Agggh! No, no, no.

“You gather all the facts you can, then look at the past to learn how other people dealt with similar problems, then you think, and then you act.”

The scientific method, aggggh! We’re faith based, and from Texas. It’s “ready, fire, aim”, got it?

belief that the system-wide deleveraging resulting from the decline in asset values, leading to an accompanying drop in net wealth across the country, is in large part the product of temporary liquidity constraints resulting from nonfunctioning markets for troubled assets

All this gobblygook is saying is that Treasury believed and continues to believe there was no housing bubble. If they are that divorced from reality, does the rest of their argument matter?

As for a smart President, this is the same fool who put all of his faith, his political fortunes, and the nation’s future in the hands of Rubin, Summers, and Geithner. And how can sham “stress” tests tell us anything useful about anything? If they had been remotely honest they would have shown both massive fraud and massive bankruptcy in the banking industry. They do neither.

Liquidity..something left in my diaper after a tex-mex special. About the same as that in Treasury. Not the best definition or explaination but closer to the truth. Recall all the money sent to corporations and buy some healt-care for America, before it’s too late

my comment about her from the last thread disappeared –

just saying how nice it would be if we could get her a slot on one of these ‘talent shows’ . imagine millions of americans being treated to her coherent, easy to follow synopsis of “boom and bust cycles” and the unraveling of the regulatory thread.

really liked at the end where Stewart advised her to let him know if Treasury continues it’s intransigence

Elizabeth Warren – financial chicken soup.

Most of our economy in the last few years was buying and selling real estate to one another and “products” derived from that.

Of course it was a bubble–real estate prices cannot go up indefinitely, and most certainly not when purchasing power is stagnant for the average wage earner.

This seems like an effort to artificially prop up or reinflate the real estate bubble until the administration can get their ducks in order.

At least I hope that’s what’s going on because it can’t go on like this.

am now curious as to how Ms Warren was given the Oversight job. by that I mean who nominated her ? (I know she has testified before Congress in the past so they were familiar with her)

it was either a bad actor – who thought she’d show up for photo ops and stfu or a good actor who knew what We The People would be getting.

inquiring firedogs want to know

The paradox was that this database did not exist already—that investors in mortgage-backed securities had not demanded the information from the beginning.

Well that’s the point isn’t it?

It’s not a paradox, the reason that no one has access to the data, is that with access to the data, no one would by the shit in the first place. The whole reason behind the lack of data is to obscure the fraudulent nature of the mortgage-backed securities.

The complete lack of real data is the key feature of these securities, not an accidental side issue.

Amen.

Warren was appointed by Harry Reid. Good on him.

Why is it that so many of the voices that warned us about the inevitible outcome of following the ideology of de-regulation came from women, and why did so many of those women lose their jobs for telling the truth to power?

Brooksley Born
Iris Mack
Elizabeth Warren

Don’t like the skirts?

Saw somewhere that she was a Harry Reid appointee.

Thanks for this posting, masaccio. That Elizabeth Warren interview absolutely popped for me. Apparently it resonated with a lot of people as I’m seeing it highlighted in many places this morning. Vindication is a wonderful thing. I thought she was outstanding…I came away feeling more clarity and competence from Warren than all the teabagging right put together…and a whole lot of the Obama Treasury, as well.

Rob Riggle vs. Glenn Beck … another take on real media vs. the astroturfing freak show.

The early signs of the real estate bubble bursting occured in 2005. I was among those to chronicle the impending collapse. There are signs locally that it has reached bottom. Bank owned properties are now being snatched up as quickly as they enter the market here in Southern California- and they are coming onto the market at a greatly reduced rate and at higher prices. It is likely that the “toxic assets have a long term value much higher than current market- a market in which there appear to be no buyers at any price.

Creating a market for these things is probably part of the key to easing out of the “crisis”.

