ManusJustus said:
Both the Republicans and Democrats have held fast to their ideologies, there are many examples for each. But when it comes to the economy, the Republican idealogy has been proven wrong. Instead of admiting this, people like you and John McCain like to pretend that they were for regulation in the past. |
Few conservatives or Republicans truely believe that all regulation is bad, or that deregulation is always a good idea; that type of (moronic) claim is very similar to claiming that the end result of electing Democrats is for the government to switch over to a communist paradise like Cuba or North Korea.
There are three things which contributed to the current mess we're in ... Bill Clinton changed regulations in his first term in order to increase home ownership for poor (typically African American) people by getting Fanny May and Freddy Mac to buy mortgages for people who couldn't afford a mortgage. Then in 1999 Bill Clinton eliminated the restrictions of the Glass-Steagall Act which (effectively) deregulated the financial industry (I guess he must have been a Republican) which drastically increased the number of sub-prime mortgages, home equity lines of credit, and allowed the repackaging of these mortgages making the risk of the investment impossible to determine. This meant that the mortgage market effectively became a ticking timebomb where the right conditions needed to exist in order to set it off ... In 2001 (after 9/11) interest rates were dropped to historic lows and became negative interest rates which encouraged people to take out loans to make stupid investments.
The housing market, which should increase at the rate of inflation, was outperforming the stock market due to the changes in regulation and the massive leverage that was allowed on mortgages; whereas no financial institution will allow an individual to buy on margin with less than 50% down, an individual in the housing market was allowed to put 0% down on the home they were going to flip.
By 2004 it became obvious that there was a massive bubble in the housing bubble and many Republicans were trying to get regulations in place (I guess they must have been Democrats) in order to pop the bubble before it grew too large and collapsed the ecconomy when it popped. Democrats fought against these regulations mainly because they would eliminate the possibility of poor (mostly African American) people from buying homes they could not afford.
Certainly, the Republicans were in a position where they could have forced the regulations through but choose not to (probably because of the political consequences). The lesson that should be learned from this is not that the industry needs more regulation, but that we should not change ecconomic regulations in order to create social programs.
