US budget deficit rises to $209 billion in November

He tried to spend more and congress said no against his wall.

He lend massive amounts of money to help out companies he judged too big too fail when GWB crashed the economy.
He ran the deficit up to something like 1,6B.... and he left office with a deficit of 0,6B.
The plan was working... Donald,... who doesn't have the troubles of a crashing economy, is up to 1.2B again.
Something like 15% of federal taxes are used to repay rent on the debt. Thanks Donald!

 

2008

 

So you can't explain it. This will help and there is a reading list at the end.


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



Here is a Reading list for you - The top 8 are in my unofficial order of importance:



Engineering the Financial Crisis - Friedman & Kraus - 2011

Fannie Mae & Freddie Mac - McDonald - 2012

Senseless Panic - William Isaac - 2010

Bad History, Worse Policy - Peter Wallison - 2013

“Government Housing Policies in the Lead-up to the Financial Crisis: A Forensic Study” - Pinto
http://www.aei.org/wp-content/uploa...-to-the-Financial-Crisis-Word-2003-2.5.11.pdf

What Caused the Financial Crisis - Edited by Friedman - 2011

Reckless Endangerment - Morgenson - 2011

Bull by the Horns - Sheila Bair - 2012

Lehman Brothers - A Crisis of Value - McDonald - 2015

Back to Work - Bill Clinton - 2011

All the Devils are Here - McLean - 2010

The Housing Boom and Bust - Dr. Thomas Sowell - 2009

Getting Off Track - Taylor - 2009

Bail Out Nation - Ritholtz - 2009

The Great American Bank Robbery - Sperry - 2011

Shakedown - Malanga - 2010

A Capitalism for the People - Zingales -

Debacle - Norquist - 2012

America's Ticking Bankruptcy Bomb - Ferrara - 2011

 

Thankfully Congress prevented additional waste of money.

TARP was implemented by Bush. All of the TARP funds were paid back.

Obama's recovery was the weakest since the Great Depression. It took over 6 years for all the people who lost their jobs to regain them.

The spending is controlled by the Democrats which is why we have such high deficits.

 

I'm sorry try again with some kind of substantive response.

The economy first went negative 3rd quarter of 2000 before Bush43 was even elected. The 2001 recession started mere weeks after he took office so I don't understand your statement he "walked us into a recession" please elaborate.

The 2008/2009 recession was already 2/3's over and waining and ended by June before Obama's stimulus started in fact the job loss rate bottomed out the month he took office ans started to quickly recede so again how did he spend us out of it? What he did spend us into was the worst recovery and unemployment in modern history. He stimulus failed by his own goals.

 

Trump? Oh geez what a lame excuse, the wall spending is a rounding error for one hour of government spending and he was trying to shift allocated money around.

Obama's playing boy car executive was a payout to the unions and cost the taxpayers billions if dollars and GM is STILL in trouble. It was the Republicans who instituted sequester and austerity which cut the deficit and yes it worked and yes Obama and the Democrats opposed it. And now the Democrats are fighting for even higher spending than the Republicans so who you gonna vote for?

 

Republicans controlled congress and the White House from Jan 2017-Jan 2019. Trump is a republican. He owns every budget he signs into law. And the deficits that go with them.

 

And TARP, as much as some disliked it, was paid back ahead of schedule with interest we made money off it. It worked and prevent a meltdown of our financial system. That was not Obama.

 

Nope. Stimulus was Feb. 2009 and by June the recession was over.
Good job Obama!

 

2008 with it's $400B deficit was a negoatiated budget deal to keep government running, the Democrats did not get all the spending they wanted and it was higher than the Republicans wanted who were the minority party in both houses so of little matter. 2009 with it's $1,400B was signed by Obama.

What expense?

TARP was under Bush and paid back with interest ahead of schedule some of that while Obama was President and he tried to use it to show a lower deficit. The stimulus did not accomplished what was said it would accomplish and we never got into a full robust recovery while unemployment and incomes turned into the worst record in modern history.

