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Old 06-01-2013, 09:29 PM
 
Location: Texas
37,937 posts, read 17,805,641 times
Reputation: 10366

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Quote:
Originally Posted by LordBalfor View Post
Again, LOW INTEREST RATES was NOT the problem.
Too many unqualified buyers was the problem. Many of those folks shouldn't have been qualified NO MATTER WHAT the interest rates were.

Ken
When interest rates are manipulated and lowered below market it entices mal investment.
If the interest rates were not low would many have purchased housing or taken risks?

Lowering the qualifications, which is another manipulation of the free market, did add to the problem.

 
Old 06-01-2013, 09:37 PM
 
Location: Texas
37,937 posts, read 17,805,641 times
Reputation: 10366
Quote:
Originally Posted by LordBalfor View Post
Again, low interest rates were NOT the problem. The problem was too many unqualified buyers who were approved. How low the interest rates were wouldn't have mattered had the initial first-line lenders exercised due-diligence when making loans.

Ken
Why should they? It was insured. Since it was then lend, lend, lend, and make those commissions.
 
Old 06-01-2013, 10:39 PM
 
Location: SE Arizona - FINALLY! :D
20,460 posts, read 26,278,891 times
Reputation: 7627
Quote:
Originally Posted by pknopp View Post
It's like trying to explain things to a block of ice. His argument wasn't to keep things affordable for the responsible. HIs argument is for keeping the economy in a bubble.

You can not create a housing bubble on the back of the responsible.

To be honest, a new bubble now would help us out a lot even if we paid for it later. This is a really good time for a bubble…

There was a headline in a satirical newspaper in the US last summer that said: "The nation demands a new bubble to invest in" And that’s pretty much right.


There is never a good time for the government to create a bubble. We saw what happened when they did what Krugman was promoting.

Informe semanal - Innovar para salir de la crisis , Informe Semanal - RTVE.es A la Carta
Just more of the same ignorant nonsense. As Krugman said HIMSELF:

...So did I call for a bubble? The quote comes from this 2002 piece, in which I was pessimistic about the Fed’s ability to generate a sustained economy. If you read it in context, you’ll see that I wasn’t calling for a bubble — I was talking about the limits to the Fed’s powers, saying that the only way Greenspan could achieve recovery would be if he were able to create a new bubble, which is NOT the same thing as saying that this was a good idea. Of course, I know that this explanation won’t keep the haters from pulling up the same quote out of context, over and over.

But did I call for low interest rates? Yes. In my view, that’s not what the Fed did wrong. We needed better regulation to curb the bubble — not a policy that sacrificed output and employment in order to limit irrational exuberance. You can disagree if you like, but that doesn’t make me someone who deliberately sought a bubble...


Me And The Bubble - NYTimes.com

I think the guy knows what he said - certainly more than you clowns do - especially considering how you wingnuts have "cut and pasted" parts of his comments to make them say something totally different. The original post of this thread is dishonest from the get-go - as are the claims you make.

Ken
 
Old 06-02-2013, 04:47 AM
 
Location: Texas
37,937 posts, read 17,805,641 times
Reputation: 10366
Quote:
Originally Posted by dsjj251 View Post


Krugman said that we should lower interest rates so that homes were more affordable, he did not advocate for a major policy claim that would allow people with no money to buy homes.
If lowering interest rates are so helpful why aren't they always low? Volcker knew

Quote:
Originally Posted by dsjj251 View Post
there is a difference.To put it in familiar terms. If you car breaks down and you need a new one, there is a huge difference between buying a 15,000 used 2010 car vs a 33,000 2014.
Austrian economics told this to us as early as the mid 1940's and specifically in the late 1970's as it pertained to housing.

The case against government-guaranteed loans and mortgages to private businesses and persons is almost as strong as, though less obvious than, the case against direct government loans and mortgages. The advocates of government-guaranteed mortgages also forget that what is being lent is ultimately real capital, which is limited in supply, and that they are helping identified B at the expense of some unidentified A. Government-guaranteed home mortgages, especially when a negligible down payment or no down payment whatever is required, inevitably mean more bad loans than otherwise. They force the general taxpayer to subsidize the bad risks and to defray the losses. They encourage people to “buy” houses that they cannot really afford. They tend eventually to bring about an oversupply of houses as compared with other things. They temporarily overstimulate building, raise the cost of building for everybody (including the buyers of the homes with the guaranteed mortgages), and may mislead the building industry into an eventually costly overexpansion. In brief in the long run they do not increase overall national production but encourage malinvestment.

The proposal for government loans to private individuals or projects, in brief sees B and forgets A. It sees the people into whose hands the capital is put; it forgets those who would otherwise have had it. It sees the project to which capital is granted; it forgets the projects from which capital is thereby withheld. It sees the immediate benefit to one group; it overlooks the losses to other groups, and the net loss to the community as a whole.
 
