way we could allow, say, Coca-Cola to fail.

3. Therefore we must bail them out - we are effectively held hostage to their (chosen) riskiness and their crucial role in the economy.

4. Therefore an unregulated market is untenable - we can regulate, we can nationalize, or we can pay a high price and bail the banks out periodically.

I prefer regulation, but it is problematic that Fannie Mae and Freddie Mac spent a lot of their money buying lighter regulations. And in fact, if you think there exists a regulatory regime that could have avoided our current problems, then you ought to be asking some very pointed questions about why, for instance, equityholders should have anything left after our public money has been spent on a bailout.

If anyone is still reading, one hilarious possibility is that in fact Fannie Mae and Freddie Mac are not only solvent but liquid, and that all of this is an overreaction to Paulson's policy review, with bearish speculators driven by panic and scant information. Of course, even if that's true, I don't find it very comforting...

Posted by minderbender | July 14, 2008 9:51 PM
33

Capitalism works because it channels selfish behavior to build markets. We should hardly be surprised when investment banks then act selfishly by pushing for deregulation.

It is our elected representatives who allowed this to happen, who failed to protect the interests of taxpayers. And because they're elected, transitively we've all failed.

So maybe we should drag ourselves out into the streets?

Posted by meh | July 14, 2008 9:59 PM
34

@31: regulations weren't always so light. They got that way because banks were willing to pay Congress for the laws they wanted, and voters weren't paying attention or making it a voting issue. In my own area of (relative) expertise, the Bankruptcy Code went from a well-crafted, cohesive piece of legislation to an error-ridden hash because, in its most recent iteration, it was written by lobbyists who didn't give a shit. Why were they allowed to rewrite the Bankruptcy Code? Because they paid for it.

Obama didn't vote for it, but plenty of good Democrats did. This wouldn't have happened if voters were paying attention and were well-informed (and in fact, it didn't happen for years and years, even though the crappy bill was waiting in the wings). So my advice is, study the problem, form an opinion, and vote. We are the change we've been waiting for.

Posted by minderbender | July 14, 2008 10:07 PM
35

I also love many of Golob's posts. I often think of a SLOG post which graphed out the GNP to the cost of a barrel of oil. I've looked for it several times and haven't been able to find it. Good stuff!

Posted by Clint | July 14, 2008 10:26 PM
36

It's a big sandwhich. We will be eating leftovers for years.

Posted by Zander | July 14, 2008 10:55 PM
37

@3: I suggest you find an equally lucid description, that also manages to be factually correct. This one is riddled with misleading errors.

At a superficial level, of course, Jonathan is right: bad loans were made, banks stopped validating the credit-worthiness of their borrowers, chaos ensued. Problem is, he has completely overlooked Fannie and Freddie's role in causing the crisis: because they're allowed to buy their own mortgage-backed securities (and in fact, Fannie/Freddie are the largest holders of their own securities, by far), they were in a position where their profit growth was entirely dependent upon their ability to find new mortgage borrowers.

Perhaps Jonathan doesn't remember it, but a few years ago, Fannie and Freddie initiated a massive PR campaign to reduce/eliminate mortgage loan standards, in the name of increasing "home ownership". They did this so that government regulators would be convinced (in the only politically palatable way) to allow them to start buying questionable debt. And as the largest buyer of mortgage debt in the US, where Fannie and Freddie went, every scumbag local mortgage broker and investment bank followed....

Point is, Golob is making out the GSEs as though they're white knights, riding in to rescue us from the damage caused by the evil private banks. That's fiction. In reality, Fannie and Freddie played a huge part in getting this ball rolling.

There are lots of other minor errors in the post (mortgage-backed securities were around before deregulation; investment banks were the second to fail, after the utter motherfucking cratering of the private mortgage banks last year, which went largely unnoticed by the crack Stranger reporting staff; investors are the consumers of debt, not the producers; etc.), but that's the big one, since it undermines the whole thesis of his rant....

