FDR’s Economic Policies FAILED. But Don’t Take My Word For It, Listen To Obama’s TOP Economic Adviser

Everyone ought to be familiar with the words of Franklin Delano Roosevelt’s Treasury Secretary:

“We have tried spending money. We are spending more than we have ever spent before and it does not work. And I have just one interest, and if I am wrong … somebody else can have my job. I want to see this country prosperous. I want to see people get a job. I want to see people get enough to eat. We have never made good on our promises… I say after eight years of this Administration we have just as much unemployment as when we started… And an enormous debt to boot!” – Henry Morganthau, FDR’s Treasury Secretary, May 1939

And for the record, in April 1939, the unemployment rate was 20.7%.  Anybody who thinks that FDR’s policies did anything but dig us deeper into depression are morons.

But few Americans have ever heard those words from that FDR economic official.  It’s an example of the kind of thing the mainstream media – or what should more accurately be called the progressive propaganda conspiracy – is designed to prevent you from knowing.  They regard themselves as “gatekeepers” of the news, and they want to be able to decide what you get to know and what you should not know.

If you knew that FDR’s very own Treasury Secretary had openly admitted that FDR’s economic policy had failed, you would probably not want to try that path again.  And the mainstream media – which is firmly under the control of the liberal/progressive/socialist/Democrat agenda – simply doesn’t want you to come to such an accurate and informed opinion.

So it really shouldn’t surprise me very much that I was unaware of the words of “President Barack Obama’s top economic adviser,” Lawrence H. Summers, on the economic policies of FDR:

Larry Summers blasphemy: Hitler saved FDR’s ass
by Lee on July 23, 2011 21:16 pm

Larry Summers is often quotable and Charlie Rose is occasionally watchable. Put ‘em together and you get the very definition of a blind sow finding an acorn.

The whole clip is interesting, but the money quote begins a hair after the 21:30 mark when Summers says something about left wing icon FDR that will undoubtedly result in fewer dinner invitations in the Hamptons this summer:

“Never forget, never forget, and I think it’s very important for Democrats especially to remember this, that if Hitler had not come along, Franklin Roosevelt would have left office in 1941 with an unemployment rate in excess of 15 percent and an economic recovery strategy that had basically failed.”

Why next thing you know Summers will be saying that Keynesian economics don’t work.

Clip here to watch the video: CharlieRose.com

Pardon me?

Nope.  I read it right.

After eight years of miserable failure, FDR would have and should have left office as a disgrace with a disastrous unemployment rate.  But Adolf Hitler bailed him out.  And the country rallied around their president – no matter how much or how badly he had failed them.

And the mainstream media decided it was unimportant that we know that – in spite of the fact that Obama had cast himself as the economic reincarnation of FDR:

It ought to interest the American people that FDR prolonged the Great Depression by seven completely unnecessary years of miserable anguish and suffering:

FDR’s policies prolonged Depression by 7 years, UCLA economists calculate
ByMeg Sullivan
8/10/2004 12:23:12 PM

Two UCLA economists say they have figured out why the Great Depression dragged on for almost 15 years, and they blame a suspect previously thought to be beyond reproach: President Franklin D. Roosevelt.

After scrutinizing Roosevelt’s record for four years, Harold L. Cole and Lee E. Ohanian conclude in a new study that New Deal policies signed into law 71 years ago thwarted economic recovery for seven long years.

“Why the Great Depression lasted so long has always been a great mystery, and because we never really knew the reason, we have always worried whether we would have another 10- to 15-year economic slump,” said Ohanian, vice chair of UCLA’s Department of Economics. “We found that a relapse isn’t likely unless lawmakers gum up a recovery with ill-conceived stimulus policies.”

In an article in the August issue of the Journal of Political Economy, Ohanian and Cole blame specific anti-competition and pro-labor measures that Roosevelt promoted and signed into law June 16, 1933.

