Economy
Clinton Promised Middle Class Tax Cuts Too…
Yet another piece in the Wall Street Journal worth a read…
Clinton’s campaign before his first term was full of promises similar to Obama’s rhetoric.
“Now, I’ll tell you this,” [Clinton] said. “I will not raise taxes on the middle class to pay for these programs. If the money does not come in there to pay for these programs, we will cut other government spending, or we will slow down the phase-in of the programs.”
Mr. Clinton, of course, won that election. And as the inauguration approached, he began backtracking from his promise. At a Jan. 14, 1993, press conference in New Hampshire, he claimed that it was the media that had played up a middle-class tax cut, not him. A month later, he announced his actual plan before a joint session of Congress.
On page one of the New York Times, the paper described the fate of the middle-class tax cut this way: “Families earning as little as $20,000 a year — members of the ‘forgotten middle class’ whose taxes he promised during his campaign to cut — will also be asked to send more dollars to Washington under the President’s plan.”
In some ways, we are today reliving the campaign of 1992. As in 1992, the Democrat is promising a middle-class tax cut. As in 1992, the Democrat is hammering the Republican as a tool of the rich…
and…
Barring divine intervention, a President Obama would not have a Republican Congress to worry about. Instead, he would be working with a Democratic speaker of the House who loaded billions in pork onto a bill meant to fund our troops; with a Democratic Senate majority leader who promised to change the way Congress spent but fought earmark reform; and with committee leaders such as Sen. Chris Dodd and Rep. Barney Frank, who did so much to bring us the financial implosion of Fannie Mae and Freddie Mac.
Burning down the house – what caused the financial crisis
Watch and rate the video on YouTube to keep it in front of the fence-sitters who don’t know this information.
Video: Democrats And Fannie Mae = “Family”
Shep Smith on Democrat Congressional Leaders
Looks like the markets has had a bit of an uptick in the last few minutes. Seems like the downturn happened when the (democrat) congressional leadership was speaking, and the uptick came when they finally shut-up.
Clinton & Dems Mandated Bad Credit Housing
READ THIS vintage 1999 L.A. Times article, “Minorities’ Home Ownership Booms Under Clinton but Still Lags Whites”, and thank Clinton and and his administration for coaxing into homes those who didn’t need, and obviously couldn’t afford, them. Cheer for the democrats, who let massaging their voting base of minorities cloud their already embarrassingly poor natural judgment about the economic stability of the country as a whole.
The one thing the democrats are doing that they may not expect, is making the case that the poor are just as greedy to live beyond their means and aren’t ready for responsibility, even when you make it easy. The article points out…
It’s one of the hidden success stories of the Clinton era. In the great housing boom of the 1990s, black and Latino homeownership has surged to the highest level ever recorded. The number of African Americans owning their own home is now increasing nearly three times as fast as the number of whites; the number of Latino homeowners is growing nearly five times as fast as that of whites.
These numbers are dramatic enough to deserve more detail. When President Clinton took office in 1993, 42% of African Americans and 39% of Latinos owned their own home. By this spring, those figures had jumped to 46.9% of blacks and 46.2% of Latinos.
That’s a lot of new picket fences. Since 1994, when the numbers really took off, the number of black and Latino homeowners has increased by 2 million. In all, the minority homeownership rate is on track to increase more in the 1990s than in any decade this century except the 1940s, when minorities joined in the wartime surge out of the Depression.
and…
All of this suggests that Clinton’s efforts to increase minority access to loans and capital also have spurred this decade’s gains. Under Clinton, bank regulators have breathed the first real life into enforcement of the Community Reinvestment Act, a 20-year-old statute meant to combat “redlining” by requiring banks to serve their low-income communities. The administration also has sent a clear message by stiffening enforcement of the fair housing and fair lending laws. The bottom line: Between 1993 and 1997, home loans grew by 72% to blacks and by 45% to Latinos, far faster than the total growth rate.
Lenders also have opened the door wider to minorities because of new initiatives at Fannie Mae and Freddie Mac–the giant federally chartered corporations that play critical, if obscure, roles in the home finance system. Fannie Mae and Freddie Mac buy mortgages from lenders and bundle them into securities; that provides lenders the funds to lend more.
and…
In 1992, Congress mandated that Fannie and Freddie increase their purchases of mortgages for low-income and medium-income borrowers. Operating under that requirement, Fannie Mae, in particular, has been aggressive and creative in stimulating minority gains. It has aimed extensive advertising campaigns at minorities that explain how to buy a home and opened three dozen local offices to encourage lenders to serve these markets. Most importantly, Fannie Mae has agreed to buy more loans with very low down payments–or with mortgage payments that represent an unusually high percentage of a buyer’s income. That’s made banks willing to lend to lower-income families they once might have rejected.
and…
The top priority may be to ask more of Fannie Mae and Freddie Mac. The two companies are now required to devote 42% of their portfolios to loans for low- and moderate-income borrowers; HUD, which has the authority to set the targets, is poised to propose an increase this summer. Although Fannie Mae actually has exceeded its target since 1994, it is resisting any hike. It argues that a higher target would only produce more loan defaults by pressuring banks to accept unsafe borrowers. HUD says Fannie Mae is resisting more low-income loans because they are less profitable.
