Comments about ‘Robert J. Samuelson: The recovery: Is this deja vu all over?’

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Published: Friday, Feb. 28 2014 12:00 a.m. MST

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Roland Kayser
Cottonwood Heights, UT

Instead of examining financial history and finding that we are doing a little better than expected, some people find it easier just to say "it's all Obama's fault".

Tyler D
Meridian, ID

I’d bet a year’s pay we don’t hear one word about this study over at Faux News – I’ll even give odds.

clearfield, UT

And to think, you guys were all so wrong to blame it on Bush.

Tyler D
Meridian, ID

@SCfan – “And to think, you guys were all so wrong to blame it on Bush.”

Since the article didn't mention causes, let alone blame, your point is irrelevant.

However, if you’d like to discuss blame, let’s do…

Let’s start with an ideology that blinds its followers to the need or rationale for any regulations. Or an ideology that believes the free market is 100% self-regulating and prices always reflect real value.

Then add a heaping dose of politicians who have drunk this kool-aid and govern accordingly – this started in large part with Reagan but there’s plenty of blame to go around (e.g., Clinton signing the repeal of Glass-Steagall).

As for Bush, he deserves blame in so far as he was the “decider” during the years prior to the meltdown, but Alan Greenspan (Larry Summers, etc.) deserves far more blame than Bush. I doubt Bush was capable of understanding the 2nd rate philosophy (e.g. Ayn Rand) that underwrote much of this ideology, let alone the 1st rate philosophy that critiqued it.

Morale of the story – blind faith in ideology is bad (and dangerous in the hands of politicians).

Roland Kayser
Cottonwood Heights, UT

To SCfan: The banking collapse happened on Bush's watch, so he get's the majority of the blame. Personally I think the collapse was caused by thirty years of banking deregulation, started by Reagan and continued by everyone up through Bush Jr. Bill Clinton also gets a significant part of the blame in my view. It was Clinton that signed the repeal of Glass-Steagall and Clinton who signed the Commodities Futures Modernization Act, both of which allowed Wall St and the finance sector to go on a destructive rampage.

If I had to pick one single person to blame it would be Allan Greenspan, the chief proponent of the "banks can just regulate themselves" school of thought. As Fed chairman for 18 years he had the power to implement that vision, to catastrophic results.

clearfield, UT

Tyler D

You know you can be pretty funny at times. You begin by saying that the article does not blame anyone, so my point is therefore irrelevent. Then only a few words later you begin to blame Bush, and conservative ideology ect. I guess that makes your points irrelevent too.

Roland Kayser

Thank you for pointing out that there are many Presidents, and I might add, Congresses that made policy that ultimately led to the 2008 meltdown. So many try to put the whole thing on the doorstep of Bush only.

Centerville, UT

Clayton Christiansen wrote an article published in the DNews (probably a year ago) that was very interesting. If my memory serves me, he proposed changing regulations & tax code to discourage debt and encourage savings. He extended this to individuals as well as corporations.

It would be interesting to see, over a long period of time (decades) what such a change would yield in terms of economic stability.

Currently, our nation is built upon consumption (driven by debt). This ends us hurting many people and businesses when downturns occur. Changing to a nation of balance, savings, and self-sufficiency, in my mind, would create slower growth, but fewer and less painful economic dips.

USS Enterprise, UT

To "Roland Kayser" again, if you go into congressional records, you will see that Bush and several Republicans attempted to take actions that could have prevented much of the financial problems. They wanted to reign in Freddie and Fannie, but the Democrats on the banking committe kept insisting that everything was fine, up to a few months before the crisis hit.

Next, the idea that banks have been deregulated over the past 30 years is a fallacy perpetuated by the ignorant. The fact is that the banking industry has been regulated more than ever. In fact, under Clinton, they were regulated and bullied so much that the Federal Government mandated that the banks engage in more sub prime lending. During the 1950's and 1960's banks were less regulated, and made significantly fewer sub-prime loans.

