Taking my money to provide necessary infrastructure is no problem. Taking it and giving that money to people who have not earned it is a problem.
All taxes "spread the wealth around".
Just as social programs primarily benefit the poor, spending on high tech weapons and government contractors primarily benefits Boeing/Northrop Grumman/Halaburton shareholders.
Blaming Democrats/CRA/poor people is compelling on its face but it ignores several keys points:
The crisis wouldn't have happened if banks didn't have the credit to lend or were able to externalize the risk of these subprime mortgages (and other debt). Mortgaged backed securities, credit default swaps, and collateralized debt obligations did both. If your bank can reduce the risk of default to zero by spinning off your mortgages or corporate paper into these credit derivatives, what incentive do you have to rigorously screen borrowers?
If the originating bank was on the hook for these subprime loans, this crisis would have never happened.
You think things like no-doc, Alt-A, or negatively amortorized mortgage loans would have happened if the banks were playing with their own money?
The market for these credit derivatives is and was totally unregulated and highly leveraged, which is why it went bad so fast. The market for credit default swaps alone was over $60 trillion USD in 2007, while the entire global stock market has a capitalization of $50 trillion. As an aside, this is also why $700B bailout is likely useless. It amounts to a little over 1% of the CDS market. A lot more than 1% of these things are going to go bad.
Slashdot Mirror
Taking my money to provide necessary infrastructure is no problem. Taking it and giving that money to people who have not earned it is a problem.
All taxes "spread the wealth around".
Just as social programs primarily benefit the poor, spending on high tech weapons and government contractors primarily benefits Boeing/Northrop Grumman/Halaburton shareholders.
Blaming Democrats/CRA/poor people is compelling on its face but it ignores several keys points:
The crisis wouldn't have happened if banks didn't have the credit to lend or were able to externalize the risk of these subprime mortgages (and other debt). Mortgaged backed securities, credit default swaps, and collateralized debt obligations did both. If your bank can reduce the risk of default to zero by spinning off your mortgages or corporate paper into these credit derivatives, what incentive do you have to rigorously screen borrowers?
If the originating bank was on the hook for these subprime loans, this crisis would have never happened.
You think things like no-doc, Alt-A, or negatively amortorized mortgage loans would have happened if the banks were playing with their own money?
The market for these credit derivatives is and was totally unregulated and highly leveraged, which is why it went bad so fast. The market for credit default swaps alone was over $60 trillion USD in 2007, while the entire global stock market has a capitalization of $50 trillion. As an aside, this is also why $700B bailout is likely useless. It amounts to a little over 1% of the CDS market. A lot more than 1% of these things are going to go bad.
It is a tea cup full of tears in an ocean.