“President Roosevelt believed that excessive competition was responsible for the Depression by reducing prices and wages, and by extension reducing employment and demand for goods and services,” said Cole, also a UCLA professor of economics. “So he came up with a recovery package that would be unimaginable today, allowing businesses in every industry to collude without the threat of antitrust prosecution and workers to demand salaries about 25 percent above where they ought to have been, given market forces. The economy was poised for a beautiful recovery, but that recovery was stalled by these misguided policies.”

Using data collected in 1929 by the Conference Board and the Bureau of Labor Statistics, Cole and Ohanian were able to establish average wages and prices across a range of industries just prior to the Depression. By adjusting for annual increases in productivity, they were able to use the 1929 benchmark to figure out what prices and wages would have been during every year of the Depression had Roosevelt’s policies not gone into effect. They then compared those figures with actual prices and wages as reflected in the Conference Board data.

In the three years following the implementation of Roosevelt’s policies, wages in 11 key industries averaged 25 percent higher than they otherwise would have done, the economists calculate. But unemployment was also 25 percent higher than it should have been, given gains in productivity.

Meanwhile, prices across 19 industries averaged 23 percent above where they should have been, given the state of the economy. With goods and services that much harder for consumers to afford, demand stalled and the gross national product floundered at 27 percent below where it otherwise might have been.

“High wages and high prices in an economic slump run contrary to everything we know about market forces in economic downturns,” Ohanian said. “As we’ve seen in the past several years, salaries and prices fall when unemployment is high. By artificially inflating both, the New Deal policies short-circuited the market’s self-correcting forces.”

The policies were contained in the National Industrial Recovery Act (NIRA), which exempted industries from antitrust prosecution if they agreed to enter into collective bargaining agreements that significantly raised wages. Because protection from antitrust prosecution all but ensured higher prices for goods and services, a wide range of industries took the bait, Cole and Ohanian found. By 1934 more than 500 industries, which accounted for nearly 80 percent of private, non-agricultural employment, had entered into the collective bargaining agreements called for under NIRA.

Cole and Ohanian calculate that NIRA and its aftermath account for 60 percent of the weak recovery. Without the policies, they contend that the Depression would have ended in 1936 instead of the year when they believe the slump actually ended: 1943.

Roosevelt’s role in lifting the nation out of the Great Depression has been so revered that Time magazine readers cited it in 1999 when naming him the 20th century’s second-most influential figure.

“This is exciting and valuable research,” said Robert E. Lucas Jr., the 1995 Nobel Laureate in economics, and the John Dewey Distinguished Service Professor of Economics at the University of Chicago. “The prevention and cure of depressions is a central mission of macroeconomics, and if we can’t understand what happened in the 1930s, how can we be sure it won’t happen again?”

NIRA’s role in prolonging the Depression has not been more closely scrutinized because the Supreme Court declared the act unconstitutional within two years of its passage.

“Historians have assumed that the policies didn’t have an impact because they were too short-lived, but the proof is in the pudding,” Ohanian said. “We show that they really did artificially inflate wages and prices.”

Even after being deemed unconstitutional, Roosevelt’s anti-competition policies persisted — albeit under a different guise, the scholars found. Ohanian and Cole painstakingly documented the extent to which the Roosevelt administration looked the other way as industries once protected by NIRA continued to engage in price-fixing practices for four more years.

The number of antitrust cases brought by the Department of Justice fell from an average of 12.5 cases per year during the 1920s to an average of 6.5 cases per year from 1935 to 1938, the scholars found. Collusion had become so widespread that one Department of Interior official complained of receiving identical bids from a protected industry (steel) on 257 different occasions between mid-1935 and mid-1936. The bids were not only identical but also 50 percent higher than foreign steel prices. Without competition, wholesale prices remained inflated, averaging 14 percent higher than they would have been without the troublesome practices, the UCLA economists calculate.

