For those who don’t know, austerity is “a policy of deficit-cutting, lower spending, and a reduction in the amount of benefits and public services provided. Austerity policies are often used by governments to reduce their deficit spending while sometimes coupled with increases in taxes to pay back creditors to reduce debt”.
In the United States, our government is now beginning to understand the importance of Austerity and how its the responsible thing to do when in hard economic times. Therefore, I though I’d review all the good things that happened to Ireland as it pursued its own austerity.
In late 2008, as the world financial markets were crashing and burning, Ireland, like other nations, saw tax revenues dip, money disappear overnight, and the economy quickly contract. As you can imagine it caused huge budget deficits and it’s debt started rising. Unlike most other nations in the EU, it did the responsible thing and declared that Ireland would not take part in EU stimulus plans. Ireland continue to reap the rewards of it’s responsible actions.
September, 2008. Ireland cuts spending by another 1.5% or a total of 4% less from the year before.
With September tax returns expected to be very bad and the economic climate rapidly deteriorating, a further 1.5% reduction in 2009 spending is now up for debate. This would bring planned cutbacks in current expenditure for next year to more than €2bn.
April, 2009. Ireland announces more emergency budget cuts and this time, income tax increases as well.
From May 1, a 2 percent “income levy”—effectively a pay cut—is to be imposed on all those earning between €15,028 and €75, 036. This doubles a levy first introduced last October and reduces the tax threshold to incorporate large numbers of low paid workers. Those on higher incomes will be levied at 4 percent and 9 percent of their income.
A health levy is also to be increased to 5 percent. This, as with other levies, is to be taken directly from the pay packets of workers whose tax payments are collected by their employers. This will be added to the pension “levy” also extracted from public sector workers in February.
The government also announced there will be no Christmas welfare payment for social security claimants in 2009. More damningly, childcare allowances for pre-school children are to be halved immediately and abolished by the end of 2009. Child benefit, currently paid to all parents, is to be means tested.
Payments to unemployed workers under 20 are also to be halved and rent support payments reduced, while new punitive measures will be introduced against welfare claimants. Mortgage interest relief will now only apply to the first seven years of its commencement.
December, 2009. More drastic budget cuts are announced. This time an additional 4 billion euros were being cut out of their budget. All the cuts came out of wage cuts on public workers, reduced benefits for the unemployed, other reduced social welfare programs, and less spending on infrastructure
Public sector workers bore the brunt of cutbacks in Lenihan’s Budget with €1 billion in pay cuts ranging from 5 per cent for those on average pay to 15 per cent for those at senior level.
The rest of the €4 billion in savings will come from a €760 million reduction in the social welfare, a €980 million cut in day-to-day spending programmes and €960 million in savings on capital investment projects.
Cuts to Child Benefit will see a €16 euro per month reduction with the lower and higher rates now €150 and €187 per month respectively. Families on social welfare will be compensated with an increase of €3.80 a week in qualified child allowance.
At the same time, unlike previous budgets, taxes were heroically kept the same or lower.
VAT will be cut by half a percentage point from January for 12 months, while the corporation tax rate will not change from 12.5 per cent.
In February 2010, a levy(tax) was placed on the generous pension plans of government workers to save the government even more money.
In March 2010 , public sector wages were cut again, despite freak out from the greedy public sector unions.
Tax revenues have collapsed, the government has run out of money, we can’t afford to pay state workers as much as they have been getting.
In fact tax revenues here have now fallen to the 2002 level. But since then, the payroll for state workers has increased by 35%.
So far the government has cut them back by an average of 12% over two budgets. But the state workers won’t accept it.
By April 2010, Ireland’s bold moves were rewarded by the financial industry, praised by the EU Central Bankers, and declared a model for Greece.
As a result, the country’s government and taxpayers have been rewarded. The “spread” the bond markets charge to hold Irish 10-year debt over the German “bund” equivalent is now 139 basis points, less than half as wide as this time last year. The Greek spread over the bund, meanwhile, is 316 basis points – more than twice as high as that of the Irish – with Athens now paying far, far more than Dublin to service government debt.
