The finger pointing continues.  The House rejected the effort to “stimulate” the financial sector with $700 billion, and all we hear on the talking heads show is how the Democrats are single handily killing off the economy, or how the Bush administration is responsible for all this mess.  Phooey.

This whole thing started snowballing well before Bush took office, and the proof is out there on the internet, if you just care to look.  For instance, an article from 1999 in the New York Times on how Fannie Mae was being pressured to offer easy credit to increase lending… by who?  None other than the Clinton administration:

In a move that could help increase home ownership rates among minorities and low-income consumers, the Fannie Mae Corporation is easing the credit requirements on loans that it will purchase from banks and other lenders.

The action, which will begin as a pilot program involving 24 banks in 15 markets — including the New York metropolitan region — will encourage those banks to extend home mortgages to individuals whose credit is generally not good enough to qualify for conventional loans. Fannie Mae officials say they hope to make it a nationwide program by next spring.

Fannie Mae, the nation’s biggest underwriter of home mortgages, has been under increasing pressure from the Clinton Administration to expand mortgage loans among low and moderate income people and felt pressure from stock holders to maintain its phenomenal growth in profits. -Source

And you can’t tell me we didn’t see this coming. It was seen coming back when this little fiasco was conceived.

In moving, even tentatively, into this new area of lending, Fannie Mae is taking on significantly more risk, which may not pose any difficulties during flush economic times. But the government-subsidized corporation may run into trouble in an economic downturn, prompting a government rescue similar to that of the savings and loan industry in the 1980’s. -Source

And the result?  Yeah, the writing was on the wall, all the way back in 1999.

”From the perspective of many people, including me, this is another thrift industry growing up around us,” said Peter Wallison a resident fellow at the American Enterprise Institute. ”If they fail, the government will have to step up and bail them out the way it stepped up and bailed out the thrift industry.” -Source

So, here is how this all really went down.  This mess was started by the Clinton administration.  The Bush administration inherited what would become the biggest financial mess in recent history, the Republican congress sat through the good times, and the Democrats jumped into the majority just before the fall out.  And now everyone is blaming everyone else, and nothing has been accomplished to fix anything.

Well, I shouldn’t say that.  The fact that our government isn’t accomplishing anything, is actually accomplishing what needs to be done: Nothing.  Let the banks fail.  Let those who lose liquidity suffer from the loss of liquidity.  And don’t spend my hard earned money trying to “fix” anything.  The markets are taking care of themselves in my opinion, and while it’s going to stink for a while, keeping the government hand out of the free market cookie jar will get things squared away all the more quickly.

Just because Americans have the right to own a home of their own, does not mean that they should all have the ability.

The Clinton administrations exercise in socialism failed.  Perhaps we should give capitalism a shot again…

Banking, Economics, Finance, Real Estate bailout, Economics, Finance, Wall Street

Last Friday marked the 20th anniversary of “Black Monday”, in which the Dow Jones slid 508 points.  What’s interesting about this is that many blamed the Monday slide in 1987 on a big sell-off on the previous Friday.

Well, since I’m a firm believer in the notion that history bears repeating itself, I’m currious as to what direction the market will take Monday morning, after the 360 point dumping the Dow took last Friday.

The market has been volatile, more so it seems than normal.  We’ve seen periods of 120+ point gains several days in a row, and then a major short period sell off.

Anyway, the financial news is abound with speculation that we’re in for a Black Monday, Round 2.  The big players aren’t so sure.

One thing’s for certain, it’s good to be holding some cash going into Monday.

Economics, Investing Black Monday, Dow Jones, Stock Market, Stocks, Wall Street