I don’t really give a shit if “corporations” are rewarded for their own stupidity or not. I DO care that we avoid a financial meltdown- and it seems that we may be on our way to doing that. Most economists see a return to modest GDP growth by the end of this year.

I like Warren very much.

I’m a bit hopeful. Obama started with a good grounding in economics, and has been getting a lot of input from a lot of people, including Jared Bernstein, as progressive an economist as there is.

Spencer Ackerman has a brand spanking new post up: “This Phone Is Tapped”

Well, I get a bit saddened thinking what else we could have done with all that TARP money but then again I feel that way about the war in Iraq, too.

I also appreciate Warren’s smarts, candor and ability to speak in plain English.

Anyone have any observations on Pelosi calling for a “New Pecora Commission”? My take is that there’s an opening to pressure her office (and whomever else in congress) with names for the commission, and for a potential witness list. This is the shot. We miss on this one and it’s over.

According to CNN Mall Owner General Properties filed for bankruptcy this AM. (Isn’t that the Freidman’s inlaws and wife.)
Commercial property failure could cause a whole new round of problems.

Real Estate prices in So Cal are now at “pre bubble” levels. The air is out of the thing here- and will be within a year or two nation wide. People are buying homes for under $200,000 that sold at the peak at $450,000. The bleeding is about over.

Yep! That’s a bit of a different animal of course. Retail space has been overbuilt and with consumer spending down, tenants are bellying up. I suspect that there will be a glut of retail space for a decade or more.

Some of the malls in So Cal are so barren that you could fire a cannonball through them and never hit anyone.

huh? what good grounding would that be?

any links about the advice obama is getting from lots of people? i haven’t seen that.

p.s. i thought jared bernstein was on v.p. mbna’s staff, not obama’s? am i wrong about that?

I would very much like Warren to be appointed as the head of the SEC or FTC. She has what it takes to be a regulator, a stronger sense of justice than greed.

I first learned of the housing bubble from you in 2005.

I am less sanguine about the bottom now though. First, there was a foreclosure moratorium which may now be ending and which could dump more properties on the market. Commercial real estate continues to tank. There was always the likelihood that Obama’s stimulus and Geithner’s giveaway would cause some moderation although I would put this mostly in 2010 (an election year). But neither of these things really fix any of the fundamental problems. In 2011 we look to be back in a downward spiral with much higher debt loads and fewer resources to set things right.

That’s a pretty steep haircut and brings prices down to the level the average family might be able to afford if they still have jobs.

The toxic assets on the banks’ books may have some value rather than zero value but, and I’m not an economist, I’m guessing losing 50% of the underlying assets’ values would put them over the brink.

And the final point is I don’t see the bubble reinflating to the levels that fueled this speculative run.

I love Elizabeth Warren. Her intelligence, insight and devotion to service are breath-taking. She understands what’s going on and she deserves the support of the American people.

Just an anecdote. We have several first time buyer clients who are anxious to buy something while prices and interest rates are still low. We have been able to find first homes for several during this bust. As of two weeks ago, when we preview homes at or below $200K, they are gone before we can show them. This thing has changed almost overnight. Banks are getting the message and raising prices a bit. We have already experienced a sales increase in so cal. Now a moderation of pricing will follow.

Absolutely not. The first thing that will happen is that prices will flatten. I suspect that they will stay relatively flat for some time. California real estate has moved in cycles for decades and typically it takes seven years or so between peak and trough- with fairly long periods of repose between spurts.

This is bad – really bad. And I like John Stewart. But if this is real, and recent, and if that lady is confused and she’s being scammed and doesn’t see it, then we are all in deep doodoo.

i do love that woman. great clip from jon stewart.

I know some guys who do this for a living. They are not at the top, but they are smart. They know math like you and I know the backs of our hands. Do you really believe even for a moment that they made up these security “instruments” without having ALL the numbers in front of them?. They don’t work that way. To do what they do, they have all the information there.

from yves smith at naked capitalism: Willem Buiter: Treasury Will Have to Abandon Current Approach to Banks

obama may have to change course. though not out of his own choice, rather because he is being forced by circumstances.