“Greece has a role model and that role model is Ireland,” said Jean-Claude Trichet last week, the European Central Bank president singling out the Emerald Isle for praise. “Ireland had extremely difficult problems and took them very seriously – and that’s now been recognised by all.”
Despite all these spending cuts and increased taxes on the public sector employees and middle class, Ireland still found itself facing another deep budget hole in October 2010.
DEEP welfare cuts loomed last night as ministers began a marathon session thrashing out how to bridge a €5 billion black hole in the budget.A property tax and specific projects like the Dublin Metro North line were under discussion, as was cutting welfare which is set to take a hit of some €2bn. The Greens are keen to save Metro north and some ministers fear cutting the capital building programme too far will damage the economy in the medium term.
Education is also expected to be a big loser.
Irish Finance Minister Brian Lenihan plans to slash the budget deficit by 6 billion euros (US$8.5-billion) in 2011 as he fights to save the nation’s economic independence.
Brian Lenihan, Ireland’s Finance Minister, described the country’s borrowing problems as “very serious”, as the yields on its bonds hit yet another all-time high. The yield on 10-year bonds peaked at 9.26 per cent yesterday, almost four times the yield that is demanded by investors in equivalent German bonds.
Senior officials in Ireland and the European Union yesterday moved closer than ever to conceding that the indebted country may now have no choice but to seek a bail-out.
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The boom that earned Ireland the nickname of “Celtic Tiger” faltered when the country fell into recession in the wake of the global financial crisis of 2008.
The property boom had been fuelled by massive lending from the banks, and when this collapsed – and lenders were unable to repay – the Irish banking system was plunged into crisis.
The Irish economy underwent one of the deepest recessions in the eurozone, with its economy shrinking by 10% in 2009.
By September 2010, it was estimated that around a third of the Irish economy had gone into shoring up the banks.
-BBC http://news.bbc.co.uk/2/hi/europe/country_profiles/1038581.stm
10 November 2009. For all the growing confidence that markets and leaders are expressing, the world is still a fragile place economically. Having covered the fastest growing economies 2010, we thought it would be timely to look at the worst economies in the coming year.
Many people were surprised at the top growth performers in the world economy, with less well-known countries like Qatar, Botswana, Azerbaijan, Republic of Congo and Angola leading the pack.
We are looking a different situation when looking at contracting countries. With one exception, all of the 12 worst countries in 2010 are in Europe, and the reason is pretty simple: the Financial Crisis – or Credit Crunch
as it is known to some in the old world. We have gone from calling countries the Sick Man of Europe to calling Europe the Sick Continent of the World, just as Asia and Africa rise to the ascendancy.
It seems a bit harsh, since the crisis started in the subprime mortgage sector in the US, and then spread around the world. However, the scale of credit
-related problems was larger for many European countries when compared to the size of their economy. America encouraged the world to follow its free-wheeling approach to debt leverage (going as far as to use Economic Hit Men).
This is a case of caveat emptor, or buyer beware. The US is far and away the largest economy in the world, has plenty of customers for its debt, and controls the US dollar which is still the world’s main reserve currency, and will be for many years to come. Follow its advice at your peril, you don’t have the security it has when things go wrong.
Here is the full table of the worst economic crashes in 2010:
Country Growth Rate
1. Ireland -3.0%
2. Lithuania -3.0%
3. Equatorial Guinea -2.828%
4. Latvia -2.035%
5. Montenegro -1.952%
6. Finland -1.238%
7. Estonia -1.045%
8. Bulgaria -1%
9. Germany -1%
10. Spain -0.714%
11. Netherlands -0.66%
12. Greece -0.6%
Source: GDP Growth Forecast 2010, EconomyWatch.com Economic Statistics Database
Notice the differance between Ireland and Greece, Ireland was obviously hit harder.