NIRA’s labor provisions, meanwhile, were strengthened in the National Relations Act, signed into law in 1935. As union membership doubled, so did labor’s bargaining power, rising from 14 million strike days in 1936 to about 28 million in 1937. By 1939 wages in protected industries remained 24 percent to 33 percent above where they should have been, based on 1929 figures, Cole and Ohanian calculate. Unemployment persisted. By 1939 the U.S. unemployment rate was 17.2 percent, down somewhat from its 1933 peak of 24.9 percent but still remarkably high. By comparison, in May 2003, the unemployment rate of 6.1 percent was the highest in nine years.

Recovery came only after the Department of Justice dramatically stepped enforcement of antitrust cases nearly four-fold and organized labor suffered a string of setbacks, the economists found.

“The fact that the Depression dragged on for years convinced generations of economists and policy-makers that capitalism could not be trusted to recover from depressions and that significant government intervention was required to achieve good outcomes,” Cole said. “Ironically, our work shows that the recovery would have been very rapid had the government not intervened.”

Don’t you think this would have been highly relevant for the American people to know in 2008 when Obama was running as FDR’s long-lost ideological twin???  I don’t know, maybe Time Magazine (the magazine that eulogized FDR as the bestest and most wonderfulest president ever ever, I noticed from the article above) could have ran this article instead of photoshopping Obama into their socialist hero.

I get so pissed off so often about how utterly dishonest the media is.

I mean, Scott McClellan wrote a book attacking President George W. Bush that I heard about for weeks and weeks in the press in 2008.  It didn’t matter how many lies and half-truths that amounted to whole lies might have been in it; it was anti-Bush; it was NEWS.

But when President Obama’s TOP ECONOMIC ADVISER basically says that Obama’s entire premise for the economy of the United States had already been a documented historical failure – which the prudent person should therefore expect to fail AGAIN – shouldn’t like SOMEBODY have reported that fact???

And now here we are, grinding our national gears and SUFFERING.  We’ve had a massive and massively failed $3.27 TRILLION “stimulus.”  We’ve had an absolutely godawful takeover of the health care system that is frankly so damaging to the economy that half of the 1,372 waivers (as of May 16) were requested by and given to the very liberal unions who had PUSHED FOR OBAMACARE IN THE FIRST PLACE.  We’ve had the absolutely disastrous Dodd-Frank financial regulations that have so stifled investment that EVEN ÜBERLIBERAL FINANCEER GEORGE SOROS said he couldn’t continue operating under such requirements.  We’ve got Obama’s packed National Labor Relations Board basically playing the role of union thug laying a beatdown on Boeing for daring to build a plant in a right-to-work state.

And these FDR-Obama Democrats say, “We’re doing all of this to help the poor.”  And it’s just a LIE.  They HURT the poor.  Over and over again, THEY HURT THE POOR.

Black people have been devastated.  Women have been devastated.  Under Obama, we’re seeing the highest poverty rate increase in fifty years

And the news we’re hearing right now is simply awful.

Manufacturing has tanked.  Consumer spending is the lowest since when we were seeing the panic-side of the “great recession” in October 2008.  The housing crisis is WORSE than – you guessed it – FDR’s Great Depression.  The credit rating agencies are giving the U.S. a negative outlook for the year.  China’s credit rating agency (remember who we borrow from!) just cut our rating for the second time in history – with both times occurring in Obama’s failed presidency.  Food stamp enrollment is at an all-time high, with one in six on the program.

And because we live in an age of constant media deception and propaganda, the news of Obama’s mishandling of the economy is always “unexpected.”

Here we are, déjà vu and voilà, in the worst shape since the LAST time FDR’s policies were poisoning America.  And we don’t learn because the media won’t LET us learn.  But you find out that FDR’s “progressive tax rates” that attacked the rich actually ended up hurting the poor as the rich sheltered their wealth to protect themselves and their families and the poor bore the brunt of economy and employment-killing taxation policies.