Fabulous, enlightening and refreshing. Anybody who can’t accept this honesty needs a shrink. Sorry: no exceptions.

He is, but he is advising Obama also, or so I think, I saw him on tv talking about it.

A stronger sense of justice than greed. Excellent point.

thanks. i’m a big fan of warren’s. obama, not so much.

Warren should be in charge and the others currently in charge should not be employed. We have a fundamental problem. The banks are insolvent that traded these toxic waste instruments. The banks are insolvent because the value of real estate that they loaned on has crumbled. Both show that they can be nothing but insolvent.
The value to shoot for, what, 40% of 2006 for example? If we do not restart the system and bypass the banks that both caused, and profited from the scheme of their creation, we will realize why Ms. Warren is not the Secretary of the Treasury. It seems that we have all the players that caused the crisis employed trying to fix it. They are incompetent or criminals. They can’t possibly be trusted because we know crime was involved, and they know it. Ms. Warren is the only one that appears untainted by the interlaced conspiracy.
but of course, I may be an idiot and not even due an opinion. I can use mathematics and must recuse myself.

There’s an excellent article on Brooksley Born in the current Stanford Alumni magazine.

http://www.stanfordalumni.org/…../born.html

When you see what she had to put up with at the time she went to law school, it’s even more amazing.

Elizabeth Warren is SO wonderful. I also loved seeing Jon Stewart “use” her intelligence & understanding to present a view of the situation. Good on him for giving her two segmants.

Slightly OT: the other day Obama was giving a “the financial crisis for dummies” speech. [It was actually pretty good.] However, in it, he said, “when you give a dollar to the banks, and they lend it, it becomes $6 or $8 in the economy.”

THIS is the problem, Mr. President: the damn banks aren’t lending. That “dollar” just goes onto their balance sheets, into their executives’ pockets, towards the naming rights of some ballpark, or into the coffers of some swanky resort [I guess this latter would at least get it into the “economy”].

As long as Obama believes THIS myth [giving the banks $$$ = getting economy going] we’ll continue to be in trouble.

I also loved seeing Jon Stewart “use” her intelligence & understanding to present a view of the situation.

Not to mention her sense of humor, if I’ve seen a guest whose interaction with Stewart was as natural, I don’t remember it.

Thanks, Masaccio. Speaking of shrinks …

Elizabeth Warren has the most daunting task in this Enron redux psychodrama — a committed clinician & skilled administrator in an asylum full of inmates who have taken over the institution.

What we need is a massive movement demanding the inmates be returned to their locked down rooms.

What we’ve got is an armey of dicks roaming the streets on tax day.

Things will have to get much worse for the former to happen, and the more desperate things get, the closer we will move toward the precipice of the latter.

In a consumer driven economy when consumers don’t have money, you don’t have an economy. That is why the top down method, refloat the banks, won’t work. Many banks are obviously involvent. You don’t need a database to reach that conclusion. As for the mortgages it was more greed and stupidity than fraud. They knew, or should have known, that 100% mortgages on marginal properties at inflated values isn’t a recipe for success. Actually had they been able to peddle their crap, they might have made the money they hoped to make. The music stopped and they were left holding the bag. Tough.

As for us, we need to develop greater grass roots than we have if we are to fight back. A million person march in one locale is fine, but not enough. We need one hundred thousand person marches all over the place on the same day and at the same time. Before we get there we must lose the hierarchical state of mind.

1) Warren rocks.

2) rw may be right, though I’m not 100% sold, it could be a dead cat bounce. We have a lot of months of job losses still to go,and that will rippled back into the housing market. OTOH, I think this probably isn’t a bad time to buy, IF your job really is secure. Very low interest rates, low housing prices. They might go lower, but they might not, at least not for a few years.

We have a lot of months of job losses still to go,and that will rippled back into the housing market.