With a well-educated, English speaking and lower cost workforce plugged directly into the European Union, Ireland became a center for many industries, in particular tech. The new jobs reversed the centuries-old migration of Irish workers out of the country, and it became a net-importer of talent. As people and money flowed in, property prices boomed spectacularly. Irish Banks got rich financing this growth, became the dominant force in the economy, and in the relentless pursuit of profit gorged themselves on securities, including toxic assets from the US.
Now the economy is being hit both sides. The banks have come undone and have now been nationalised or have the government as major owners. As the world economy collapsed, exports plummeted, businesses have shut down and unemployment has rocketed. 12.5 percent of the population is out of work, and that number is expected to rise to 15 per cent in 2010. Whole areas of this once vibrant country have come ghost towns – and the people are angry. Yet another bailout is in the works, stoking more anger.
If approved by Parliament, which appears increasingly likely, NAMA would spend some $81 billion of taxpayer money to buy loans worth an estimated $70.5 billion at current market value. The so-called bad bank, as NAMA is sometimes called, will then manage the loans on behalf of the state for the next decade, by which time, the government assumes, the country’s property market will have recovered. This assumption also explains the $10.5 billion markup in the sum to be paid for the toxic assets — a difference the government says reflects the long-term economic value of the loans.
It sounds like theyve been doing some mass spending and similar kinsian ideas.
Government debt has grown alarmingly. The budget deficit had been running at 14% of GDP. A second emergency budget
was recently created, with a mix of tax increases and spending cuts aimed at bringing the deficit down to 10.75%. But even these austerity measures as the ratings agencies (desparately trying to save their own tarnished reputations) have downgraded the sovereign debt of Ireland. Standard & Poors have cut its AAA credit rating to AA+.
What does this mean?
Firstly, it means that the rating agencies believe that Ireland has underestimated the size of its problems – it now has the second highest level of household debt in the world, running at 190 percent. Secondly, it means that they believe the chance of Ireland defaulting on its debt has increased. Thirdly – and most importantly – it means that the borrowing costs for the Irish government will go up, since lending rates are closely tied to credit rates. This of course will only increase the deficit. And so the cycle of financial doom and destruction spins ever downward.
Challenging Ireland for the questionable honour of worst economy is Lithuania. It does not have the complexity of the securitisation markets to deal with, but in many ways its story parallels that of Ireland. It has built an export-oriented economy with a currency pegged to the Euro. Following record growth of 8.9 per cent in 2007, it slowed in 2008 and then plunged this year, with the economy falling 9.5 percent in Q1 2009, and a full year drop of 10 percent expected, similar to the other two ‘Baltic Tigers’ of Latvia and Estonia, who have similarly dismal forecasts for 2010.
It seems as though Ireland did EVERYTHING it could both Progressive and conservative idea and is failing. So whats your point? Is that if you only talk about the conservative economic ideas in a failing country then that proves they dont work. And we dont even have to look at the whole picture?
The fact remains that no where at no time has there ever been a true Capitalist Democracy with a truely free market and that is our first mistake. Our first good desision at the same time was as close to a free economy the world has ever seen and that has made us the most powerful nation in the world.
Your on the right track though, keep looking try past experiances, I mean Id love to tear up FDR’s economy.
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I thought my point was self-evident. Pursuing “austerity” policies during a recession is economic suicide.
Also, bailing out banks is not a keynesian style way to resuscitate an economy(putting money into the economy and hoping the newly unemployed find work, would be) – so technically they didn’t try any keynesian policies. I’m not sure bailing out banks and bank investors falls into the thinking of any economic school. However, if it does, it’s probably most likely to come from the thinking of Monetarist view since they thint that monetary policy is the best way to regulate the economy. That being said and even though I think both economic schools are no longer applicable, I don’t think either school’s founders, Keynes or Freidman, would’ve thought massive bank bailouts were good ideas.
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“no where at no time has there ever been a true Capitalist Democracy with a truely free market”
Exactly how would you define this and what would it look like?
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Fair point…
I suppose taking parts of the industrial age and matching them with modern standards…
Still its must be said the reason we rose to be a super in a 100 years where as many took thousands. Is capitalism, There are many socialist, communist, democracies, republics and dictators to use as examples. But, how many true democratic capitalist societies are there?