Obama is back to the same utterly failed Marxist class warfare tactics that have always failed before. In the 1990s, Democrats imposed a “luxury tax” on items such as yachts, believing that the wealthy “could afford it.” Maybe they could and maybe they couldn’t, but the FACT was that the rich STOPPED buying yachts. As in stopped completely.  As in NOBODY bought a yacht with that damn tax on it. The Democrats finally rescinded that stupid tax two years later after destroying the yacht building and yacht maintenance industries and killing over 100,000 jobs. Rich people weren’t hurt at all; ordinary people were devastated.

And now Obama wants to do the same thing with corporate jets that previous Democrats did to yachts. And they only people who will get hurt if Obama gets his way are the companies that hire people to build and maintain those jets and the workers themselves who will lose their jobs and their livelihoods. And the only thing that is stopping this rape of businesses, workers and the economy that depends on workers and businesses are Republicans – who are trying to do the right thing and make the tough decisions necessary to lead in the face of constant demagoguery.

And people wonder why this economy is struggling, and why it will CONTINUE to struggle until this FDR-clone (or clown?) is finally gone.

Tags: , , , , , , ,

16 Responses to “FDR’s Economic Policies FAILED. But Don’t Take My Word For It, Listen To Obama’s TOP Economic Adviser”

  1. Anonymous Says:


    Great read !!! If only this information was offered to the public along side the other “crap” they get from the lamestream media, they would see the deceitfulness. In my speaking to others, whether it be friends or strangers, I’m always so surprised how misinformed most people are, it’s scary. The majority of the electorate is unintelligent, uninformed and basically greedy little bastards that only want to hear that they’re getting something for free. I fear the greatness of the country has slipped into the abyss.

    In CA we have more bottom feeders than in any other state I fear. I especially blame the Hispanic race for their constant ILLEGAL intrusion into our country and the rape and pillage of all our services that are intended for the “temporary” downtrodden. When you can ignore the law of a country, get a job without having to pay taxes, give birth to children for free, feed those kids for free and then educate them for free, all this on the backs of hard working legal US citizens, you have no “skin in the game”. When something is given to someone for free, humans place little value in that something. This is why Hispanics don’t really care about education and aspirations for their children to become more than gardeners and maids. They have little to nothing invested. And we’re all suckers because we allow it to happen via liberal moronic judges that constantly overturn the will of the people.

    Sorry for making that hard right turn and rambling, I’m just getting a little fed up these days as I drive through Santa Ana, CA, it’s just like I crossed the border !!!


  2. Jojo Says:

    The blog is NON-STOP. I have too many liberal friends, I’ll be the first to admit it. They used to walk around spouting off their idiotic policies and talking points. Cowardly I didn’t dare rebut them, I wasn’t armed. Now thanks to your blog I am mentally equipped, hell I have an arsenal at my disposal! Without pause I destroy their fallacious arguments and dare them to even think of trying to refute my stance. I feel like I am some Conservative Rambo!

  3. Michael Eden Says:


    That is MAGNIFICENT. You made my day. And for the record, what you are saying is PRECISELY why I felt I needed to get into blogging.

    My goal was to help conservatives refute bad liberal arguments (which are often leaded with false presuppositions and bogus “facts”) and thus stand their ground. And I wanted to persuade the persuadable.

    Many liberals AREN’T persuadable. They are radically confined in a distorted and perverted view of the world. They cannot even possibly see the world as it really is. They have radically willed themselves to be stupid even if they are otherwise intelligent. Such people need to be refuted so that others around them will be able to see that they are fools, lest they produce even more fools.

    Part of the problem we have as conservatives is that there are a lot of assertions that are masquerading as “facts.” As an example, here’s one: “FDR got us out of the Great Depression.”

    Well, no he didn’t. And as I document in this article I don’t even have to go to conservative thinkers to refute that premise: I can merely go to FDR’s own primary cabinent and I can even go to prominent liberals today.