Barry Zigas, who heads Fannie Mae’s low-income efforts, is undoubtedly correct when he argues, “There is obviously a limit beyond which [we] can’t push [the banks] to produce.” But with the housing market still sizzling, minority unemployment down and Fannie Mae enjoying record profits (over $3.4 billion last year), it doesn’t appear that the limit has been reached.
You could almost smell the invitation to crash in the second to last paragraph above. Almost as if the L.A. Times, high on the powder of a Clinton White House and Democrat Congress, even smelled the rotten fish.
EVEN more damning is this New York Times (currently dba Obama Campaign PR consultancy) article written in the last year of the evil reign of Clinton. READ IT HERE
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…
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.
”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…”
In July, the Department of Housing and Urban Development proposed that by the year 2001, 50 percent of Fannie Mae’s and Freddie Mac’s portfolio be made up of loans to low and moderate-income borrowers. Last year, 44 percent of the loans Fannie Mae purchased were from these groups.
Fannie Mae officials stress that the new mortgages will be extended to all potential borrowers who can qualify for a mortgage. But they add that the move is intended in part to increase the number of minority and low income home owners who tend to have worse credit ratings than non-Hispanic whites.
And here we are.
Publish on the rooftops… Bill (I feel your pain) Clinton, Barney (Buddy Hackett’s less intelligent twin brother) Frank, Chris Dodd, etc. can claim this victory for the poor and disenfranchised. Well done!
And the Surrender Poodle from San Francisco has the guts to blame Republicans!?
Those Responsible, Part 1: Lehman Brothers Board
Let’s remember these names, to keep them out of the business world until they die. Perhaps we should send them a card each September 15th…
“For your invaluable direction and wisdom while on the board of Lehman Brothers (invaluable of course in the sense that we’ll never really know the level of destruction your contribution (or lack thereof) waged on the U.S. economy). Best Wishes on dealing with your total failure! As opposed to so many others, you went out at the very bottom of your game.
Sincerely,
America”
“Nine of them are retired. Four of them are over 75 years old. One is a theater producer, another a former Navy admiral. Only two have direct experience in the financial-services industry.
“Meet the Lehman Brothers Holdings Inc. external board directors, a group of 10 people who, perhaps unknowingly, carried the health of the world’s financial system on their shoulders the past 18 months…” –Dennis K. Berman on WSJ.com
Lehman Brothers Board of Directors
Richard S. Fuld, Jr.
Chairman and CEO
Michael L. Ainslie
Private Investor and Former Pres. and CEO of Sotheby’s Holdings
John F. Akers
Retired Chairman of IBM Corp.
Roger S. Berlind
Theatrical Producer
Thomas H. Cruikshank
Retired Chairman and CEO of Halliburton Company
Marsha Johnson Evans
Rear Admiral, United States Navy (Retired)
Sir Christopher Gent
Non-Executive Chairman of GlaxoSmithKline plc
Jerry A. Grundhofer
Chairman Emeritus and Retired CEO of U.S. Bancorp
Roland A. Hernandez
Retired Chairman and CEO of Telemundo Group, Inc.
Henry Kaufman
President of Henry Kaufman & Company, Inc.
John D. Macomber
Principal of JDM Investment Group
Freddie Mac/Fannie Mae, one root of evil is Barney Frank
The shockingly oblivious Democrat from Massachusetts Barney Frank has proven himself to be one of the most vehement protectors of crap management and a record-breaking flusher of others’ wealth. Thanks for the new $200+ billion invoice. And for the liberals and conservatives out there, I don’t want to hear another word about the 10 billion/month we’re spending in Iraq attracting and subsequently pulverizing extreme Muslims. Barney Frank and his kind just waged a single day war on the taxpayer (read “rich white conservatives”, not the “working people”) to the price tag of 18 months in Iraq.
Asked about Treasury’s modest bailout condition that the companies reduce the size of their high-risk mortgage-backed securities (MBS) portfolios starting in 2010, Mr. Frank was quoted on Monday as saying, “Good luck on that,” and that it would never happen.
