Thursday
Oct232008
Causes of crisis
A Zogby poll sponsored by the organization Judicial Watch found that 81.7 percent of Americans believe that political corruption was a major factor that lead up to the current financial crises. According to Thomas Fitton, Judicial Watch’s President, the evidence suggests those 81.7 percent are correct.
“American’s seem to get what the problem is, but because ‘everyone’ is involved, you wont hear a peep about it from the city’s establishment,” said Fitton, speaking at a Judicial Watch panel discussion on the causes of the financial crisis.
“Arguably, the financial crisis is part of the biggest government corruption scandal in our nation’s history, and it doesn’t get much bigger than Fannie Mae and Freddie Mac...the companies took care of both political parties.”
Editor of the Real Clear Markets website John Tamny said that deregulation was not the cause of the crisis, as some democratic leaders are suggesting.
“If you look at the biggest freeze so far in this mortgage meltdown, it’s been of Fannie Mae and Freddie Mac If we ignore first of all the fact that both parties to varying degrees were literally horizontal in bed with these guys, the idea that they didn’t have oversight of their activities is laughable,” said Tamny.
Instead, Tamny attributes the origin of the crisis to the weak dollar.
“Real estate is very commodity like, and just how commodities always do well when the dollar is weak, so does real estate. And with housing making big gains upwards in nominal terms in recent years, Americans logically chased this performance and piled into the housing sector.”
This housing boom resulted in people purchasing risky mortgages under the belief that if they found out they could no longer afford it, they would be able to sell it easily in the empowered real estate market. Eventually, the housing market turned sour, and the housing investments followed.
Senior Fellow at the Cato Institute Alan Reynolds found blaming the recession that is taking place worldwide on U.S. housing to be a ‘bit of a stretch’, and claimed that a spike in oil prices had a role in the crisis, pointing to nine occurrences when oil prices tripled, only to be followed by periods of recession. Reynolds expressed skepticism to a government solution.
“Recessions happen. If energy prices get too high, they have to come down. If home prices get too high, they need to come down. If homebuilders build too many houses, they have to stop building for a while until they get the inventory down..if the governments really knew how to stop, prevent, alleviate recessions, why do we still have recessions?”
John Berlau, Director of the Center for Entrepreneurship said that the initial emphasis the government put on housing in the finance system was not as helpful as originally believed, and instead suggested that they should have focused on getting the poor to save and invest.
Berlau said that Fannie Mae and Freddie Mac were essentially hybrids of government and private industry which had dangerous consequences.
“Fannie and Freddie were kind of the worst of both worlds. They could lobby like the private sector could do, but they were also built by congress and had built in government support where they had a 2 billion dollar line of credit...that made investors think, and it turned out rightly, that if anything happened they would be bailed out by the government.”
“American’s seem to get what the problem is, but because ‘everyone’ is involved, you wont hear a peep about it from the city’s establishment,” said Fitton, speaking at a Judicial Watch panel discussion on the causes of the financial crisis.
“Arguably, the financial crisis is part of the biggest government corruption scandal in our nation’s history, and it doesn’t get much bigger than Fannie Mae and Freddie Mac...the companies took care of both political parties.”
Editor of the Real Clear Markets website John Tamny said that deregulation was not the cause of the crisis, as some democratic leaders are suggesting.
“If you look at the biggest freeze so far in this mortgage meltdown, it’s been of Fannie Mae and Freddie Mac If we ignore first of all the fact that both parties to varying degrees were literally horizontal in bed with these guys, the idea that they didn’t have oversight of their activities is laughable,” said Tamny.
Instead, Tamny attributes the origin of the crisis to the weak dollar.
“Real estate is very commodity like, and just how commodities always do well when the dollar is weak, so does real estate. And with housing making big gains upwards in nominal terms in recent years, Americans logically chased this performance and piled into the housing sector.”