Look at all the other nations whom with good intent began to let thier Gov. take more and more “care” of the people. When does caring become control? When does control become tyrany? Can you say your really so much smarter than the peoples of 1942 germany and all other who fell victom to tyrants? well, maybe you are but I damn well bet more than half this country needs only alil push before they just too far gone for maken sence.
I may not know what a truely capitalist society looks like but I know very well the reasons why we have to find it.
(I hope I dont have to include the fact that Im not saying we should loose our standards and such, some legislation is a good thing, its just gotten way outa hand)
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You crack me up. In other words you don’t know what you’re looking for, only what it’s called, but somehow you really know that you have to find it. You are a cult leader’s dream come true.
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Really Dustin????….Really?….
(funny comment by the way)
However since there has never been one its had for one to present it in the contexts of a blog reply. It would take much more thought and research.
I also know that within much of what we’ve discussed in person as per my ideal America you have had delighted interest if not agreed.
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Oh yeah… Trombone!
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I am a fan of austerity… it’s called chasing the bottom line… if it goes down, your budget line should race your bottom line (always keeping below it). I wish more business in the US had raced their bottom line; maybe our government wouldn’t be drowning if businesses/individuals were responsible for themselves.
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I got your point ol boy. You just left out some very key evedance in your case study and….. I DISSAGREE
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If you got my point, then why’d you ask “So whats your point?”
Ireland has relentlessly pursued austerity. Every time it’s budgets were slashed, Unemployment increased and the budget deficit got bigger. The only place it spent more money on was bailing out failing banks. I’d say that’s a pretty far cry from “trying EVERYTHING”. You’re free to disagree, but don’t copy and paste an entire news article and act like you somehow “proved” something.
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the reason I ask for your point was
BECAUSE IT AMUSES ME!!!
I will grant you that austerity is a huge part of Irelands plans but, only after spending.
In the way the EU is set up countries act more like states, with a single conected currancy and economy.
New Jersey is practicing austerity and it is looking promising.
Honestly Your veiw on Ireland as a point against austerity is as lagitamit as my connecting our future to germanys socialist past in earlier arguments (of which I still see commonalities)
NOW, if your saying you don’t want the US to be like Ireland well then I AGREE which is the reason I asked for your point. Was it to learn from mistakes or to bash austerity?
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Fortunately for me, this was a case where I could do both at the same time.
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lol nice…
I must ask then….
What do you have against austerity?
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I have nothing against austerity when unemployment is low and inflation is high. In fact, I think it’s the right thing to in that situation.
I have a problem with austerity when unemployment is high and inflation is low. Austerity exacerbates the situation and further wrecks the economy.
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Interesting stuff – I can recall that the main argument for the UK’s austerity measures (as put forward by the Tories) was the idea that the UK would end up economically like Greece if nothing was done. Ireland is a good counter-example – the UK could still end up like Greece – or Ireland – and possibly faster as a result of austerity measures.
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Once again I dont belive they precticed austerity for any other reason than it was the last act of desperation. Unfortunetly the first act is/was (most common for some stupid reason) is massive spending which if not used along with austerity creats a super massive unsustainable debt.
The FACT remains that this is a problem steming from our government puting its hands where they dont belong. Interfearing with the economy by trying to act as a play and not the refferie incharge of watching for problems like fanny and freddy
The Federal National Mortgage Association (FNMA) (OTCBB: FNMA), commonly known as Fannie Mae, was set up as a stockholder-owned corporation chartered by Congress in 1968 as a government-sponsored enterprise (GSE), but founded in 1938 during the Great Depression. The corporation’s purpose is to expand the secondary mortgage market by securitizing mortgages in the form of mortgage-backed securities
The Federal Home Loan Mortgage Corporation (FHLMC), known as Freddie Mac (OTCBB: FMCC), is a public government sponsored enterprise (GSE), headquartered in the Tyson’s Corner CDP in unincorporated Fairfax County, Virginia.[3][4]
The FHLMC was created in 1970 to expand the secondary market for mortgages in the US. Along with other GSEs, Freddie Mac buys mortgages on the secondary market, pools them, and sells them as a mortgage-backed security to investors on the open market. This secondary mortgage market increases the supply of money available for mortgage lending and increases the money available for new home purchases. The name, “Freddie Mac”, is an acronym of the company’s full name that had been adopted officially for ease of identification (see “GSEs” below for other examples).