Posted by A Non Imus | July 14, 2008 10:57 PM
38

"what was once one of the most stable and socially productive investments..."

Wasn't there, like, a savings and loan crisis in the 1980s caused by deregulation and all sorts of criminal behavior? And a bailout in the late 80s/ early 90s?

Not saying our present state isn't dire. But I'm not sure the 1990s was the beginning of the end, or that the system has ever been as free of corruption as you suggest.

Posted by Trevor | July 14, 2008 11:44 PM
39

Clint: The GDP in barrels of oil post, for you.

A Non Imus--

I do remember the little Fannie and Freddy scam/PR campaign to lower standards. Hence why I can see a market argument to let them fail, rather than just assume their failing to raise capital is just due to panic. I do not wish to imply or state they are white knights. No one is. We're fucked. These bailouts just delay the day of final fucking for a bit. This brings up the whole ugly underside of GSEs.

I refuse to consider private mortgage banks, banks, in any honest sense of the word. They were Ponzi schemes masquerading as banks. I delighted in their collapse. The shocking thing is the "legitimate" financial institutions--like Bear Stearns or the GSEs--were not all that better.

Posted by Jonathan Golob | July 14, 2008 11:46 PM
40

Neil Bush/ Silverado in 2012!!!!!!!!

Posted by Xenu, Warrior Thetan | July 15, 2008 12:27 AM
41

Nothing like their previous CEO having to pay his fine for his options in the shares he exercised.

Which meant he's out less than $100,000 for causing hundreds of BILLIONS of damage to other shareholders.

Posted by Will in Seattle | July 15, 2008 12:39 AM
42

Wow. I regularly read Paul Krugman, the Naked Capitalism blog and lately Gretchen Morgenstern's column in the NY Times, and I have to say that Jonathan's post is REALLY well written. Kudos!

Until the current situation, the last time we saw "the most massive transfer of wealth in history" was back during the savings & loan crisis of the 80s, which was created by Milton Fucking Friedman and the whole University of Fucking Chicago school of economic theory. "Supply side" economics, blah blah blah. Guess what ALWAYS happens when you have deregulation? Workers get SCREWED!! Take the airline industry and the airlines' screwing of their labor force (dumping pensions), throwing local economies into chaos -- hey US Air, fuck you! I live in Pittsburgh and I watched US Air fuck over Pittsburgh and the state of Pennsylvania while all our politicians fumed and workers got fucked. But I digress!

The only thing missing from Jonathan's excellent post is the point that all the debt our government has been racking up is being held by the rest of the world, which is now finally getting sick of George Fucking Bush & Co. and is telling us it's time to pay the fucking bill. So what will the U.S. Treasury do? Print more money? Hello, Zimbabwe!

So while we've been watching the rich get richer at a truly astronomical rate, we're suddenly witnessing the newest "most massive transfer of wealth in history", and it's all going to ... oil producers! Wow! Who saw THAT coming? Bush and "Vice President" Cheney both former oil men ... Cheney's top-secret "energy policy" ...

Mission Fucking Accomplished indeed.

Watching the bank run at IndyMac in California today was truly frightening. The truth is that we (Americans) no longer own our future: we sold that off a long time ago.

Oh, and remember how Bush wanted to let the stock market take over Social Security a while ago, and nobody took the bait? Looks like he and his pals may have found another way to get us to fork it all over after all.

Jesus fucking Christ. The gold standard for Worst U.S. President in History used to be Reagan. But as Sarah Vowell once said, "I can't BELIEVE that when Bush was elected I was actually worrying about a few TREES getting cut down! I was such a WIMP!"

Posted by MichaelPgh | July 15, 2008 1:26 AM
43

Foreigners hold 25% of our national public debt. Japan holds more debt than China.

Good to see that sloggers prefer a good read to an accurate portrayal.

And what about climate change that brought the great drought of 1930?

