TPS

Not saying it all went, just saying there was a big movement into REITs, which helped make the hot markets even hotter.

Maybe the work at ILB will help his run D skills, as I think he was mainly a "get after the passer" DE in college. Would be a great story if this works out, at least for Moats...

Study I thought this was my line? Nice article. It's too bad they didn't inlcude data on how much money flowed into REITs, but those were some mighty fine returns. I do recall, that with the Enron/Worldcom, etc scandal and the tech bubble burst, a lot of was reluctant to go into stocks. Real Estate became one of the investments of choice. Maybe I'll check the Flow of Funds data and see if I can get that.

Ok, Take government out of the picture--no interest deduction, no implicit backing of gses, no cra, etc. Are you saying a bubble in housing could not be possible?

As I said, I don't know what caused the problems at N-rock. I do know that there was a housing bubble in the UK and in many EU countries. So I guess the real issue I was trying to get at: were governments in those countries also pushing homeownership for low-income residents?

Well I guess we'll have to agree to differ on which source we think is more reliable: Fed researchers vs Washington Post journalist and Ayn Rand institute member. We agree here: Monetary policy has very little effect during a serious recessions when loan demand is flat (which is why there is velocity has slowed and the "money multiplier" is non-existent). I think in my pm to you I mentioned I believe that investors are speculating in commodity futures which could mean a bubble is brewing there. The dollar decline is something the economy needs, as exports have been one of the few bright spots. The other point of disagreement I have is your view of money, specifically that you think the Fed has "printed" money, but we've certainly been down this road before, so I won't rehash.

I have news for you, all economic discussions are political, and all economists, just as everyone else does, have a political bias. Do you think your link was not biased? Because the real unemployment is close to 15%.

Where did I say you said "only"? I know you realize there were a lot of factors, but you did say it (CRA) "played a huge role." As for your articles, from the first one: While they had "goals" the government set, they were pushed by banks to buy their crap, so they could keep the bubble going and continue to generate the fees from the loans. As it also says, they entered the subprime market in 2006/7, and the bubble was already in progress. One might conclude from this article that Fannie went into the subprime market mainly to boost its earnings on higher interest loans becuase of the accounting scandal in which they overstated earnings. your second article is an editorial by someone from the Ayn Rand institute. Very objective. Try reading something a little more objective: Fed president Sure, government policies support homeownership, they always have. You seem to think there were significant changes in those policies that were the "root cause" of the bubble; I disagree. There was a bubble across all segments of the market. Like any bubble, or ponzi scheme, you continually need more players to keep it going. The mortgage finance industry paid a lot of money to pols to keep it going too. An interesting question, that I don't know the answer to: as I recall, the first casualty of the crisis was a British bank (Blackrock?). How was its failure related to the real estate bubble in the US?

They both refer to the impact on savings, not consumption. First, are you saying there was only a bubble in poor neighborhoods? Was it poor blacks and mexicans who bought all those houses in Las Vegas, Florida and California? Is buying a house the only way to invest in housing assets (REITs for example)? I'm talking about all of the **** created based upon the price of the underlying assets--that's what bubbles are about. Speculation about some underlying asset that drives financial assets related to the real asset to higher and higher levels, which drives the price of the underlying assets higher, which drives the paper assets higher, which.... I'm not denying there was some impact, but not the main impact. CRA applies to financial institutions that take in deposits, so they are required to lend some % in the communities where they take in those deposits. The majority of sub-prime loans were generated by mortgage finance companies which are NOT covered by CRA. Even many Wall Street IBs bought their own finance companies to fuel their MBS and derivative markets. The FED and FDIC have done the research (and published papers), and from this both Bernanke and Bair, both appointed by Bush, have testified that the primary factor was not CRA, rather it was predatory lending, securitization, and lax regulation. The right pushes this as the main issue because it plays into the anger of their targeted constituents. I'm not making a subjective claim about those tax cuts, I'm trying to explain how one can make the argument that they impacted the bubble (which I do happen to believe though). This all goes back to a comment by PastaJoe.

You chimed in on the response I gave to GG, which means you got on board the new topic. I'm happy to get back to the original--friggin' hijackers! I don't think we were debating Clinton originally either. The debate, from my end, was whether tax cuts for the wealthy (a part of supply side theory, not the whole of it) can add fuel to the bubble? My contention is that cuts to households at the top create a greater pool of savings which are used for financial investment, which can fuel a bubble. Unless you are a small business owner, savings of households are used to buy financial assets, which increases the demand for those assets (which is NOT the same thing as real investment). Tax cuts for those who save a greater proportion of their income add more fuel to asset prices/bubbles, than tax cuts for those who spend all of their income. That does not mean the tax cuts caused the bubble, rather they add to it. There is nothing at all absurd about that argument--it's a fact that the rich save more than the poor. Btw, the argument about tax cuts for households is not the same as supply-side tax cuts for businesses. There is a marginal impact on real investment from reducing the after-tax return on those productive investments. Gee, such an unbiased source.... This quote about the possibility of increased taxes: "That means small business owners have no idea come January how much capital they will have available to pay their workers and make investments." I thought workers were paid out of pre-tax income? He also says the #1 impediment from government is taxes (I'm sure that's true). However, surveys say the #1 impediment for small businesses at the moment is lack of demand/sales, which is the #1 impediment to investment right now.