The Government created these entities deamed “TOO BIG TO FAIL” to do the same things people now consider “EVIL” and blame Capitalism for.
Barney Frank (born March 31, 1940) is the U.S. House Representative for Massachusetts’s 4th congressional district, serving since 1981, and the chairman of the House Financial Services Committee since 2007. He is a member of the Democratic Party.
He won his first full term in 1980 and has been re-elected ever since by wide margins.[3] In 1987, he became the second openly gay member of the House of Representatives. He has become one of the most prominent LGBT politicians in the United States.[4]
In 2007, after the Democratic Party won a majority in the House, Frank became the chairman of the House Financial Services Committee, which oversees the entire financial services industry including the securities, insurance, banking, and housing industries. He is considered to be one of the most powerful members of Congress.[5][6][7]
SO whos fault is it and how do they plan to fix it?
Seems to me by digging us a deeper hole….
So forgive Me and other for not believeing that Gov. is the salution.
What Government practices austerity “when unemployment is low and inflation is high.” Certainly if anything that would be a backwards aproach to “Pressivism”. But, maybe you could explain it to me better being a “progressive”.
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I’m convinced that the idea that Fannie & Freddie caused the melt down was created by wall street conservatives because they couldn’t face the fact that “the market” failed them. Rather than face the truth, they instead made up a fantasy about the GSEs. Here’s the Reality:
Subprime securities were created in 2000 by Wall Street after the repeal of the Glass-Steagal Act(A.K.A. less regulation). Wall Street firms were the sole purchasers of subprime loans for 5 years. Fannie\Freddie didn’t start buying subprime securities until late 2005. No act of congress forced them to enter the subprime market, it was a decision by the stock holders to chase where the mortgage market was going. They left the market 18 months later in February 2007 – this was also a decision by stockholders, not an act of congress. When everything started blowing up in 2008, the GSE backed mortgages fared better than most
Oh, and as for the other fantasy of blaming barney frank. He didn’t become chairman until 2007, two years AFTER Fannie\Freddie entered the sub-prime market. Blaming him defies logic.
Do you ever get tired of being wrong?
Is your memory THAT bad? See United States, 2000
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As far as Fannie & Freddie they were just two examples and you being conviced doesnt change the facts that Gov. intervention caused this.
As far as old Barn is conserned he was responsible for the situation as it went down and was his responsiblity to make sure it didnt. If you can blame Bush for katrina you can blame Barny Frank for this.
Im not taking Republican sides or the democrats on this it is a GOVERNMENT PROBLEM. If you wanna live in some fantasy world where everything is magically sovled by voting Democrat thats fine. BUT, most of us live in the real world where the real problem is TOOO MUCH GOVERNMENT!!!!!
Don’t blame my massive concussions for things YOU fail to see.
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AHAHAHA lol. You have a real bad case of cognitive dissonance. You are at the same time blaming both “TOOO MUCH GOVERNMENT” for causing it and blaming government for not preventing the crises.
And what really shows your inability to think logically is that the person you are blaming wasn’t even chairman until after the real estate bubble was completely inflated.
Repeating your position over and over when faced with overwhelming evidence to the contrary will not make it true. If you don’t like being wrong, bring evidence, not rants.
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Yes it is a Government issue and yes I blame the Government, why is that so hard to understand? Like I always have said, they need to be in charge of making sure the game is played by the rules, NOT!! to act as players or change rules to bennefit one over another.
Aswell I do place much of the blame on “wall street” but they are not incharge of the rule of law and making sure it is inforced that is the job of the Government.
