Monday, November 1, 2010

Still Want To "Blame Bush"? Read This Article And Look At The Data For Yourself Who's Really To Blame.

This is from the site Practical Man, that I found linked on The Lonely Conservative. Check out this historical data.

I already knew most of this data before I came across this one, but it's nice to see more of it laid out, backed up and presented. For the first year of Obama's presidency when the bailouts, etc were being passed, signed, not working and it proves it because I am still unemployed thanks to the economy and his failed policies.

I was getting into arguments with good friends over this similar data, people who are Democrats and others that don't care for politics, they just wanted Bush out. I don't get how you can ignore the numbers. Like I told my friends, you can't spend your way out of a mess. It just creates a bigger mess. To this day, they still don't see that.

Before being elected President Barack Obama was a Senator in a party that controlled both houses of Congress beginning in 2007. Add to that the fact that President Bush was unusually catering to Pres-elect Obama after the November election, and not only did Bush consult with Obama, but at Obama’s urging he authorized the bailouts for insurance company AIG, for car corporations, and for the $700 billion TARP fiasco. Obama himself URGED the first $700 billion, the deficit “his administration” inherited was created by a budget that he and his party created in Congress just prior to his election as President. Not to mention everything else that has happened since then and he still continues to play the blame game. His first 20 months of debt and unemployment greatly outnumber that of Bush in 8 years.


Via Practical Man:

When I first started this project, I had a pre-conceived notion that congress was primarily responsible for the ups and downs of the economy and I expected the graphs to point that out graphically. My concept was sound and the graphs do tell the tale but as they say “the devil is in the details” and you must know EXACTLY what you are looking at. Here are some observations on the following Unemployment graph.

1. We are told Unemployment is a “lagging indicator”. So the unemployment numbers stay low during the beginning of the bad times and stay low after the numbers improve. We should be able to compare the graphs and see that.
2. The first period is under (R) George Herbert Walker Bush with both a Democrat Senate and House. Unemployment was high.
3. 1993 the presidency went from R to D with Bill Clinton. Still both houses Democrat. Unemployment was high.
4. 1994 Democrats loose both houses. We then begin a period of prosperity with (D) with Bill Clinton. Both houses Republican. Unemployment is dropping. You can credit Bill Clinton for this or you can credit congress. I believe Congress and particularly the House is more directly in control of budgets so I lean that way. What the graph doesn’t tell you is the stock market is booming and the country is undergoing a one of a kind boom due to the impact of this new thing called the Internet!! Whoo hoo we will all get rich, times are good. It is important to note here that while both houses were Republican, the Democrats Barney Frank and Christopher Dodd Chaired the committee which oversaw Fannie Mae and Freddie Mac. President Clinton and this pair pushed through the Community Re-investment Act of 1995 which lowered the Fannie Mae and Freddie Mac guidelines for home loans. This had a gradual positive effect for several years but set the stage for the housing boom of 2001-20033 when the stock market crashed. The REPUBLICANS DIDN’T HAVE TO VOTE FOR IT AND COULD HAVE STOPPED IT BUT DIDN’T. These were times of compromise and “working together”. Some good, like Welfare Reform, came of it but some bad did as well.
5. The year 2000 ( D) with Bill Clinton. House is Republican Senate Democrat, sees the burst of the dot com bubble. This marks the end of the good times and we should see unemployment go up as the technology companies lay off.
6. 2001 (R) George Bush House is Republican Senate Democrat sees us attacked on 911 which further destroys the stock market. Unemployment continues to rise.
7. 2002-2005 (R) George Bush Both houses Republican. The country recovers in spite of the costs of two wars and unemployment drops. Similar to the dot com internet boom there is a housing boom going on. This is created by the lowering of loan qualifications and discounted interest rates. People move from the stock market to real estate. As a personal foot note, some of us saw this coming. I told my wife “we have 2 years to buy 10 houses”, the market is TOO GOOD. You can buy a home for nothing down and rent it for the payment. This can’t last. everyone is bailing out of the stock market and they have to go somewhere. I expected the houses to go up 200%. We didn’t buy 10 but we did buy 5. The market expanded far beyond my predictions due to “crazy” lending practices and the houses went up 400%. We sold them at the peak, did a tax deferred exchange and retired 10 years early. I remember feeling sorry for the buyers but they wanted to buy them….
8. 2006 Republicans lose the House and Gingrich resigns. This is where the details are important. (R) George Bush both houses Democrat George Bush now has a liberal House and Senate. Unemployment is a lagging indicator. Unemployment is at it’s lowest point due to good policy and a housing bubble which is set to explode. 2007-8 the Housing Bubble bursts and begins the worst financial collapse since Jimmy Carter and possibly even back to the Great Depression. This crashing Housing Bubble is the underlying cause in loss of value of the “derivatives” you hear so much about from the “evil” Wall St crowd. Actually it works like this: Bank makes loan according to Fannie Mae guidelines, never intending to keep the loan, sells a “bundle” of those loans done exactly as Fannie Mae required. The bank gets their money back and repeats the process. Fannie Mae starts to run out of money so they bundle a bunch of the bundles the bank sold them and sell them to investors. There is a very low foreclosure rate at this time since most of the buying was done before the prices went out of sight. The bundles of loans “derive” their value from the history of good Fannie Mae loans in the bundles. The expected failure rate is very low based on “history”. But now the loans are with the looser guidelines and the houses are being sold at inflated values. Wall St isn’t “evil”, they just aren’t any smarter than the banks, Fannie Mae or the government. For the continuation of this saga read my post on tarp bailout pulling us back from the edge of a Great Depression.