Mainly Me
Werribee, 00

What recovery? I'd hate to see a depression.

salt lake city, UT

@ Red Shirt
I believe if you go back and research the financial melt down, it was mostly due to banks playing with derivatives and speculation vs Freddy and Fannie loans. They were selling junk, buying junk, trading junk and it finally caught up to them. Whether it was the meltdown or 9-11, they both came on Bush's watch and his administrations incompetence played a role in them. At some point Bush supporters need to stop blaming Clinton for all their failures.

Deep Space 9, Ut

To "FT" the banking problems didn't start with Clinton. They began in the late 1960s. Clinton forcing banks to issue sub-prime loans was just one example.

You should look into the history of the things you blame for the financial melt down. Most were sanctioned or pushed by the government as a way of reducing risk on the banks.

Did you know that it was the Federal Government that invented the idea of derivatives was created in 1978 under Carter. The Federal Reserve, which started 100 years ago has been ineffective and has added to the regulations that banks have to comply with.

Basically, what we saw in 2008 was the result of nearly 100 years of government intervention in the banking industry.

West Jordan, UT

All this talk of blame. Shouldn't our focus be on repairing the damage? There are blueprints of successful economic recoveries in our history. Pick one and implement the policies. It's really not rocket science!

salt lake city, UT

@ Redshirt
Wrong. Banks got greedy, had little regulation and invested in high risk. Both Democratic and Republican parties particapated in the deregulation of the industry. The goverment did not force any bank to buy the junk that mortgage lenders were selling they decided that on their own. Our trouble accerlated when Greenspan and political leaders decided to let captialism run amuck within the banking system and they did not have the assests to cover their own loses. Bottom line is the industry needed more regulation and enforcement once society let them get to big to fail. Bush was the last one holding the bag and had neither the competence or clout to fix it before it went under.

Durham, NC

I do think it is Obamas fault, and those who were brave enough to act decisively in congress.... that the US fared this last GLOBAL recession the best, tied only with Germany. There are far too many pointing out that we had a recession, and too pointing out how our country rebounded better than most from it. It was not a US recession, or just a western recession, but the last recession hit all the economies of the globe. It even dented the hyper growth China and India were experiencing.

So before we run around blaming Obama, or even Bush..... the what could have been had both these men not reacted would have been far worse. Sure the medicine tasted bad going down.... but we would have been far worse off had we not taken the medicine.

Deep Space 9, Ut

To "FT" once again, you are wrong.

Read the following:

"Fannie, Freddie asked to relax condo loan rules: report" Reuters

"How HUD Mortgage Policy Fed The Crisis" Washington Post

"Meltdown? Let's blame politicians" DN

"Three Decades of Subsidized Risk" WSJ

"The True Origins of This Financial Crisis" American Spectator

"Bill Clinton's drive to increase homeownership went way too far" Bloomberg Business

There are more articles out there that go into the underlying rasons.

Again, Bush tried to reign in Freddie and Fannie, but your ilk killed that idea. See "New Agency Proposed to Oversee Freddie Mac and Fannie Mae" NY Times. Bush wanted to reign in Freddie and Fannie in 2003. The meltdown would not have been as bad if they had enacted the new oversight. Also see "President Bush Tried to Rein In Fan and Fred" in the WSJ.

The meltdown wasn't due to capitalism, but socialism trying to control the banks.

Tyler D
Meridian, ID

@RedShirt – “…reign in Freddie and Fannie”

When it comes to what caused the 2008 meltdown, the government pushing banks to lend (and F&F to underwrite) to the poor/minorities is the mouse in the room next to the Elephant (i.e., the highly leveraged (up to 30–1), fee driven, financial products=things of real value, Wall Street/Finance industry.

What does F&F have to do with the bank collapse in Iceland, the debt of Greece, or the decline in home values in Norway? And F&F loans only became a problem when banks did not have to keep a portion of their loans and Wall Street bundled them with good loans and got ratings agencies to deem them AAA.

