Tonight On The Randi Rhodes Show

ECONOMISTS ARE HOT

I’m in love. Truly madly deeply in love. He is brilliant, handsome, funny, and charismatic and hates Milton Friedman!! http://www.nytimes.com/2006/11/17/business/
17milton.html?ei=5088&en=a0db578046e72e19&
ex=1321419600&partner=rssnyt&emc=rss&
pagewanted=print

Yes, I am in love with Austan Goolsbee, PhD, Fulbright scholar at The London School of Economics, Associate Editor at American Economics Association, and Barack Obama’s Chief Economic Advisor throughout the campaign. Dreamy Austan shares with me the whole ridiculous cable TV experience, so he knows how bizarre being in the “debate” dungeon is http://www.msnbc.msn.com/id/21134540/vp/26962715#26962715 and how bad the lighting is at CNN http://www.youtube.com/watch?v=FqufI3r8vF8 plus he’s a master of the one liner http://www.youtube.com/watch?v=TKvMfVntY2g&feature=channel


On Face The Nation with Bob Sheiffer Austan lays out exactly what Obama is going to do, what Bush did NOT, and how to get out of this mess. WATCH HOTTIE AUSTAN GOOLSBEE. Http://www.cbsnews.com/video/watch/?id=4628202n

We have so much to talk about. But mostly I think he’ll want to talk about his MTV Exec wife Robin and their 3 kids. DAMN. But, I’m still admiring him from afar…inSouth Florida.

FOCUS RANDI…AHEM…

With brainiacs like Austan and Tim (Geitner), Larry (Summers), Warren (Buffett of course), and Paul the Volcker (not Vulcan) I am quite sure that we are going to have a shot at getting out of this Economic black hole that Bush, Phil Gramm, John McCain and the rest of the “Free Market” NeoCon Deregulators got us into.

People STILL believe the housing crisis was caused by people who bought houses they couldn’t afford. NOT TRUE. If mortgage rates don’t reset, if interest rates were instead lowered, if the number of years on the loan were extended, the numbers of foreclosures would shrink not grow. Banks do NOT care about saving the loans from default because banks cooked up a plan so they’d never have to pay for them even if the homeowner defaulted. THAT’S WHAT CAUSED THE CRISIS.

The Foreclosure crisis was caused by banks that made loans and did not secure them in case of default. They took risk but decided NOT to cover the risk they took. Instead they decided to sell the risk to investmen t banks. But investment banks wouldn’t buy crap right? So the banks hired bond-rating agencies to rate these “securitized mortgages” “AAA:” even though they were utterly worthless. Worthless not just because the interest rates on the loans were going to reset making them totally unaffordable for borrowers, but really really worthless because these “securities” were nothing more than shredded pieces of paper that were scattered into many “baskets” and sold.

To understand what banks did, just imagine making this recipe:

Take one whole prime mortgage and one subprime mortgage – Shred in a food processor into very fine pieces

Mix both kinds of mortgages in a large mixing bowl

Empty the contents of the bowl into smaller bowls and serve

That’s what the banks cooked up. So no one knows which mortgage shreds they have and which shreds you have and on and on. Like making coleslaw…but imagine the last line of the recipie says:

Remove only the pieces of subprime loans and set aside WHAT? Yep, that’s what has to happen to those mortgages if the investment banks and insurance companies who bought those “bowls” are going to be able to figure out which shreds are in which bowl they bought. They can do it…but it would be so much easier just to go to the owner of the mortgage and deal directly with them!!

There is nothing wrong with making low interest affordable loans to people. After World War II that’s exactly the kind of low interest loans our GI’s got. Low interest home loans created an awesome, solid middle class. The same middle class that I am from. The same middle class that you are from. No, the problem was not with low income borrowers who needed affordable loans, the problem is what banks made out of them.

It’s farce to say that low income homeowners forced banks to do anything. It’s also farce that low income home owners deserved what they got. It’s crazy to think that banks would not insure against risk. But that’s what they did by chopping up the sub prime mortgages and mixing them in with prime mortgages and then selling them all over the world as if prime and subprime were reliable and sound. Thomas Frank (another possible love of my life) clearly pointed this out in his Wall Street Journal piece on October 1, 2008:

“Just imagine the flights of fancy that the theory of borrower malevolence and Wall Street victimization requires conservatives to take: All these no-account folks, you see, got together and forced investment banks to engineer subprime mortgages into highly leveraged securities. Then they tricked all manner of hedge funds and pension funds and financial institutions into buying these lousy products. Just for good measure, these struggling homeowners then persuaded bond-rating agencies to misrepresent the risk associated with these securities.” http://online.wsj.com/article/SB122282690823092989.html?mod=rss_The_Tilting_Yard

You can see why I love these men, but you can also see that it’s time everyone began to understand what happened to us, so IT CAN NEVER HAPPEN AGAIN and so we CAN FIX IT.

Sheila Bair Chairwoman of The FDIC agrees with my view that until we HELP homeowners we will get more of the same crushing results. She went to Congress last week, went to the Bush Administration prior to that and finally g ot so frustrated she put her plan on The FDIC website Sheila Bair is a Bush appointee but she’s on her way out and wants to correct things before she goes http://www.fdic.gov/consumers/loans/loanmod/FDICLoanMod.pdf

Joe Nocera of the NY Times was on Bill Moyers Journal on Friday and told us how frustrated she is, and why she’s right WATCH JOE HERE http://www.pbs.org/moyers/journal/11212008/watch.html

READ JOE HERE

And here on the Auto Industry Bridge Loan

Auto Bailout

Amazing folks are working at this problem. We have to at least pay attention to what they’re telling us and plan on helping them as much as we can.

CAN WE FIX IT? As Austan Goolsbee might say “Yes we can” LISTEN TO PRESIDENT ELECT BARACK OBAMA’S PLAN
http://www.change.gov/page/s/economy

Oh and speaking of going we still have to pay attention to Bush’s “MIDNIGHT REGULATIONS”

The last terrible acts of George W Bush

http://www.pbs.org/moyers/journal/11212008/profile3.html

Homework for Monday, November 24, 2008

Advertisements

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

%d bloggers like this: