Oh, noeeezzz! I've been PWNED!!
The current recession goes back to the housing crisis. But, who created the housing crisis? The answer that liberals give you is the free market. The problem is, the free market was not in control of the two companies that the housing crises stems back to. Freddy Mac and Fannie Mae are GSEs, government sponsored enterprises. These two enterprises gave out thousands of mortgages to poor people who couldn't pay back their loans.
And then there's reality (emphasis leg-humpingly added):
While attention has been focused on the relatively tiny US "sub-prime" home mortgage default crisis as the center of the current financial and credit crisis impacting the Anglo-Saxon banking world, a far larger problem is now coming into focus. Sub-prime or high-risk Collateralized Mortgage Obligations, CMOs as they are called, are only the tip of a colossal iceberg of dodgy credits which are beginning to go sour. The next crisis is already beginning in the $62 TRILLION market for Credit Default Swaps.
Anyone who tries to write about the current economic crisis without mentioning credit default swaps is merely demonstrating their grotesque, hysterical ignorance.
Oh, wait, Justin's a Blogging Tory ... forgive me that last bit of unnecessary redundancy.
JUST FOR FUN, it would be amusing to watch Justin describe how the sub-prime mortgage fiasco alone is responsible for the current recession. Let's let Justin hang himself with his own words by calculating just how much (or how little) effect the sub-prime market could have on a global economy. First, here's Justin, pulling numbers out of his ass:
These two enterprises gave out thousands of mortgages to poor people who couldn't pay back their loans.
So, Justin, it's your position that "thousands" of bad mortgages to poor people who couldn't afford them are somehow responsible for the current world-wide recession? OK, let's go with that and see where it takes us.
How many "thousands" of these mortgages are we talking about, Justin? Five? Ten? Twenty? Hey, Justin, let me be generous and say, oh, half a million. Yeah, for the sake of argument, even though you claim only "thousands" of allegedly bad mortgages, I'll hypothesize that there were half a million. Does that work for you? I don't want to shortchange you, I want to give you every opportunity to make as dire a case as possible.
Movin' on, then, what was the average value of one of these mortgages? Now, given that these were sub-prime mortgages (and Justin himself claims that they were given out to "poor people"), I think it's reasonable to assume that they didn't represent stunningly expensive properties, but I'm going to give Justin plenty of leeway and assume that each of these mortgages was worth, oh, what the hell, half a million dollars and I think we can all agree that I'm bending over backwards to be generous to Justin.
And, finally, in terms of a meltdown in the sub-prime market, let's assume a totally worst-case scenario and assume that every single one of these mortgages tanked completely and lost every single penny of value of its original mortgage price. You still with me? That is, in order to be (more than) fair to Justin, I'm proposing the absolutely worst possible outcome to see just how much this would affect the global economy.
So ... half a million sub-prime mortgages, each worth half a million, and every single one of them tanking and losing its entire value, gives us a (ridiculously over-inflated) loss of ... $250 billion.
Read that again: $250 billion.
Positively worst-case with ridiculously generous numbers, Justin. And yet, here we are, watching the U.S. getting revved up with a stimulus package worth almost $800 billion. Why, Justin? Go on, explain that to me, Justin. Because, given that the entire sub-prime situation could have been (according to my out-of-thin-air numbers) resolved with a mere $250 billion, how exactly is it that were talking, literally, trillions of dollars in the long run to repair the world economy?
Let's hear it, Justin ... how exactly does that work? Oh, and Justin? It's safe to say that one of us is howlingly ignorant of the basics of what's happening here, economics wise. And I'm pretty sure it's not me.
DEAR BLOGGING TORIES: Now we'll see if Justin can walk the walk.
23 comments:
I was listening to Rush yesterday (I know, I know), and by what I'm sure is sheer coincidence, he said the exact same thing as that first paragraph you quoted.
At the time I thought: Oh come now, ElRushbo, nobody would believe that hypersimplified tripe.
D'oh!
From Rush's lips to Justin's ears -- I believe that's how it works.
His profile says he's young, fit and angry. Tsk! He forgot stupid.
Here's another very good overview from Billmon at Dailykos complete with tasty Catch-22 references which would fly waaaaaaaaay over Justin's empty head.
http://www.dailykos.com/storyonly/2009/2/19/05524/5446/499/699191
aren't the folding home mortgages just a shining beacon of george bush's ownership society?