Yes, it's a bit more complicated than saying it was the tech boom, but the Roubini link (you can ignore the equations) has a good discussion and links to the debate of the period (including some WSJ editorials).

I knew I should've thrown the "natural rate" term in... I'm not talking about the source of the expansion in the 1990s, which of course was the tech bubble. Up until the mid-90s the so-called "natural rate of unemployment" or "non-accelerating inflation rate of unemployment (NAIRU) was believed to be between 5-6%. In the past, when Unemployment (U) approached 5-6%, the FED would raise rates to slow the economy down. Since inflation was tame in the 1990s, the FED believed that NAIRU was lower, and let the expansion continue. The point is that the FED decides when to let the party stop by raising rates, and in the 1990s they let the party continue because the inflation barrier changed. Maybe you need to do a little more homework... To save you some time, here's a little primer on the debate from that period by Roubini: Nairu

I named one out of the "few others" I said there were. The tech bubble relates to what GG said about capital gains taxes, which I never disagreed with. I believe the unemployment rate falling to 4% was a bigger factor.

I've always argued there are a host of reasons for the most recent crisis, no one single factor can describe the perfect storm. Cutting taxes at the top raised the volume of savings looking for returns--more money for hedge funds, reits, etc. There's a long history of economic thought that focuses on rising inequality of income and wealth to (HELP) explain speculative bubbles and crises.

I thought we agreed there were a few other factors, like the unemployment rate falling to 4%, which both increases revenues and lowers expenditures. I don't recall "crowing" though...

One can make the argument that tax cuts for the class of households that have a higher propensity to save out of income creates a greater pool of savings looking for financial investment opportunities. One can use this argument and provide evidence from the two experiments with supply-side tax cuts to show these experiments ended with speculative bubbles, financial crises and bailouts--the commercial real estate bubble and S&L crisis in the 1980s, and the most recent housing bubble and ensuing crisis. With the exception of small business owners, increasing the "pool of savings" by tax cuts means an increased source of demand for financial assets which might indirectly influence real corporate investment, but more than likely won't, since new business investment is mainly a function of demand for its products (sales). There is a logical case for PJ's argument AND evidence to support it, given two test cases.

The Bills got a sack and allowed a sack. On the offensive side of the ball, this was testament to both improved O-line play and improved QB play. On the defensive side of the ball, this indicates a lack of playmakers in the front 7. The D will be in for a long year if this continues.

I know for a fact that fraud was rampant by direct lenders. Banks and mortgage finance companies input fraudulent data into Fred/Fan proprietary systems (midanet/mornet) because they no longer carried the risk--their goals were to churn assets to generate fee income. And, by the way, these were all loans, not just so-called subprime loans. Now it's possible that F&F execs weren't diligent in weeding it out as well. As I said, everyone was getting rich off this crap. It is a crime that no execs across the spectrum are doing time, which speaks to the bipartisan culpability of this mess. I missed you too AD.

Hmmm...I may regret this... You say the ratings agents and banks got their macro data from Fr/Fan, but Fan/Fr don't participate in direct lending. So where did Fan/Fr get their data? Ans. From the direct lenders. So who corrupted the data? Ans. Direct lenders. Blame can surely be spread, but it's just plain idiotic to blame things put into place years ago (like CRA). Blame should go to the bubble in the housing market in general, not just subprime. The credit created on the basis of housing wealth was unprecedented. Everyone wanted a piece of this cash cow, and fraud was rampant at all levels of finance and all wealth values (i.e. a $50,000 home vs a $500,000 one) in order to keep the ponzi schemes going up and down the credit chain. Subprime was simply the "canary in the coal mine." Check this little report out that was trying to estimate losses from suits to corps in order to estimate the losses to those who insure directors. link

I had a great meal at Seabar a few weeks ago Seabar Besides sushi, I had "Bourdain's last meal" and the 40-hour short ribs--as tender as foie gras! You won't go wrong at any of these: Left Bank (is truly no longer a secret), Lombardo's, Hutch's, Tempo. As for a little "secret" place, Europa Bistro on Elmwood near Toro does some wild stuff.

Ohhh...the ignominy... One of these years.

Offense: - A solid performance, scoring at least 20 points. - NO false starts. - No more than 1 sack given up (trying to be a little realistic). - A couple of big plays, including a successful long pass or three... - A good balance of rushing and passing yards. Defense: - I don't expect the Bills to keep Miami under 100 yards rushing, but I do hope they keep it closer to 100 than 120. - Win the T-O battle. - At least 2 sacks. Special Teams: - Win the field position battle. - Don't give up a score! This game should be a great test for the start of the Chan Gailey era, and should provide answers to a lot of questions everyone has discussed ad nauseum for the past 6-8 months. Looking forward to it, and Go Bills!

Sorry guys, but I'm going to have to bail, as the wife reminded me that we have a pot luck to go to Saturday afternoon...

Ok, count me in for 18. I hope they have worked on speeding up play there, the last time it was almost a 5-hour round (that's not a comment about MY play either).

I won't be surprised to see a veteran guard picked up.