    And then I can go to the conservative thinkers – such as Burton Folsom, Jr. (New Deal or Raw Deal) and Amity Shlaes (The Forgotten Man) – to utterly crush any stupid assertion that FDR did anything other than perpetuate misery.

    The research on the subject is rather clear: “FDR’s policies prolonged Depression by 7 years, UCLA economists calculate.” And here’s a link to their work: http://www.econ.yale.edu/seminars/echist/eh02/ohanian-021008.pdf

    Here’s a piece by Amity Sclaes.

    Here’s one by Thomas Sowell.

    Even fairly liberal treatments of FDR that want to defend him can only present the most touchy-feely of subjective arguments to counter an avalanche of concrete facts. Here’s one such from CNN.

    Another even more substantive article gives you an example of how liberals have ALWAYS gone from a touchy-feely subjective claim straight to demonization:

    To those of us living in more knowledgeable times, Schlesinger’s excitement over The Coming of the New Deal, the second volume of the Age of Roosevelt trilogy, is difficult to fathom. The New Deal legislation was ad hoc and the programs ineffectual in reducing unemployment. The basis of Schlesinger’s excitement lies not in the efficacy of New Deal solutions but in the growth of government as such. In the third volume, The Politics of Upheaval, Schlesinger disposes of New Deal opponents as people lacking in compassion who are opposed to the utilization of government to provide economic security to the common man.

    We “conservative Rambos” (and I really like the sound of that) have to be able to understand our opponent’s arguments – specifically their lack thereof actual arguments – and attack them with the facts and with the truth.

  4. Michael Eden Says:


    I’m a Californian too. To quote Slick Willy, “I feel your pain.”

    I don’t blame Hispanics on one fundamental level: if I were Mexican, and my family needed to eat – and my failed society was incapable of producing stability or jobs – I’d come here, too. I would cross the border and I would work to feed my family. It’s easy to say, “Come here LEGALLY, then!” But that process can take years, and my kids are probably hungry right NOW.

    That said, who DO I blame?

    I blame that same Mexican who comes to this country and doesn’t begin to appreciate the difference in freedom and prosperity and then consider what made that freedom and prosperity possible in the first place. Instead, what many of these Hispanic people do is escape one failed hellhole and then begin to agitate to create the very same type of failed hellhole HERE. I DO blame them for that.

    I blame the politicians – in BOTH political parties – who have allowed some 20 million people to come here illegally. You’ve got that “Chamber of Commerce” establishment Republican who wants cheap labor, and you’ve got your Democrat who wants cheap votes. The DEMOCRATS ARE FAR MORE THE PROBLEM BECAUSE THAT DOMINATES THEIR THINKING versus the “CoC” Republicans who are a small minority. But ultimately the problem isn’t “Mexicans’ fault”, it is OUR fault for letting it happen.

    I blame political correctness which has essentially mandated that we can only view the problem of illegal immigration in a self-serving way that can only lead to one conclusion. Political correctness is a large, coordinated effort to change Western culture as we know it by redefining it. The view is that language is reality, and if they can shape the language they can create the reality. Early Marxists designed this game plan a long time ago and Marxists continue to execute it today — and now liberals are picking up the same tactic: to control the argument by controlling the “acceptable” language. Those with radical agendas understand the game plan and are taking advantage of an oversensitive and frankly overly gullible and stupid public.

    My view of illegal immigration derives from what Paul said in 1 Timothy 5:8, “If anyone does not provide for his relatives, and especially for his immediate family, he has denied the faith and is worse than an unbeliever.” Which is to say that we are “providing” for tens of millions of people who are NOT our own which does nothing more than undermine our ability to take care of our own.

    Democrats have this, “How can you be so unfeeling?” And my first response to them is that if these people voted overwhelmingly Republican, you’d be a lot more unfeeling toward them than I am. And I’m actually a lot more consistent than liberals: I wouldn’t want Canadians or any other group pouring into the country illegally even if they voted REPUBLICAN.

