prohibits the SEC from regulating the rating methodologies used by NRSROs (Credit reporting agencies, 2014).
After the 2008 housing bubble. Credit rating agencies use a business model that is characterized by a fundamental conflict of interests (New rules will fail to reform ratings agencies, 2014). In a painful reminder that greed can infect an entire industry, the 2008 housing bubble focused attention squarely on the CRA sector. According to Baker (2008), prior to the 2008 housing bubble burst, “Banks paid for the rating of their bonds by credit agencies,” a practice that “should have prompted more concern from regulators” (2008, p. 73). These lax practices resulted in enormous… Continue Reading...
significant asset inflation (stock market at all-time highs, bond yields at all-time lows, the housing bubble re-inflated, precious metal prices soaring, food costs soaring, and so on). If this were rational self-interest, the argument could surely be made that those players who had adopted foolish strategies in the marketplace should be made to take it on the chin and accept the repercussions, even if it meant pain for the global economy as a result. What resulted however was not this but rather the prevailing of a concept known as “privatized gains and socialized losses”—i.e., the players who had friends in high places in government… Continue Reading...
housing bubble that had grown under Bush II popped in 2007-08 and caused GDP to crash deep into negative territory in 2009 (Amadeo). This was certainly not Obama’s fault, but the perception among some was that Obama was at least partly responsible for the state of things—especially since he voted for TARP, the bailout that allowed the big banks to put the burden of their mistakes on the backs of tax payers to the tune of hundreds of billions of dollars (Hoven). However, and as Randall Hoven points out, the… Continue Reading...
had been sucked off it, remembers Sen. Christopher Dodd (D-Conn.) (TPF, 2009).
With the housing bubble bursting and trillions of dollars in mortgages beginning to go bad in the year 2007, fear began to spread through the big firms that are the heartbeat of Wall Street. By spring 2008, with billions worth of bad mortgages on their back, Bear Stearns -- an investment bank -- was rumored to be near collapse. The problem with such kind of rumors is that they can put so much strain on a financial institution that they get to bust. The financial markets had become volatile and no company… Continue Reading...
security growth in the post 9/11 world -- and following the banking implosion of 2008 in the wake of the housing bubble crisis, bailouts would further increase the deficit, putting Americans even further on the hook (Burton, 2016). If anything, these decades showed that Congress was not really doing anything to reduce the deficit: its actions were impotent and the outcomes evident -- the deficit has increased dramatically. Congress is simply dysfunctional (Binder, 2015).
The budget does not exist in a vacuum. The deficit is the result of a number of policies and actions taken by Congress and the White House via Executive Order. Any legislative attempts to reduce the… Continue Reading...
10% till 2000, whereupon the bursting of the tech bubble/dotcom bubble precipitated a further decline4% by 2003followed by a bounce back to a high of 8.25% in 2006 (at the height of the housing bubblewhich burst the following year, bringing the market down with it). Today, rates sit at 3.5% and the Fed has been very cautious about raising them even just 25 basis points, eyeing a fragile global economy and surely taking note of the impact that a rate rise would have on certain asset classes (like real estate, stocks, and bonds).
The economic factors that impacted the interest rate changes over the past three and half decades cannot be divorced from the Feds own economic policies and the political variables acting… Continue Reading...
