PF Exclusive: Debt increase in FY2015 lowest in 14 years

Um lets see. Failure to deal with the housing crisis. Tax cuts. The Iraq war. Failure to regulate the banking industry involvement in mortgage securities. And basically in general total cluelessness as to what was happening in the economy. But hey he was only President for eight years so who could possibly have expected him to understand what was going on or to act intelligently. Probably all Clinton's fault. Right!

 

The graph shown displays the effect. We might learn the source of the cause if we were to see the same data for each State and local government area.
What drives inflation?


But in keeping with the OP topic:
__DATE___TOTAL DEBT
10/31/2016 $19,805,715,214,641.75
11/30/2016 $19,948,064,697,245.75
12/30/2016 $19,976,826,951,047.80
01/20/2017 $19,947,304,555,212.49 Trump inaugurated
01/31/2017 $19,937,261,314,503.29
02/13/2017 $19,924,218,517,074.52 Latest Posted

 

We can discuss many sources of the cause of the bubble. Including Mr. Ownership Society's policies and the Republican's "business can regulate itself" philosophy.

But what the chart undeniably shows is that the bubble blew up to its absurd levels, and then started imploding, entirely during the time the Republicans controlled the administration and Congress. And the Supreme Court for that matter.

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The housing bubble had already blew up to its absurd levels and started tanking before the Dems got control of Congress.

The GR was already a done deal. The only question was how bad it would be.

 

When setting a bomb to explode timing is important and the bomber, if they are smart, are nowhere near.

Again, timing is important. Create a problem, and then appear, to place blame and take credit for attempts to resolve the problem.
Fannie Mae 1938, Freddie Mac 1970, CRA 1970, HMDA 1975, CRA 1977, Franklin Delano Raines FNMA under Clinton and redlining, Gale Cincotta, Shel Trapp, William Proxmire and a great many others collectively over a long period of time created the conditions which resulted in the housing bubble bursting. Government, for more than a Century now has become the source of numerous bubbles, containing them within an even larger bubble our National debt, and when that bubble bursts so will all the individual bubbles contained within it.

 

You're exactly right, timing is important. We had had "Fannie Mae 1938, Freddie Mac 1970, CRA 1970, HMDA 1975, CRA 1977, Franklin Delano Raines FNMA under Clinton and redlining, Gale Cincotta, Shel Trapp, William Proxmire" for decades without major incident.

Then "Mr. Ownership Society" Bush and the "business can regulate itself" Republicans got complete control of the government during the entire time the housing bubble was allowed to blow up to its absurd levels. And then the giant bubble started imploding.

The Dems took office as the (*)(*)(*)(*) was starting to hit the fan, which conveniently allowed the Republicans to blame the Dems for the economy even as the Republican intentionally sabotaged the recovery with obstruction, austerity, sequesters and default threats. Then blame the President and trust that the ignorant "useful idiots" will do the same.

It worked well for them. Timing is important.

 

It was a very long fuse which allowed time to increase the explosives at the end. Mandating loans be made to persons who could not afford them created a situation whereby the lenders had to protect themselves by unloading many of the loans which only allowed government to mandate they make more such loans creating a sellers market. When I worked in the loan department of a bank many years ago those who did not meet the requirements showing they could repay the loan were simply denied the loan, or could possibly get the loan with a cosigner who did meet the requirements or perhaps could get approval for a smaller loan.

But in keeping with the OP topic:
__DATE___TOTAL DEBT
10/31/2016 $19,805,715,214,641.75
11/30/2016 $19,948,064,697,245.75
12/30/2016 $19,976,826,951,047.80
01/20/2017 $19,947,304,555,212.49 Trump inaugurated
01/31/2017 $19,937,261,314,503.29
02/14/2017 $19,932,679,233,716.16 Latest Posted

 

It wasn't that long of a fuse. As the graph proves, housing prices were within the historical trend lines until about 2001. Then they started accelerating way beyond historical trends.

Rather than tighten up on regulations to keep the bubble under control, we had "Mr. Ownership Society" and the "business can regulate itself" Republicans in charge, along with a laizzes-faire liberterian at the Fed who followed the same philosophy. They loosed restrictions and relaxed enforcement of regulations and stood by while greed fueled banks, investors, hucksters and fraudsters engaged in an orgy of irresponsible lending and speculation, while housing price skyrocketed to utterly absurd levels.