Sorta scares me to even think about what it will do to the retail market, unless new industries very suddenly and very fast start up to take up the space of all those retailers going under due to lack of customers and the “low price” crunch. Even if the unemployment rate heads up to the low double digits, only about one in ten houses will be dark, but it may be a higher toll for retail, I fear.

thanks ! good on him indeed

What on earth would make you feel an impulse to declare Obama a “smart President” on this issue?

Where, in any of what he said, did you see him entertaining, or preparing the American people, for the possibility of nationalizing banks when necessary? Didn’t he, quite to the contrary, provide still another set of arguments — and exceedingly weak arguments — for refusing to nationalize banks?

Most liberal economists outside his administration certainly believe that nationalization will be a required step. The only real dispute among them is whether as an initial step, PPIP might serve a useful purpose.

How is it “smart”, then, to close off an approach that virtually all liberal economists accept must be adopted, sooner or later?

Why, in general, must all commenters on Obama’s policies bow and scrape before him, and make loud public declarations of their belief in his wonderfulness, before they allow themselves to utter any criticism, however mild, of those policies?

Read the speech. You may be surprised.

I read the speech.

Given that it was just more rationalization for doing exactly the wrong things they have been doing all along, and refusing even to entertain doing the right things, as the Obama and his team have all along, how and why might I be surprised?

Why is it that so many of the voices that warned us about the inevitible outcome of following the ideology of de-regulation came from women, and why did so many of those women lose their jobs for telling the truth to power?

I think there were plenty of people who knew it was a disastrous policy. What more did those women provide? Nothing I’ve heard/read.

What happened was the Dems & Repubs were debating how much regulation was/is needed in our system and the Repubs, obviously, wanted to deregulate so they could steal everything that wasn’t nailed down. They also wanted to destroy Clinton’s housing plans to prevent Dems from being seen as successful by the electorate.

What’s the obvious reply to that salvo?

Clinton & co decided to let them eat ‘the whole thing’ and they did. Now we see what it’s led to and the Dems are going to roll it all back to safe levels, the ones Ms. Warren and everybody with a brain knew was good. But, more than just *doing* that, they have the public with them now. The public has seen and felt the disaster of the Repub ideas.

Now we can really fix the system and perhaps improve it here and there.

Ms. Warren is, as they sometimes say, a talented kibitzer. She comments from the sidelines. But, she isn’t keeping up with the game or ahead of it. She’s commenting on things done 6-9 months ago and she still doesn’t have it all right.

Harvard prof, eh? Well, they gave us Dubya, so they can’t be all that great.

good to hear

It seems that we have all the players that caused the crisis employed trying to fix it. They are incompetent or criminals.

Rubin & Geithner were in the Clinton admin., but I don’t recall them having the power to over-ride the Repub Congress. They are far from incompetent.

Criminals? What do you think they’ve done that’s criminal wrt this crisis? Sorry, I don’t see it.

What we need is a massive movement demanding the inmates be returned to their locked down rooms.

Well…there was the election and the Bushies left office. Dunno if they were locked down though.

As for the mortgages it was more greed and stupidity than fraud. They knew, or should have known, that 100% mortgages on marginal properties at inflated values isn’t a recipe for success. Actually had they been able to peddle their crap, they might have made the money they hoped to make. The music stopped and they were left holding the bag. Tough.

I don’t know if they consciously did this thinking the gov’t. HAD to bail them out, but it certainly looks that way.

For now it appears Treasury is holding them up, but there hasn’t been any announcement that we were going to take all the toxic assets off their hands at full price to ease them of their stupid deals/plans. While they appear to be insolvent zombie banks I haven’t heard anyone say what will become of them down the road. If Geithner’s plan to have their toxic assets sold off to other private entities happens, then they might salvage some value. If not it would appear the banks will continue to let the value of those mortgages slip slide away. If only they had used HOPE for Homeowners to write them down a bit and fix them, then they had hope to save more value. Stupid is as stupid does!