I have tried to be as objective as I could in my analysis.
There were basically two recessions, one in 2000 which was extraordinary, being the internet bubble and explosion. The second was the Housing Bubble and its explosion. I don’t believe anyone caused the internet bubble pro or con and I state that in my Clinton Surplus analysis. But I do believe government causes the Housing Bubble and I tried to show the cause and who was to blame. It was a good intentioned attempt to increase home ownership by well intentioned people. But you know where the road with that for pavement leads. The government should just stay out of it. There are a certain percentage of people who are not responsible enough to own a home. Having reasonable lending qualifications helps maintain a reasonable balance and stable market. The other side of this equation was a higher than normal vacancy factor in rental housing. This too had a detrimental impact on investment and real estate markets.

Unemployment chart for the last 20 years



Who was in charge.

Here are some observations on the following GDP Rate change graph.

1. We are told GDP is a “leading indicator”. So the GDP numbers drop during the beginning of the bad times and regain swiftly after the numbers improve. We should be able to compare the graphs and see that.
2. The first period is under (R) George Herbert Walker Bush with both a Democrat Senate and House. GDP was low and jumped way up.
3. 1993 the presidency went from R to D with Bill Clinton. Still both houses Democrat. GDP was down but good
4. 1994 Democrats loose both houses. We then begin a period of prosperity with (D) with Bill Clinton. Both houses Republican. GDP is growing steadily. Again, you can credit Bill Clinton for this or you can credit congress. I believe Congress and particularly the House is more directly in control of budgets so I lean that way. What the graph doesn’t tell you is the stock market is booming and the country is undergoing a one of a kind boom due to the impact of this new thing called the Internet!! Whoo hoo we will all get rich, times are good. These were times of compromise and “working together”. Some good, like Welfare Reform, came of it but some bad did as well.
5. The year 2000 ( D) with Bill Clinton. House is Republican Senate Democrat, sees the burst of the dot com bubble. This marks the end of the good times and GDP falls off sharply entering 2001. We are in a Recession at this point. The GDP numbers that remain are left over from the beginning of the year. The Bush era is ushered in by a recession and declining economy. This is the 2000 recession of which not much is said.
6. 2001 (R) George Bush House is Republican Senate Democrat sees us attacked on 911 which further destroys the stock market. GDP takes a hit but survives and remains positive.
7. 2002-2005 (R) George Bush Both houses Republican. The country recovers in spite of the costs of two wars and unemployment drops. Similar to the dot com internet boom there is a housing boom going on. This is created by the lowering of loan qualifications and discounted interest rates. People move from the stock market to real estate. Times are still good and GDP does well. We are building homes like crazy.
8. 2006 Republicans lose the House and Gingrich resigns. This is where the details are important. (R) George Bush both houses Democrat George Bush now has a liberal House and Senate. You can see GDP is declining but it is really a continuation of the decline of the year before as the housing market starts to slow. I don’t give government a plus or minus here, the dice are cast and the path is already certain.
9. 2007-2008 (R) George Bush Both houses Democrat. GDP drops to Zero. The bubble bursts and has a HUGE impact on the economy. Henry Paulson declares a financial emergency and both parties fall into lock step. For the continuation of this saga read my post on tarp bailout pulling us back from the edge of a Great Depression. Whether or not there was a real catastrophe pending I will leave for you to decide. It is possible it required nothing more than a change back from a government forced accounting method known as “mark to market” back to “book value” to solve the entire problem. This was proposed by many but the whole country was in a panic. This is all discussed in the article.
10. 2009 (D) Barack Obama with both a Democrat Senate and House. GDP tanks and we have the first major period of recession since Jimmy Carter. Tarp Panic and massive “emergency” spending sent the country into a spiral. This is in red italics because it is opinion. The housing bubble was clearly worse than the Internet bubble but of course, it was government made vs. natural. It can be argued that the spending helped but I don’t buy it for a minute. The REASON we had a GREAT Depression was the same stupid economic policies. They prolonged the depression was not GREAT in other countries, only here. They failed in Japan when they tried them and they failed again. Please, if your spouse proposed borrowing on your credit cards to maintain your spending levels when you lost your job do you think that would be a winning strategy? A recession which would have been over by now has become the GREAT Recession. There is nothing Great about it. But it is not a coincidence that FDR, Jimmy Carter and Barack Obama stand out as the overseers of the 3 worst economies of the last 100 years.

I have tried to be as objective as I could in my analysis.
It seems to me both graphs tell the same story. How you interpret that is up to you. I have kept my opinions where they are easily identified. If you find I was inaccurate or biased in my presentation of the facts please let me know so I can make corrections. If you disagree with my conclusions or comments in red let me know that as well and we can begin a discussion.

GDP Growth Rate last 20 years

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