Yet the solution on the Right is simply to dissolve Fannie & Freddie (the equivalent of calling the mouse exterminator while the Elephant destroys your house).

And an accurate understanding of history would demonstrate this collapse was similar in many ways to the panics of the 1800’s and early 1900’s – before the evil Fed and regulations you deem causal.

You have the cause & effect relationship here exactly backwards…

Pleasant Grove, UT

@Tyler D

Your mouse is not separate from your elephant -- they are two views of the same animal. The bad loans resulting from HUD/Fannie/Freddie policy needed go somewhere...so they were packaged into worthless financial instruments and traded off. No one wanted to be the guy who got stuck with them. Participating in the fraud was wrong, but the root cause was what produced the flood of risky loans in the first place -- federal housing policy. When you set aside lending standards for one community, you have to set them aside for everyone.

This leads back to the original topic: why the slow recovery? One of the reasons is that everyone knows the Obama administration hasn't dealt with root causes. Nothing substantial has changed in federal housing policy.

Other reasons, we're all familiar with. Obamacare is a nightmare of uncertainty. The law is on-again, off-again, until no one knows what it will require of them. Job creators are standing by, waiting to see what happens.

Similarly, other job creators have decided to just sit tight until Obama leaves office...the same thing that happened under Roosevelt. This has slowed down the recovery by years.

Roland Kayser
Cottonwood Heights, UT

So much revisionist history. Fannie and Freddie were bit players in the whole meltdown, it would have happened even if they didn't exist. No bank was ever forced to make a subprime loan against their will. They were falling all over themselves trying to write them because they were far more profitable than standard loans. There are even examples of banks pushing clients into subprime even though they qualified for a regular mortgage.

As to Nate's assertion that banks were trying to get rid of the bad loans, why then did they have so many on their books when the crash came? They thought they were cash cows, that's why.

Anyone interested in a thorough history of the crisis should read "When the Music Stops" by Alan Blinder. Another excellent source is "All the Devils are Here", I'm forgetting the name of the author.

The Hammer
lehi, utah


Here is the timeline and why Fannie Freddie were the main cause.
Sept 7-The Feds take over Fannie Freddie (Remember these guys provided guarantees on over half of our nations mortgages)
Sept 14-Merrill Lynch is sold to Bank of America (this sparked the liquidity crisis that sent the FDIC straight to the president's desk telling him that without changes to current law over half the banks in the US would fail, this was due to the devaluation of all of the mortgage securities that fannie freddie had that were now rated as junk which sent banks holding these securities ratio's into the abyss)
Sept 15- Lehman collapses (FDIC wouldn't step in largely because it would have drained the reserves and nobody wanted to buy them out ala Bearstearns)
Sept 17- AIG (the other insurance company) needs a bale out.
Sept 19-TARP is unveiled to stop the liquidity crisis.
Sept 23- The FBI announces fraud going on at Fannie Freddie

They weren't Bit players. They were largely the cause because they helped start the idea that you can insure investment risk with insurance backed by the very investments they are insuring.

Roland Kayser
Cottonwood Heights, UT

@the Hammer: Fannie and Freddie were late to the subprime party. They only got into it because they saw how much money the other banks were making on it. They actually held far fewer bad mortgages than most commercial banks did.

Merrill-Lynch and Lehman were not banks and were not covered by the FDIC. The FDIC had nothing whatsoever to do with their demise. AIG was actually the biggest problem, which derived from their massive sales of credit default swaps, which are essentially insurance policies on bonds. Unfortunately they were not required to have funds to cover the insurance losses, which is why they needed a the biggest bailout of all..

Another major issue was the ratings agencies who assigned AAA rating to many bonds that turned out to be junk. Many organizations are only allowed to buy AAA rated securities, pension funds for instance, and the crash would have been much less severe had the ratings agencies not been corrupted by money from the banks they were supposed to be rating.

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