Old 06-02-2013, 05:40 AM
 
79,908 posts, read 44,064,775 times
Reputation: 17204
Quote:
Originally Posted by LordBalfor View Post
Just more of the same ignorant nonsense. As Krugman said HIMSELF:

...So did I call for a bubble? The quote comes from this 2002 piece, in which I was pessimistic about the Fed’s ability to generate a sustained economy. If you read it in context, you’ll see that I wasn’t calling for a bubble — I was talking about the limits to the Fed’s powers, saying that the only way Greenspan could achieve recovery would be if he were able to create a new bubble, which is NOT the same thing as saying that this was a good idea. Of course, I know that this explanation won’t keep the haters from pulling up the same quote out of context, over and over.

But did I call for low interest rates? Yes. In my view, that’s not what the Fed did wrong. We needed better regulation to curb the bubble — not a policy that sacrificed output and employment in order to limit irrational exuberance. You can disagree if you like, but that doesn’t make me someone who deliberately sought a bubble...


Me And The Bubble - NYTimes.com

I think the guy knows what he said - certainly more than you clowns do - especially considering how you wingnuts have "cut and pasted" parts of his comments to make them say something totally different. The original post of this thread is dishonest from the get-go - as are the claims you make.

Ken
His explainations are a complete joke. We have had record low rates. Simply incredibly low rates for years and has it allowed the government to quit printing a record amount of money? No.

Record low rates may help things plod along and that is fine but low rates are not going to re-inflate the bubble which Krugman has clearly argued for many times. He's still arguing that.

It also wasn't just bringing those who were not viable candidates into the market that was a problem. It was the entire system. It was speculators who otherwise were responsible but bailed when things went bad. The banks having to accept lower and lower quality contracts to keep the money flowing. etc.

None of this would have happened if we hadn't artificially lowered interest rates, which Krugman clearly called for over and over. You can't after the fact claim that yes you were for lower rates but not for the bad that went along with them.

That would be like if I would argue that the BAC should be raised to 1.5 to encourage the sale of alcohol and spur an increase in night club business but after the fact claim that I in no way was responsible for the increase in traffic accidents as I didn't support that.

None of the end results that Krugman argued for happens without the irresponsible parts happening. He even notes in the video I posted that we would have to pay for what he was proposing down the road but it was still a good idea.
 
Old 06-02-2013, 07:24 AM
 
Location: Long Island, NY
19,792 posts, read 13,917,756 times
Reputation: 5661
 
Old 06-02-2013, 04:39 PM
 
Location: SE Arizona - FINALLY! :D
20,460 posts, read 26,278,891 times
Reputation: 7627
Quote:
Originally Posted by pknopp View Post
His explainations are a complete joke. We have had record low rates. Simply incredibly low rates for years and has it allowed the government to quit printing a record amount of money? No.

Record low rates may help things plod along and that is fine but low rates are not going to re-inflate the bubble which Krugman has clearly argued for many times. He's still arguing that.

It also wasn't just bringing those who were not viable candidates into the market that was a problem. It was the entire system. It was speculators who otherwise were responsible but bailed when things went bad. The banks having to accept lower and lower quality contracts to keep the money flowing. etc.

None of this would have happened if we hadn't artificially lowered interest rates, which Krugman clearly called for over and over. You can't after the fact claim that yes you were for lower rates but not for the bad that went along with them.

That would be like if I would argue that the BAC should be raised to 1.5 to encourage the sale of alcohol and spur an increase in night club business but after the fact claim that I in no way was responsible for the increase in traffic accidents as I didn't support that.

None of the end results that Krugman argued for happens without the irresponsible parts happening. He even notes in the video I posted that we would have to pay for what he was proposing down the road but it was still a good idea.
Your post is total nonsense not based on fact. You keep harping on the low interest rates but the fact is the pre-crash interest rates were NOT "record lows". The super-low "record low" interest rates came AFTER the housing bubble burst - NOT BEFORE, so it wasn't "low interest rates" that caused the crash. Now, in historical terms the pre-crash rates WERE definitely low compared to the rates in the 70's 80's and 90's -but they were in fact just about what they were back in the early-mid 60's and were HIGHER than they were back in the late 40's and early 50's - so this constant fetishlike fixiation you have on low interest rates being the cause of the housing crash just isn't born out by the facts. We've HAD interest rates in that range before for roughly TWO DECADES and it didn't cause a housing crash or the severe economic collapse we suffered in 2008 so it's NOT "low interest rates" that were the problem - no matter how much you may THINK it was. The problem was UNQUALIFIED BUYERS and the failure of first-line lenders to do exercise due-dilligence in their job of making sure that borrowers really were able to make the payments on the loan (WHATEVER the interest rates were). If interest rates were 10% and lenders were giving to loans to unqualified buyers there STILL would have been a crash. You can't give loans to people unable to make the payments and not expect there to be trouble.

Chart of interest rates back to 1963:

Interest Rate Trends ~ Historical Graphs for Mortgage Rates

Chart of interest rates from about 1910 to 1952 (page 4):

http://www.nber.org/chapters/c1331.pdf

Ken

Last edited by LordBalfor; 06-02-2013 at 05:06 PM..
 