And again
What do you mean by "under Bush"? Simply that he was President? You think Presidents alone control the budget? You think that have the most power when it comes to the budget and spending?

 

It was passed in February with little if any spent by June. Remember even Obama had to come out with his "well those shovel ready jobs weren't so shovel ready". Takes a while to get those projects going. And his big claim in selling it was that it would hold unemployment to just 8% and then a rapid fall instead it soared to 10% and stayed over 8% for the next four years. And what little he tried to claim

The final verdict is in on the 2009 stimulus bill, and it’s pretty clear that the entire thing was one massive boondoggle:

When the Obama administration releases a report on the Friday before a long weekend, it’s clearly not trying to draw attention to the report’s contents. Sure enough, the “Seventh Quarterly Report” on the economic impact of the “stimulus,” released on Friday, July 1, provides further evidence that President Obama’s economic “stimulus” did very little, if anything, to stimulate the economy, and a whole lot to stimulate the debt.

The report was written by the White House’s Council of Economic Advisors, a group of three economists who were all handpicked by Obama, and it chronicles the alleged success of the “stimulus” in adding or saving jobs. The council reports that, using “mainstream estimates of economic multipliers for the effects of fiscal stimulus” (which it describes as a “natural way to estimate the effects of” the legislation), the “stimulus” has added or saved just under 2.4 million jobs — whether private or public — at a cost (to date) of $666 billion. That’s a cost to taxpayers of $278,000 per job.

In other words, the government could simply have cut a $100,000 check to everyone whose employment was allegedly made possible by the “stimulus,” and taxpayers would have come out $427 billion ahead.
https://www.outsidethebeltway.com/the-final-verdict-on-the-2009-stimulus-a-failure/

 

I got my check in April.
Your argument has no merit because you can't show how far down the economy would have gone without the stimulus.

 

OOOOoooo that was a BIG part of his stimulus plan. You were on Social Security or SSI back then?

How much further down would unemployment have had to have gone for it to be a failure? I used Obama's economic councils OWN GOAL and prediction. I used his OWN White House Council of Economic Advisers report. Your attempted rebuttal has no merit.

 

Yeah. Social security. I ran right out and spent it as I recall.
One argument is as good as the other.

 

Yeah it was that one time $250 that social security recipients got that turned around the economy and reversed course and got us into a full recovery.

Again I go by their own statements and marks of success, how successful were they?

 

Exactly. Taxpayers received interest from the loans which were actually forced onto banks whether they wanted the loans or not.

 

Without 60 votes in the Senate Republicans had control of nothing. Civics 101.

 

By the time spending started the recession was over. Are you claiming that all ~ $900B was spent by March 2009 ??? Remember Obama’s statement that there are not any “shovel ready jobs” ??? I think that the entire stimulus was never fully spent.

 

No. Of course not. Even my wife couldn't spend that much money that fast.
I just told you I got my check in April and I spent it. That started the turnaround.

 

Reconciliation. Civics 101. They had total budgetary control for 2 straight years. Trump is president. He owns every budget bill he signed into law, and the deficits that go with them. That’s reality.

 

April checks ended the recession ?? Too funny.

 

Reconciliation only applies to a very narrow situation. You cannot cut spending using reconciliation. Civics 101.

He had to sign them to get done what he wanted. The Democrats loaded up the budget or said nothing about cutting spending in the continuing resolutions. That's reality.

 

And unemployment soared from 7.5% to 10% and stayed over 8% for the next 4 years, the LFPR went over a cliff, the deficit went from $161B to $1,400B and stayed over $1,000B for the next three years and they call it a success.

 

And Christine Romer who “engineered” the stimulus and guaranteed that unemployment would not exceed 8% had no idea why the Obama stimulus failed.

 

yes you can

trump is president. he owns every single budget he signed into law, and the deficits that go with them. that is reality