There you have the Fannie Mae problem in profile. Mr. Frank wants you to pick up the tab for its failures, while he still vows to block a reform that might prevent the same disaster from happening again.
At least the Massachusetts Democrat is consistent. His record is close to perfect as a stalwart opponent of reforming the two companies, going back more than a decade. The first concerted push to rein in Fan and Fred in Congress came as far back as 1992, and Mr. Frank was right there, standing athwart. But things really picked up this decade, and Barney was there at every turn.
Oh, and the best part? Many of the irresponsible people who got into houses they never could have afforded may get to stay in those houses, on my dime. You’re welcome. Now grow up and use your brain next time. The formula is as follows: work your tail off, get promoted, work your tail off, get promoted, buy a house you can afford in good times and bad, work your tail off, retire. I’m keeping it simple, because buying twice the house you can afford — just because some greedy (and stupid) bankers dangled the carrot — means you can’t follow complex.
Oh, and the greedy bankers? Here’s some for you. We must have experienced a decade of MBAs on Wall Street who were apparently the drunken weak link on their teams in school. Oh, except for the Goldman Sachs guys, they were the ones doing the work.
Do I sound angry? Yeah, I’m angry.
Kenyan Economist: Stop The Aid To Africa!
There’s a incredibly insightful article in Spiegel about the damage foreign aid brings to third world countries in very plain language. These are things I and others have been saying for years, but when you have an economist from Kenya saying the same, maybe people will believe it now.
The Kenyan economics expert James Shikwati, 35, says that aid to Africa does more harm than good. The avid proponent of globalization spoke with SPIEGEL about the disastrous effects of Western development policy in Africa, corrupt rulers, and the tendency to overstate the AIDS problem.
SPIEGEL:
Mr. Shikwati, the G8 summit at Gleneagles is about to beef up the development aid for Africa…
Shikwati: … for God’s sake, please just stop.
SPIEGEL: Stop? The industrialized nations of the West want to eliminate hunger and poverty.
Shikwati: Such intentions have been damaging our continent for the past 40 years. If the industrial nations really want to help the Africans, they should finally terminate this awful aid. The countries that have collected the most development aid are also the ones that are in the worst shape. Despite the billions that have poured in to Africa, the continent remains poor.
SPIEGEL: Do you have an explanation for this paradox?
Shikwati: Huge bureaucracies are financed (with the aid money), corruption and complacency are promoted, Africans are taught to be beggars and not to be independent. In addition, development aid weakens the local markets everywhere and dampens the spirit of entrepreneurship that we so desperately need. As absurd as it may sound: Development aid is one of the reasons for Africa’s problems. If the West were to cancel these payments, normal Africans wouldn’t even notice. Only the functionaries would be hard hit. Which is why they maintain that the world would stop turning without this development aid.
SPIEGEL: Even in a country like Kenya, people are starving to death each year. Someone has got to help them.
Shikwati: But it has to be the Kenyans themselves who help these people. When there’s a drought in a region of Kenya, our corrupt politicians reflexively cry out for more help. This call then reaches the United Nations World Food Program — which is a massive agency of apparatchiks who are in the absurd situation of, on the one hand, being dedicated to the fight against hunger while, on the other hand, being faced with unemployment were hunger actually eliminated. It’s only natural that they willingly accept the plea for more help. And it’s not uncommon that they demand a little more money than the respective African government originally requested. They then forward that request to their headquarters, and before long, several thousands tons of corn are shipped to Africa …
SPIEGEL: … corn that predominantly comes from highly-subsidized European and American farmers …
Shikwati: … and at some point, this corn ends up in the harbor of Mombasa. A portion of the corn often goes directly into the hands of unsrupulous politicians who then pass it on to their own tribe to boost their next election campaign. Another portion of the shipment ends up on the black market where the corn is dumped at extremely low prices. Local farmers may as well put down their hoes right away; no one can compete with the UN’s World Food Program. And because the farmers go under in the face of this pressure, Kenya would have no reserves to draw on if there actually were a famine next year. It’s a simple but fatal cycle.
SPIEGEL: If the World Food Program didn’t do anything, the people would starve.
Shikwati: I don’t think so. In such a case, the Kenyans, for a change, would be forced to initiate trade relations with Uganda or Tanzania, and buy their food there. This type of trade is vital for Africa. It would force us to improve our own infrastructure, while making national borders — drawn by the Europeans by the way — more permeable. It would also force us to establish laws favoring market economy.
SPIEGEL: Would Africa actually be able to solve these problems on its own?
Shikwati: Of course. Hunger should not be a problem in most of the countries south of the Sahara. In addition, there are vast natural resources: oil, gold, diamonds. Africa is always only portrayed as a continent of suffering, but most figures are vastly exaggerated. In the industrial nations, there’s a sense that Africa would go under without development aid. But believe me, Africa existed before you Europeans came along. And we didn’t do all that poorly either.