This housing boom resulted in people purchasing risky mortgages under the belief that if they found out they could no longer afford it, they would be able to sell it easily in the empowered real estate market. Eventually, the housing market turned sour, and the housing investments followed.
Senior Fellow at the Cato Institute Alan Reynolds found blaming the recession that is taking place worldwide on U.S. housing to be a ‘bit of a stretch’, and claimed that a spike in oil prices had a role in the crisis, pointing to nine occurrences when oil prices tripled, only to be followed by periods of recession. Reynolds expressed skepticism to a government solution.
“Recessions happen. If energy prices get too high, they have to come down. If home prices get too high, they need to come down. If homebuilders build too many houses, they have to stop building for a while until they get the inventory down..if the governments really knew how to stop, prevent, alleviate recessions, why do we still have recessions?”
John Berlau, Director of the Center for Entrepreneurship said that the initial emphasis the government put on housing in the finance system was not as helpful as originally believed, and instead suggested that they should have focused on getting the poor to save and invest.
Berlau said that Fannie Mae and Freddie Mac were essentially hybrids of government and private industry which had dangerous consequences.
“Fannie and Freddie were kind of the worst of both worlds. They could lobby like the private sector could do, but they were also built by congress and had built in government support where they had a 2 billion dollar line of credit...that made investors think, and it turned out rightly, that if anything happened they would be bailed out by the government.”
Iraqi Refugees need U.S. help, advocates say
America must invest more time, money, and human resources to help those displaced by the ongoing Iraq War, according to human rights advocates from the Washington, D.C.-based Refugees International.
The presence of 2.6 million displaced Iraqis persons is overwhelming to neighboring Middle East countries and is “undermining” to the social fabric of Iraq, said Ken Bacon, President of Refugees International, at a speech made today at the National Press Club.
President Barack Obama talked about displacement with Iraqi Prime Minister Nouri al-Maliki during his surprise visit to Iraq on Tuesday.
Bacon is happy at what is being seen as a distinct change from the “little attention” that the Bush Administration paid to Iraqi displacement.
It is estimated that since the U.S. invasion of Iraq in 2003, 2.6 million Iraqi’s have lost their homes and have fled other parts of the country. An additional 2 million have fled to neighboring countries, including Syria, Jordan and Egypt.
Bacon said that greater American and international support in receiving refugees and providing financial-aid can help stop the crisis.
Displacement of that many people “affects the whole region”, said Bacon, which results in educated citizens and specialized workers fleeing the country.
There are only 18,000 practicing doctors in Iraq, down from 32,000 doctors in 2002. There are more Iraqi doctors in Jordan than in Iraq’s capitol city of Baghdad, Bacon said.
Last year Democratic Senators Robert Casey (PA) and Benjamin Cardin (MD) introduced a bill to increase aid to Iraqi refugees and allow more of them to enter the United States. Since the FY2010 Budget has been approved by Congress, any appropriated funds to help Iraqi citizens would have to come through additional legislation, Bacon said.
A spokesman for Senator Cardin said it has not been decided yet if similar legislation would be introduced in this Congress.
Refugee International’s Field Report on the Iraqi refugee situation said that the Iraqi government is trying to keep more of its citizens from fleeing their homeland. It is feared by the Iraqi government that the existence of so many refugees tarnishes the image of overall security within the country.
The report also said Iraq violated international refugee laws in 2007 by asking Syria not to accept any more Iraqi refugees.
Many refugees have fears of returning home, the report says, because many of those that returned already have been killed.
Kristele Younes, an advocate with Refugees International, says that security is a major issue in Iraqi neighborhoods, with each little borough acting as its own walled off “fiefdom”.
Younes said that the United Nations is trying to place a tourniquet on the flow of persons out of the country by the end of the year, but significant challenges remain in Iraq, including budgetary shortcomings due to low oil prices, corruption within the government and sectarianism.
The Refugees International’s report on Iraq can be found here.