Posted by ouch | July 15, 2008 7:06 AM
44

Thank the Republicans. Thank the idiots who voted for them. Thank the politicians who think Americans shouldn't be able to declare bankruptsy and escape smothering debt, but rush to the aid of big investment houses that have been using skulldugery. American's are getting what they deserve for voting for simplistic answers like short changing what's desperately needed!

Posted by Vince | July 15, 2008 7:17 AM
45

@32, depends on what you mean by cost. The Fed is funding, it creates money. Now to avoid inflation (and sometimes deflation) it engages in various transactions to offset the money it put its in, but not always. Right now the fed has about 500b of Treasury securities, until those are auctioned off that money is free. It was created (poof) the moment the Treasury transferred the securities to the Fed in exchange for dollars. Now doing so too much can have an inflationary affect, but some is actually necessary to keep the economy growing.

I am with you though on the need for regulation, the question is what kind of regulation. We need to make sure we do this right. I also tent to think a lot of this is panic driven. There is even some evidence that Bear was fine until rumors started to fly, same with Indy.

What I think is we are getting dangerously close to is something like this:http://en.wikipedia.org/wiki/Japanese_asset_price_bubble

Posted by Giffy | July 15, 2008 8:00 AM
46

Sincere question: why is they were fine until the rumors started flying important? My interpretation is that there are always rumors and part of being solvent is surviving that. And that regardless when an institution goes insolvent there will always be rumors at the end. In other words don't get close enough to the edge that a push will send you over because someone will push you.

Posted by daniel | July 15, 2008 8:24 AM
47

Score for me. I work for ING, a company that hasn't done any of these dumbass things. You could fit the number of homeowners we've forclosed on in an elementary school classroom, and you can count the number of mortgages we've resold on zero hands. When all this shakes out, I might be working for the only bank still in business.

Posted by Gitai | July 15, 2008 8:42 AM
48

the most distressing thing i find is the incentive the government provides for being a home owner, the mythos surrounding home ownership, and how every step along the way in the past 5 years people thought you were a crank if you said anything bad about this bubble.

regulation is more than long over due for the entire real estate biz, but if things were relatively peachy for decades in the biz, how could the government anticipate the need for regulation?

Posted by Bellevue Ave | July 15, 2008 8:48 AM
49

Gitai, if you have any pull and ING you'll force them to find a different advert company.

Posted by Bellevue Ave | July 15, 2008 8:50 AM
50

@46, The financial world lives on trust. Most firms have billions (hundreds of) in counterparty obligation. Basically pledges to buy, sell, lend etc. These often secure other obligations. Here's a simple example: I'm going to buy X shares of Y for 10b and sell them to anther firm for 11b. That 11b then is going to be used to buy something form someone else.

What happens in a market like this were everyone is jittery is that when a rumor starts to fly that a firm might not be able to meet its obligations people stop trading with them, or in the case of a bank demand their money. Since nobody keeps reserves to match their obligations, its possible for them to run out. There are other things that happen as well that imperils their liquidity. Its not really a whole lot different then if everyone you make payments too got scared and demanded a years worth of payments tomorrow and your job got worried you could not work and withheld your paycheck for a week. You might have some savings, but it would disappear quickly.

And while there are always rumors, this is a bad market, and in the case of Indy at least, the rumor was given legs by a sitting senator.

Posted by Giffy | July 15, 2008 8:54 AM
51

Also, the big danger with that is that it ripples and everybody stops trading with everybody else, and that is what we call Armageddon. That's why the Fed rushed ot rescue Bear. It was not to help them, it was to save the market.

Posted by Giffy | July 15, 2008 8:57 AM
52

Still it seems that the rumors are to blame the way that an earthquake is to blame for destroying your poorly built home.

Seems to me that people are running to close to the edge in pursuit of profits. If I can make money running a just in time business but then one day a supplier goes out of business and I go bankrupt and lose all the money I made over 10 years in 3 months then not only was my greatness over-rated there's no point in blaming the supplier for his or her mistakes. What good is blame?

Posted by daniel | July 15, 2008 9:11 AM
53

Bush on NPR this morning saying it's not a bailout because the shareholders still control the company.