SPIEGEL: But AIDS didn’t exist at that time.
Shikwati: If one were to believe all the horrorifying reports, then all Kenyans should actually be dead by now. But now, tests are being carried out everywhere, and it turns out that the figures were vastly exaggerated. It’s not three million Kenyans that are infected. All of the sudden, it’s only about one million. Malaria is just as much of a problem, but people rarely talk about that.
SPIEGEL: And why’s that?
Shikwati: AIDS is big business, maybe Africa’s biggest business. There’s nothing else that can generate as much aid money as shocking figures on AIDS. AIDS is a political disease here, and we should be very skeptical.
SPIEGEL: The Americans and Europeans have frozen funds previously pledged to Kenya. The country is too corrupt, they say.
Shikwati: I am afraid, though, that the money will still be transfered before long. After all, it has to go somewhere. Unfortunately, the Europeans’ devastating urge to do good can no longer be countered with reason. It makes no sense whatsoever that directly after the new Kenyan government was elected — a leadership change that ended the dictatorship of Daniel arap Mois — the faucets were suddenly opened and streams of money poured into the country.
SPIEGEL: Such aid is usually earmarked for a specific objective, though.
Shikwati: That doesn’t change anything. Millions of dollars earmarked for the fight against AIDS are still stashed away in Kenyan bank accounts and have not been spent. Our politicians were overwhelmed with money, and they try to siphon off as much as possible. The late tyrant of the Central African Republic, Jean Bedel Bokassa, cynically summed it up by saying: “The French government pays for everything in our country. We ask the French for money. We get it, and then we waste it.”
SPIEGEL: In the West, there are many compassionate citizens wanting to help Africa. Each year, they donate money and pack their old clothes into collection bags …
Shikwati: … and they flood our markets with that stuff. We can buy these donated clothes cheaply at our so-called Mitumba markets. There are Germans who spend a few dollars to get used Bayern Munich or Werder Bremen jerseys, in other words, clothes that that some German kids sent to Africa for a good cause. After buying these jerseys, they auction them off at Ebay and send them back to Germany — for three times the price. That’s insanity …
SPIEGEL: … and hopefully an exception.
Shikwati: Why do we get these mountains of clothes? No one is freezing here. Instead, our tailors lose their livlihoods. They’re in the same position as our farmers. No one in the low-wage world of Africa can be cost-efficient enough to keep pace with donated products. In 1997, 137,000 workers were employed in Nigeria’s textile industry. By 2003, the figure had dropped to 57,000. The results are the same in all other areas where overwhelming helpfulness and fragile African markets collide.
SPIEGEL: Following World War II, Germany only managed to get back on its feet because the Americans poured money into the country through the Marshall Plan. Wouldn’t that qualify as successful development aid?Shikwati: In Germany’s case, only the destroyed infrastructure had to be repaired. Despite the economic crisis of the Weimar Republic, Germany was a highly- industrialized country before the war. The damages created by the tsunami in Thailand can also be fixed with a little money and some reconstruction aid. Africa, however, must take the first steps into modernity on its own. There must be a change in mentality. We have to stop perceiving ourselves as beggars. These days, Africans only perceive themselves as victims. On the other hand, no one can really picture an African as a businessman. In order to change the current situation, it would be helpful if the aid organizations were to pull out.
Shikwati: … jobs that were created artificially in the first place and that distort reality. Jobs with foreign aid organizations are, of course, quite popular, and they can be very selective in choosing the best people. When an aid organization needs a driver, dozens apply for the job. And because it’s unacceptable that the aid worker’s chauffeur only speaks his own tribal language, an applicant is needed who also speaks English fluently — and, ideally, one who is also well mannered. So you end up with some African biochemist driving an aid worker around, distributing European food, and forcing local farmers out of their jobs. That’s just crazy!
SPIEGEL: The German government takes pride in precisely monitoring the recipients of its funds.
Shikwati: And what’s the result? A disaster. The German government threw money right at Rwanda’s president Paul Kagame. This is a man who has the deaths of a million people on his conscience — people that his army killed in the neighboring country of Congo.
SPIEGEL: What are the Germans supposed to do?
Shikwati: If they really want to fight poverty, they should completely halt development aid and give Africa the opportunity to ensure its own survival. Currently, Africa is like a child that immediately cries for its babysitter when something goes wrong. Africa should stand on its own two feet.
Interview conducted by Thilo Thielke
Translated from the German by Patrick Kessler
SPIEGEL: If they did that, many jobs would be immediately lost …