The result was all to predictible. But instead of learning the obvious lesson of unregulated investment lending, we have elected a government that is doing the same damn thing.

Terrible. But at least the m/billionaires got huge tax cuts by which they put trillions into their offshore accounts and portfolios, as opposed to controlling the debt.

That is what you wanted, isn't it? So what are you complaining about?

What is your view on donald's scheme to give even more massive tax cuts to m/billionaires? How's he going to pay for that? What do you think that will do to the budget?

 

The housing bubble and financial crisis are actually two different things although the collapse of the housing bubble resulted in the financial crisis. The housing bubble was caused by the lowering of lending standards due to the HUD requirement that Fannie and Freddie make a set percentage of loans to low income borrowers. This policy was initiated by Bill Clinton and was based on an interpretation of the Community Reinvestment Act. At the end of Clinton's term that percentage was 50%. This was increased to 55% by the Bush administration. The lowering of the lending standards was used by unscrupulous mortgage lending firms like Countrywide and New Century to make many other high risk loans. Adding to the housing bubble was the easy money policy of the Fed which made loans easier to afford due to low interest rates. The housing bubble suddenly burst in 2008. This was similar to the dot.com bubble which burst in 2001 and recovered from by 2003 but why was the financial industry so terribly affected this time.

The financial crisis triggered by the housing bubble collapse was the result of a combination of financial and banking regulations going back to 1936 (See the list below). Mortgage backed securities have been around for years before the 00's. They are securities formed by conglomerating home mortgages and are a way for investors to earn a return through the housing market. They have historically been very safe investments. The HUD housing policies however resulted in a portion of the MBS's created in the 90's and 00's to consist of the subprime and other low standard loans. The Basel rules were based on the assumption that securities consisting of home mortgages were of very low risk. Therefore the reserve requirements for MBS's were set at a very low rate of 5%. This meant that for every $50K of MBS's that a commercial or investment bank had it could make loans totaling $1M. Since banks make money from loans they would use the investment vehicles with the lowest reserve requirement. And very many of them did. They bought AAA rated MBS's (the ratings were determined by the National Ratings Agencies - Fitch, Moodys, and Standard and Poors). This was required by gov regulation. But the ratings agencies were not doing due diligence on the make up of the MBS' which was unknown to the banks involved who trusted the ratings and Basel guidelines. Collapse of the housing bubble caused foreclosures in the subprime mortgages especially. This created fear and uncertainty in the value of the MBS's even though they were still paying ~ 90% of their returns. The market price dropped (in some cases a price could not be determined because no one was interested in buying). This is where the mark to market rule came in resulting large paper and consequently the banks reserves falling below the already low 5%. The bailout from the gov started out as TARP which was passed to buy up all these MBS's which had now large paper losses due to mark to market. It was quickly changed however to give money directly to the banks so that they could bring their reserves up to the 5% level. Bear Stearns was bailed out but Lehman was allowed to fail. This resulted in uncertainty and the credit markets froze (none of the banks wanted to lend to other banks who might not be bailed out). Some commercial banks like WaMu also had MBS's in reserve and ended up being taken over.


The analysis of what happened is contained in the book by Friedman and Kraus – “Engineering the Financial Crisis” – 2011. As can be seen these rules were issued over the years with no analysis on how they might conspire together to set up a catastrophic house of cards situation due to the homogenization of asset mix held by many of these investment houses. Collapse of the housing bubble which affected these assets including MBS’s (whose contained loans were still paying at ~ 80%) then lost value due to the market price dropping way below value triggering large paper losses due to mark to market accounting rules. This reduced the capital and lending capacity of the banks due to Basel I and the Recourse Rule (an adoption in the U.S. of part of what later became Basel II), which specify those capital requirements. The conflation of all of this resulted in the financial (really the banking) crisis. The authors also show that the repeal of Glass Steagal had nothing to do with the financial crisis. Glass Steagal prevented the mixing of private deposits with investments and that was not a factor. Here are the set of regulations:



1. SEC Regulations from 1936 requiring mandated minimum ratings for a growing number of institutional investments.

2. SEC decision in 1975 to confer NRSRO on the big three ratings agencies.

3. Basel 1 from 1978 which established favorable risk weighting for mortgages and GSE issued MBS’s.

4. Mark to market accounting established by FAS 115 in 1993 and refined by FAS 157 in 2006.

5. HUD targets for mortgages to low-income families in the late 1990’s resulting in reduction of down payment requirements for the GSE’s.
++
6. Recourse Rule issued by the FED, FDIC, and Office of the Comptroller of the Currency, and the Office of Thrift Supervision.