Well, you and your readership have lessons to learn. Here's the response, complete with a refutation of everything you have said here.
Dear Justin:
I started reading and when I ran across you upgrading your number of failed sub-prime mortgages from "thousands" to 1.3 million and realized you really were that sloppy and careless in your research, that's pretty much where I stopped reading.
Have fun in your fantasy world where you can blame poor people and their mortgages for the current worldwide economic crisis. I'm sure that, on your planet, that makes perfect sense.
So, you ignore facts in order to live in your world view. If you had actually read it, you would have noted that my number came from an actual source, unlike your conjecture.
You should change your subtitle. It should read:
"Random thoughts from an unarmed (and fantasy-based) Canadian. These views are not necessarily the same views held by Canadians in general. That is definitely a good thing."
Justin says he is in "Debris Removal" -- garbage man?
Anyway, the following article at Newsweek explains that it was not the poor people.
http://www.newsweek.com/id/162789
Justin is such the kidder, he amusingly added this to his comments " All comments become my property." -- ah the fun I could have...
To be fair, I don't think Justin is trying to be dishonest. For him and his buddies blaming things on teh negroz is easy to understand and entirely consistent with their ideology. While it's possible for a slightly intelligent person to learn about what happened after the loans were made and why that has caused such a problem, it is completely and horribly beyond the capabilities of Justin's stunted brain to figure out, so instead he'll just ignore reality. It's okay Justin... it's okay.
WV "Spopord" if there was a word for Justin's level of stupidity, that would be it.
I stopped reading CC's post here:
"These two enterprises gave out thousands of mortgages to poor people who couldn't pay back their loans."
That's not even how Fannie Mae and Freddie Mac work.
"The corporation's purpose is to purchase and securitize mortgages in order to ensure that funds are consistently available to the institutions that lend money to home buyers."
Justin, you little moron. Get off the computer and go read book.
Dear readers:
I'm just hanging out in Ottawa airport, waiting for my flight to board but, rest assured, I'm going to give poor Justin the thorough disemboweling he so richly deserves upon my return home.
Stay tuned ...
I don't know. When it comes to the financial meltdown, I think there are worthier targets than this low-hanging fruit. Li'l Justin's just repeating the nonsense those higher up the right wing food-chain are spewing.
Justin is being stupidly simplistic in his analysis, he is looking at one very small piece of the problem, the people who bought homes and claims that they only got their loan FM and other back gov banks.
It is true that this is part of the problem, but it was only 10% of the problem, the rest of the problem was created by Wall Street, Hedge Funds and the buying of selling CDO's. These factors, because of the lack of oversite and regulation allow a giant and legal ponzi scheme.
The failure the banks and financial markets occured because of the what they did with risky mortgages (sub prime)
I've seen this FM&FM shit floated out on quite a few right and far right, minority hating sites. Blaming FM&FM fits nicely with this types world view.
After reading til my eyes bleed on what happened, it's corruption and greed from top to bottom.
it's corruption and greed from top to bottom.
The biggest sinners in all of this are all the people who admit now that they didn't understand what they were doing...what they were borrowing, buying, selling or rating. That's more forgivable when it comes to the average slob, but when it comes to these highly-educated, well-remunerated so-called experts, well...that's when I think we should examine the option of re-education camps.
"and the buying of selling CDO's."
and the rating and artificial inflating of those cdo's. the system got gamed like never before, and it wasn't by po' folk.
KEvron
Agreed, Ti-guy.
It must make life so much simpler and pleasant when you can roll this mess into poor people and liberals. :)
Here's a little something for Justin, it's a visualization which should makes it easier for him to understand. (h/t JJ)
Oh, and here's a second little something for Justin.
Patience, kids ... Justin's going to get his. Actually, let me rephrase that -- Justin will probably learn absolutely nothing when I drop the hammer on him, but the rest of you might find it amusing to have it demonstrated, once and for all, the utter futility of debating with truly stupid people.
Again, stay tuned ...
Who's debating? I'm sharing.
So, you people really are as ignorant as I think you are. I provided you with plenty of facts, and you all claim that I'm just a racist who believes right wing nonsense. That's just sad.
"I already have my opinion, don't confuse me with the facts."
Fits the description of the left wing perfectly.
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