FROM WIKI:
Fannie Mae and Freddie Mac
In 2003, while the ranking Democrat on the Financial Services Committee, Frank opposed a Bush administration proposal, in response to accounting scandals, for transferring oversight of Fannie Mae and Freddie Mac from Congress and the Department of Housing and Urban Development to a new agency that would be created within the Treasury Department. The proposal, supported by the head of Fannie Mae, reflected the administration’s belief that Congress “neither has the tools, nor the stature” for adequate oversight. Frank stated, “These two entities…are not facing any kind of financial crisis…. The more people exaggerate these problems, the more pressure there is on these companies, the less we will see in terms of affordable housing.”[68] In 2003, Frank also stated what has been called his “famous dice roll”:[69] “I do not want the same kind of focus on safety and soundness [in the regulation of Fannie Mae and Freddie Mac] that we have in the Office of the Comptroller of the Currency and the Office of Thrift Supervision. I want to roll the dice a little bit more in this situation towards subsidised housing.”[70]
Frank was criticized by conservative organizations for campaign contributions totaling $42,350 between 1989 and 2008. Critics[who?] claim the donations from Fannie and Freddie influenced his support of their lending programs, and say that Frank did not play a strong enough role in reforming the institutions in the years leading up to the Economic crisis of 2008.[71] In 2006 a Fannie Mae representative stated in SEC filings that they “did not participate in large amounts of these non-traditional mortgages in 2004 and 2005.”[72] In response to criticism, Frank said, “In 2004, it was Bush who started to push Fannie and Freddie into subprime mortgages, because they were boasting about how they were expanding homeownership for low-income people. And I said at the time, ‘Hey—(a) this is going to jeopardize their profitability, but (b) it’s going to put people in homes they can’t afford, and they’re gonna lose them.’” [8]
In 2009 Frank responded to what he called “wholly inaccurate efforts by Republicans to blame Democrats, and [me] in particular” for the subprime mortgage crisis, which is linked to the financial crisis of 2007–2009.[73] He outlined his efforts to reform these institutions and add regulations, but met resistance from Republicans, with the main exception being a bill with Republican Mike Oxley that died because of opposition from President Bush.[73] The 2005 bill included Frank objectives, which were to impose tighter regulation of Fannie and Freddie and new funds for rental housing. Frank and Mike Oxley achieved broad bipartisan support for the bill in the Financial Services Committee, and it passed the House. But the Senate never voted on the measure, in part because President Bush was likely to veto it. “If it had passed, that would have been one of the ways we could have reined in the bowling ball going downhill called housing,” Oxley told Frank. In an op-ed piece in the Wall Street Journal, Lawrence B. Lindsey, a former economic adviser to President George W. Bush, wrote that Frank “is the only politician I know who has argued that we needed tighter rules that intentionally produce fewer homeowners and more renters.”[8] Once control shifted to the Democrats, Frank was able to help guide both the Federal Housing Reform Act (H.R. 1427) and the Mortgage Reform and Anti-Predatory Lending Act (H.R. 3915) to passage in 2007.[73] Frank also said that the Republican-led Gramm–Leach–Bliley Act of 1999, which repealed part of the Glass–Steagall Act of 1933 and removed the wall between commercial and investment banks, contributed to the financial meltdown.[73] Frank further stated that “during twelve years of Republican rule no reform was adopted regarding Fannie Mae and Freddie Mac. In 2007, a few months after I became the Chairman, the House passed a strong reform bill; we sought to get the [Bush] administration’s approval to include it in the economic stimulus legislation in January 2008; and finally got it passed and onto President Bush’s desk in July 2008. Moreover, “we were able to adopt it in nineteen months, and we could have done it much quicker if the [Bush] administration had cooperated.”[74]
Chair of the House Financial Services Committee
Congressmen Ellison & Frank at Financial Services Field Hearing on Home Foreclosures in Minneapolis.