Here are some excerpts from an editorial from the WSJ:

http://online.wsj.com/article/SB10001424052970204468004577166723093578272.html

Google – The Meltdown Remains a Whodunit

 

Tax reform will help grow the economy which will generate more tax revenues. The economy today is not growing. Our population corrected gdp growth is only 1% - it should be 3%. Trump will also repatriate the hundreds of billions of dollars sitting off shore due to the highest corporate tax rate in the world. Trump also has a working Congress to implement these reforms. Reagan did not and never received the promised spending cuts. This resulted in budget deficits.

How did Obama manage to add ~ $10T to the national debt ?? Pathetic economic growth and restrictive gov policies - that's the take away from Obamanomics.

 

It looks like AFM provided essentially the response I was about to provide, although I was going to throw in the remarks of Barney Frank made in 2003 "I want to roll the dice a little bit more in this situation toward subsidized housing."

I'm not complaining about anything, simply displaying the data.

But in keeping with the OP topic:
__DATE___TOTAL DEBT
10/31/2016 $19,805,715,214,641.75
11/30/2016 $19,948,064,697,245.75
12/30/2016 $19,976,826,951,047.80
01/20/2017 $19,947,304,555,212.49 Trump inaugurated
01/31/2017 $19,937,261,314,503.29
02/15/2017 $19,937,364,595,503.01 Latest Posted

Tax cuts are not a purchase which are paid for, they are a reduction of the cost to those who are paying for the operations of our government best accomplished by government identifying and eliminating waste, fraud, and unnecessary spending from the budget.

 

Congress failed to deal with.

How did the tax rate cuts, which produced soaring tax revenues and that contributed to the Republican final deficit of just $161B, cause a recession?

How did the Iraq war which was over cause a recession?

He applied all the regulations that congress had instituted and he was the one that saved it from a total failure.

What an unsupported self-serving claim.

So IOW you cannot prove that Bush caused a recession.

Well the slowdown/recession when he came into office began the 3rd Quarter of 2000 while Clinton was President.

So why don't you tag that with the Clinton qualifier? The Iraq war had it's basis in the ILA which Clinton signed into law and made Saddam and his regime's removal and replacement with another government the official Policy of the United States and the kicking out of the inspectors which premised that and the UN resolutions occurred in 1998 and Clinton failed to resolve that. Of course we know Clinton's involvement in the CRA which laid the groundwork for the housing collapse and he certainly didn't understand the economy when he passed his tax increase but will admit he knew it better when he finally did is 180 and supported the Gingerich/Kaisch tax rate cuts and welfare reform and spending restraint.

As long as you insist on assigning blame to Presidents.

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And they failed to successfully deal with it and mitigate the damage.

 

Which capital gains rate produced the highest tax revenues to the treasury

Clinton's 29% rate?
Gingrich/Kaisch's 20% rate?
Bush43's 15% rate?

 

Is this supposed to be an attempt at rebutting my post? If it is, it is a failure.

As for capital gains, these are periods of equivalent capital gains realizations which prove that during equivalent time periods, tax revenues are down with lower cap gains tax rates.

Year - Realized C/G - Tax rev.
1996 $260.696B $66.396B [Cap gains tax rate 28%]
2002 $268.615B $49.122B [Cap gains tax rate 20%]
2009 $263.460B $36.686B [Cap gains tax rate 15%]
http://www.taxpolicycenter.org/taxfacts/displayafact.cfm?Docid=161

Now you post cherry picked data when realizations were vastly different to try to make the absurd claim that lower tax rates provide higher tax revenues, and then disappear when I challenge you to prove that the tax rate caused the vast different realizations.