Old 06-02-2013, 06:23 PM
 
79,908 posts, read 44,064,775 times
Reputation: 17204
Quote:
Originally Posted by LordBalfor View Post
Your post is total nonsense not based on fact. You keep harping on the low interest rates but the fact is the pre-crash interest rates were NOT "record lows". The super-low "record low" interest rates came AFTER the housing bubble burst - NOT BEFORE, so it wasn't "low interest rates" that caused the crash.
The record lows came after the crash but they were being held artificially low before that.Even Greenspan admits he screwed up by doing that.

But as the Fed slashed interest rates to nearly record lows from 2001 until mid-2004 , housing prices climbed far faster than inflation or household income year after year. By 2004, a growing number of economists were warning that a speculative bubble in home prices and home construction was under way, which posed the risk of a housing bust.

Mr. Greenspan brushed aside worries about a potential bubble, arguing that housing prices had never endured a nationwide decline and that a bust was highly unlikely...........


http://www.nytimes.com/2008/10/24/bu...anel.html?_r=0

The Bubble does not happen without the Fed holding the rates so low.
 
Old 06-02-2013, 08:55 PM
 
Location: SE Arizona - FINALLY! :D
20,460 posts, read 26,278,891 times
Reputation: 7627
Quote:
Originally Posted by pknopp View Post
The record lows came after the crash but they were being held artificially low before that.Even Greenspan admits he screwed up by doing that.

But as the Fed slashed interest rates to nearly record lows from 2001 until mid-2004 , housing prices climbed far faster than inflation or household income year after year. By 2004, a growing number of economists were warning that a speculative bubble in home prices and home construction was under way, which posed the risk of a housing bust.

Mr. Greenspan brushed aside worries about a potential bubble, arguing that housing prices had never endured a nationwide decline and that a bust was highly unlikely...........


http://www.nytimes.com/2008/10/24/bu...anel.html?_r=0

The Bubble does not happen without the Fed holding the rates so low.
Actually I don't see Greenspan saying that at all - WHERE in that article does Greenspan admit that the Fed kept rates too low? I don't see that (if I'm missing it, point it out to me). I seem him admitting that he messed by assuming that the markets would self-regulate itself (you know? - the type of thing YOU are pushing?).

Again, even YOUR LINK cites the problems with making risky loans:

"But on Thursday, almost three years after stepping down as chairman of the Federal Reserve, a humbled Mr. Greenspan admitted that he had put too much faith in the self-correcting power of free markets and had failed to anticipate the self-destructive power of wanton mortgage lending...

... he failed to rein in the explosive growth of risky and often fraudulent mortgage lending
".

YOUR LINK also touches upon the fact that the Fed was too willing to "let the market regulate itself". How many times have folks on the Right championed "letting the market regulate itself"? It appears that even YOUR LINK mentions the role THAT played in the mess - which is EXACTLY what I've been saying (ie that the first-line lenders DIDN'T DO THEIR JOBS). I sure don't see Greenspan agreeing with you that the Fed let rates go too low though.

The only reference I see to "rates being too low" is the CLAIM from his critics that he did that - and in THAT regard "so what that his critics claim that? - that's not exactly news that his critics claim that - and it's certainly not some kind of proof that the critics are right, it's simply a claim by the critics (just like YOU are doing). It's also not an ADMISSION by Greenspan that they are right in that regard. Again, IF i'm wrong and Greenspan admitted that, show me where in the article he does that, because I sure don't see it. You CLAIM that Greenspan "admits he kept rates too low" but I don't see that ANYWHERE in the article. Unless you can show in that article that Greenspan admits he kepts rates too low, it seems to me that you are playing "fast and loose" with the facts there.

All YOUR LINK does is back up EXACTLY what I've been saying all along - that the lenders DIDN'T DO THEIR JOBS.

Ken

Last edited by LordBalfor; 06-02-2013 at 09:05 PM..
 
Old 06-03-2013, 03:32 AM
 
79,908 posts, read 44,064,775 times
Reputation: 17204
Quote:
Originally Posted by LordBalfor View Post
Actually I don't see Greenspan saying that at all - WHERE in that article does Greenspan admit that the Fed kept rates too low? I don't see that (if I'm missing it, point it out to me). I seem him admitting that he messed by assuming that the markets would self-regulate itself (you know? - the type of thing YOU are pushing?).
Not once I have I pushed that. This is why it's impossible to discuss things like this with someone like yourself. You take your preconceived notions how you think someone else believes and then argue them as fact.

None of what Greenspan tried and Krugman supported happens without the low rates, bad loans and relaxed regulations. You can say that they didn't actually support that stuff which means they were actually just blowing smoke out their butt's.

You can not build a bubble, which Krugman pushed for on the backs of the responsible.

Paul was constantly warning us to stop it while Krugman just like now was arguing more, more, more.
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