As chairman of the House Financial Services Committee, beginning in 2007, Frank “sits at the center of power”.[12] Frank has been a critic of aspects of the Federal Reserve system, partnering with some Republicans in opposition to some policies.[75] Frank says that he and Republican Congressman Ron Paul “first bonded because we were both conspicuous nonworshipers at the Temple of the Fed and of the High Priest Alan Greenspan.”[75]
Frank has been involved in mortgage foreclosure bailout issues.[76] In 2008 Frank supported passage of the American Housing Rescue & Foreclosure Prevention Act, intended to protect thousands of homeowners from foreclosure.[12] This law, H.R. 3221, is considered one of the most important and complex issues on which he worked.[12][77] In an August 2007 op-ed piece in Financial Times, Frank wrote, “In the debate between those who believe in essentially unregulated markets and others who hold that reasonable regulation diminishes market excesses without inhibiting their basic function, the subprime situation unfortunately provides ammunition for the latter view.”[78] Frank was also instrumental in the passage of H.R. 5244, the Credit Cardholders’ Bill of Rights Act of 2008, a measure that drew praise from editorial boards and consumer advocates.[79][80][81] In 2007 Frank co-sponsored legislation to reform the Section 202 refinancing program, which is for affordable housing for the elderly, and Section 811 disabled programs.[82] Frank has been a chief advocate of the National Housing Trust Fund,[8] which was created as part of the Housing and Economic Recovery Act of 2008 and was the first affordable housing program to be enacted by the Congress since 1990.[83]
During the subprime mortgage crisis, Frank was characterized as “a key deal-maker, an unlikely bridge between his party’s left-wing base and [...] free market conservatives” in the Bush administration.[84][85] Hank Paulson, the U.S. Treasury Secretary for the Bush administration, said he enjoyed Frank’s penchant for brokering deals, “he is looking to get things done and make a difference, he focuses on areas of agreement and tries to build on those.”[84]
The New York Times noted that the Federal Housing Administration’s crucial role in the nation’s housing market, providing low-down-payment mortgages during the crisis of 2007–2010 when no mortgages would otherwise have been available, “helped avert full-scale disaster” by helping people purchase or refinance homes and thereby putting a floor under falling home prices. However, due to the tighter flow of credit from the banks, total FHA loans in 2009 were four times that of 2006, raising concern that year that if the economy were to dip back into recession, more Fed funds could be required to keep those loans afloat. Frank’s response was that the additional defaults—2.2% more of the total portfolio in 2009 than the year before—were worth the economic stabilization of the broader policy, noting “It was an effort to keep prices from falling too fast.” In that context, he opined, “I don’t think it’s a bad thing that the bad loans occurred.” In fact, the unprecedented number of loans made since 2008 were noted to be performing far better than those in the prior two years.[86]
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Uhmmm… if all of this is true, then this pretty much exonerates barney frank as a hero not villian.
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the point is not to make any one individual a hero or villian but make the fact presant the the problem is primerally a problem with government. The sway of power is part of the issue. I blame them ALL equally weather I agree with parts of either ideal that doesnt change the fact that across the board they are all guilty of curruption weather through a vote, cronnies, or the simple act of allowing the act to be carried in opposition to the American people.
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Um… I’m gonna call bullshit. Why else would you bring up just one person? the one person that the right wing has been attempting to blame for the last 2 years.
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Maybe because Obama has blaming Bush pretty well covered.
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You’re right about one thing. Obama is wrong to put everything on Bush. It doesn’t matter who is president as long as conservative economic policies continue to proliferate in Washington D.C.
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Dangit Dustin I already “tromboned” now I just look foolish.
In my opinion we are along way off from “conservative economic policies” and I’m not to sure what “proliferate” means but I’m damn sure your wrong and pretty sure your a butt-head.
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lol!!!
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TROMBONE!!!
[...] Austerity is an auspicious sounding term for paying down government debt by cutting spending and/or raising tax rates. Considering that Ireland has been doing nothing but austerity plan after austerity plan for the last 3 years, some neoliberal economists would eventually take a look at the results and realize that they aren’t working(even I’m able to do that). [...]