I swear to god that man isn't even trying anymore.

Posted by w7ngman | July 15, 2008 9:16 AM
54

@52, Your right in a sense. To many people were relying on mortgaged backed securities as if they were treasury notes. Essentially assets that were 100% safe. Turns out they were not (shockingly enough).

Had these rumors flown about 2 years ago they would have been mostly ignored, today is a different ballgame. But your right, its not that rumors killed them, its the rumors pulled out the last piece on the already wobbly Jenga tower.

I think blame is good, in that it can help us figure out what we need to do in terms of regulation. Now is not the time for punishment. Sure we could make sure big firms suffer, but honestly those of use who don't have 100 mil stashed away in an off shore hedge fund would suffer more. But we do need to sit down, get a bunch of smart people together, and figure out how we can keep this form happening again.

Posted by Giffy | July 15, 2008 9:20 AM
55

I want to see heads on pikes.

Posted by Greg | July 15, 2008 11:29 AM
56

I actually exclaimed, out loud, at my desk at work, "This is EXCELLENT." (Your article, not the current US economical situation). I'll be copying/pasting/forwarding this to my friends and family, (with due credit). Well done.

What do we do now? What do we do?

Posted by Elizabeth | July 15, 2008 11:54 AM
57

This is obviously a measured and well thought out response to the mortgage crisis. The categorization of all involved as crooks is not entirely accurate, however. Loan agents are required by law to get the best deal for borrowers that they can.

Some of them, for sure, sold borrowers rotten deals to make more money, but there are those that provided the service they are obligated to do, and banks simply gave money to people they shouldn't have because of lax requirements.

Posted by Jesse | July 15, 2008 12:24 PM
58

Giffy et al., I really enjoyed reading your discussion here, for what it's worth.

Posted by Darcy | July 15, 2008 1:37 PM
59

Fantastic explanation. Too many people don't have a clue of how this whole thing happened and most of the rest of us can only understand it on the most basic level.

Another great explanation can be found here.
http://docs.google.com/TeamPresent?docid=ddp4zq7n_0cdjsr4fn&skipauth=true&pli=1
It's well explained and pretty funny.

People should absolutely be furious! Industry needs to be regulated on some level. Certainly if the government, read taxpayers, are going to be expected to bail them out when things go wrong then we should be able to regulate them to make sure we don't have to do it often.

Posted by Colin | July 15, 2008 1:53 PM
60

@22 is correct, the Secretary of the Treasury at one point had to sign a paper saying the US Treasury would stand behind any losses past that first amount.

Posted by Will in Seattle | July 15, 2008 2:36 PM
61

It seems many of us have forgotten the State of the Union address when Bush promised the American Dream of home ownership for every hard working American. This was their way of foreshadowing the green-light-go of further deregulation and it was intended to secure investor confidence. After the collapse of Enron, World Com, Arthur Anderson alluded to the overvaluation of some of our most trusted companies, we needed another bubble to funnel our money into. Deregulation made it so easy to loan money and just as Golob said, the amalgam of repackaged loans made their constituent parts impossible to evaluate - and weirdly palatable to investors since their structure sort of resembled mutual funds. The building boom helped fuel the mortgage sector, constuction materials, labor and durable goods which helped buoy the economy when it should have been slumping badly. The bubble created the same false sense of security we've had during any other bubble and so instead of feeling the impact of Bush's retarded economic policies during his presidency, we'll experience the real crash after he's out of office when the blame can easily be shifted to Obama's shoulders. The Republicans will take control of Congress in 2010 since this is something that won't be solved overnight, (knock wood) and he'll be powerless to improve the situation until he's unseated by Jeb Bush in 2012 who can then come up with some new-fangled bubble to boost the economy back into some semblance of functionality. (KNOCK WOOD) K whatever.

Posted by Morgan | July 16, 2008 3:13 AM
62

Oh man... I have no idea what's goin' on...

Posted by Towelie | July 16, 2008 5:08 PM

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