Even if the unemployment rate heads up to the low double digits, only about one in ten houses will be dark, but it may be a higher toll for retail, I fear.

Yes, I’d say that’s likely. How bad is entirely unclear. The problem for retail businesses isn’t the mortgages, but the credit market. They’re simply getting cut off by banks with less to loan. And, until things stabilize further it isn’t so likely the gov’t. would dare to inflate the economy to support them.

So, we’re going through a sort of roll-back of the economy. A lot of ground is being lost because of stupid laissez faire economic ideas — so much for Milton Freidman.

I think there were plenty of people who knew it was a disastrous policy. What more did those women provide? Nothing I’ve heard/read.

What these women provided was a totally proper voicing their professional opinion that a great, and obvious disaster loomed in our future if we allowed the markets to continue to self regulate.

In the case of Brooksley Born, she offered a proposal for legislation to regulate derivative trading that was promptly shot down through the coordinated efforts of Greenspan, Rubin and Levitt, who proposed and got a legislative injunction against the CFTC to prevent any further effort on her part to rein in the wayward market.

What happened was the Dems & Repubs were debating how much regulation was/is needed in our system and the Repubs, obviously, wanted to deregulate so they could steal everything that wasn’t nailed down. They also wanted to destroy Clinton’s housing plans to prevent Dems from being seen as successful by the electorate.

No, on the contrary, there was very little in the way of debate, instead of debate, there was a successful effort to marginalize Born and in the end that effort was successful in both stopping her from doing her job, and in dissuading her from further public service.

What’s the obvious reply to that salvo?

Clinton & co decided to let them eat ‘the whole thing’ and they did. Now we see what it’s led to and the Dems are going to roll it all back to safe levels, the ones Ms. Warren and everybody with a brain knew was good. But, more than just *doing* that, they have the public with them now. The public has seen and felt the disaster of the Repub ideas.

Giving Clinton and company credit for letting the Republicans “eat the whole thing” is a weak effort at revisionism, and ignores the simple and might I say obvious reasons Clinton did nothing to stop the run away train that was our economy during his tenure, and that was that we were on the manic and profitable side of an inflating bubble, and Clinton was doing what most politicians do when things are going their way, that is to say nothing.

Now we can really fix the system and perhaps improve it here and there.

Ah, I see, now that we’ve vanquished the evil republicans, we can do a little tinkering here and there, and before you know it, we’ll be rockin’ and rollin’ again. So nice to know that things aren’t really out of control, and all that’s needed is a few adjustments here and there.

Ms. Warren is, as they sometimes say, a talented kibitzer. She comments from the sidelines. But, she isn’t keeping up with the game or ahead of it. She’s commenting on things done 6-9 months ago and she still doesn’t have it all right.

Ms. Warren is the farthest thing from a kibitzer; she’s a totally qualified professional who has been put in a position of responsibility. It is both appropriate and well within her rights, and her job description to raise the issues she has raise and to challenge the continuing fraud that has been, and still is being perpetrated on our country by the leaders of our financial sector, with the aid of our elected representatives.

I, for one am glad that she doesn’t consider her job to be “keeping up with the game or ahead of it.”

Ms. Warren is most certainly not commenting on things done 6-9 months ago, or even 6-9 years ago, she is explaining a decades old, coordinated attack by the rich and powerful, on the regulatory system that until the 1970’s provided a much needed counter to the inevitably destructive forces of greed masquerading as financial innovation.

Harvard prof, eh? Well, they gave us Dubya, so they can’t be all that great.

Your snarky attempt to dismiss Elizabeth Warren as just another Harvard professor, whose status is in some oblique way related to the immensely unpopular George W. Bush, is incredibly telling, and weak.

It has all the earmarks of egotistical ass-talking, but hey, I’m new around here and I could have you all wrong.

55 is a reply to MarkH@49