SSDD

 

No a simple question

Which capital gains rate produced the highest tax revenues to the treasury

Clinton's 29% rate?
Gingrich/Kaisch's 20% rate?
Bush43's 15% rate?

Your numbers were not peak years in fact you pit Clinton rate in the middle of a strong recovery with the Bush rate in the middle of a recession quite the cherry picking. Which rates produced the highest revenues at their peak? Or are you going to once again make the fallacious claim that capital gains rates and income tax rates have no effect on economic activity and overall tax revenues?

 

See highlighted portion of my post. Called it exactly.

And none of your blather even addresses the post you responded to.

 

So why do we have the massive deficits we have now. Probably because the stupid Bush idiocy only worked while the housing bubble was happening. Face it, the Republican trickle down nonsense doesn't work long term . And now Dump is going to do it again in spades.

 

The problem is that government simply pays interest on the debt allowing the relative value of the principal owed to decrease as a result of devaluation of our fiat currency which results in inflation of the price of goods/services and the relative value of property which can be exchanged for money.

But in keeping with the OP topic:
__DATE___TOTAL DEBT
10/31/2016 $19,805,715,214,641.75
11/30/2016 $19,948,064,697,245.75
12/30/2016 $19,976,826,951,047.80
01/20/2017 $19,947,304,555,212.49 Trump inaugurated
01/31/2017 $19,937,261,314,503.29
02/16/2017 $19,926,581,166,878.36 Latest Posted

 

Originally Posted by Bluesguy View Post
Which capital gains rate produced the highest tax revenues to the treasury

Clinton's 29% rate?
Gingrich/Kaisch's 20% rate?
Bush43's 15% rate?

How about an answer and the last Bush/Republican deficit was a mere $161B then in just two years the Democrats had it up to $1,400B and kept it over $1,000B for the next four years.

 

Lack of response notes and dodfing the question noted.

Whixh rate produced the highest revenues?

 

Since the Bush rate is still in effect and the defecit is Hugh, clearly the right answer is not Bush. Guess Clinton must be the right answer since hevwas able to actually balance the budget.

 

Because the Democrats took the final Bush/Republican deficit of a measly $161B to their Whopping $1,400 deficit in 2009 and kept it about $1,000B for the next four years meaning a huge increase in interest on the debt. Did you vote for Republicans to give them the leverage to bring it down by insuring Congress could stop the Democrats? Did you support the sequester which did cut that in half? Did you support Republicans in this election to insure they could control the budget and not have Democrats stop them from getting the deficits back down and heading towards surplus?

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ROFL what makes you think Clinton balanced the budget..........that was Gingrich and Kasich who balanced the budget over his objections although he was finally forced to sign on.

So again

Which capital gains rate produced the highest tax revenues to the treasury

Clinton's 29% rate?
Gingrich/Kaisch's 20% rate?
Bush43's 15% rate?

 

FY 2016 ended with a debt of $19,573,444,713,936.79 an increase of $1,422,827,047,452.46 from FY 2015


FY 2017 Mo 1 ended with a debt of $19,805,715,214,641.75 an increase of $232,270,500,704.96

FY 2017 Mo 2 ended with a debt of $19,948,064,697,245.75 a monthly increase of $142,349,482,604.00

FY 2017 Mo 3 ended with a debt of $19,976,826,951,047.80 a monthly increase of $28,762,253,802.05 increasing our debt $403,382,237,111.01 during the first three months of FY 2017.

01/20/2017 $19,947,304,555,212.49 Debt when Trump inaugurated

FY 2017 Mo 4 ended with a debt of $19,937,261,314,503.29 a monthly decrease of $39,565,636,544.51

FY 2017 Mo 5 ended with a debt of $19,959,593,604,841.58 a monthly increase of $22,332,290,338.29

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Still waiting

Which capital gains rate produced the highest tax revenues to the treasury

Clinton's 29% rate?
Gingrich/Kaisch's 20% rate?
Bush43's 15% rate?

 

STILL waiting

 

how do you guys believe this lie? The debt exploded under Bush and his tax cuts (hey, what do you know, didn't lead to jobs, lead to great recesssion) and starting 2 wars.