    By the way, another reason I blame Democrats for this is a now little-known thing Democrats did in the mid-1960s to create “chain migration.” We USED to allow people in from all over the world based on their skills/abilities/training/education. We had an immigration policy that focused on selecting the best immigrants who would make America stronger. But Ted Kennedy and LBJ “fundamentally transformed” our immigration system to bring in the extended families of immigrants. And of course many of those people had no marketable skills in America. And that policy weakened us enormously.

    As to your excellent first paragraph, we’re seeing the fruits of that reality in the UK now. We’ve indoctrinated a generation of people who have an entitlement mindset that the government somehow ought to do everything for them. And the minute all the failed promises can’t be collected anymore, they are just as entitled to riot and loot as they are to get all the freebies benefits in the first place.

  5. Latisha Kim Says:

    FDR PROLONGED the Depression and saddled Americans with DECADES of future debt
    Carter’s failed national security policy weakened America’s defenses
    Clinton’s NAFTA and FAnnie Mae directives are the largest contributing factors to the economic mess we’re in today

  6. Michael Eden Says:


    That’s a good nutshell description of reality.

    Liberals want to say “both sides created the problems we’re facing today.” But that’s just crap.

    Take one particular issue that is – unbeknownst to most – responsible for 95% plus of our debt travesty. Social Security and Medicare and the explosions Republicans predicted for seventy years are responsible for a TRUE debt of $211 TRILLION.

    But even that doesn’t fully address the debt scandal that Democrats are responsible for. Try this one: the pensions that Democrats gave to public union employees are bankrupting America state by state even as Democrats bankrupt the entire nation all at once. California ALONE has a $500 billion pension bomb all by itself:

    California’s $500-billion pension time bomb
    April 06, 2010|By David Crane

    The staggering amount of unfunded debt stands to crowd out funding for many popular programs. Reform will take something sadly lacking in the Legislature: political courage.

    The state of California’s real unfunded pension debt clocks in at more than $500 billion, nearly eight times greater than officially reported.

    That’s the finding from a study released Monday by Stanford University’s public policy program, confirming a recent report with similar, stunning findings from Northwestern University and the University of Chicago.

    We either hold Democrats responsible and just plain hunt them down and burn them alive for what they did or else we’re going to suffer a depression that will result in the coming of the Anichrist.

  7. Gary Anderson Says:

    Sorry, we are doing nothing now and our recovery is slow too. We are stimulating banks, but not helping the people. The housing market is in the deep freeze, which is better, I guess, than the new housing bubble that the Republicans want. Summers too I bet.

    But many workers were saved by FDR. Many important projects were completed. If anything, cutting spending in 1937 resulted in a setback. Many people owe the salvation, financially, of their families to FDR. You are rewriting history.

    You want another housing bubble? Vote Republican and you will get one, as soon as they can figure out a way to guarantee securitized bonds. Mark my words.

  8. Michael Eden Says:


    I find people like you who are chock full of bogus assertions and completely empty on facts truly irritating.

    FDR prolonged the Great Depression by SEVEN YEARS. That is simply a fact.

    I didn’t know that Republicans were the ones who created Fannie Mae and Freddie Mac. I didn’t know that Republcians rammed the Community Reinvestment Act that forced banks to provide loans to people who couldn’t possibly pay them back.

    Look at the timeline:

    From the New York Times, September 30, 1999:

    Fannie Mae, the nation’s biggest underwriter of home mortgages, has been under increasing pressure from the Clinton Administration to expand mortgage loans among low and moderate income people and felt pressure from stock holders to maintain its phenomenal growth in profits.

    More. Again from the New York Times, September 30, 1999:

    In moving, even tentatively, into this new area of lending, Fannie Mae is taking on significantly more risk, which may not pose any difficulties during flush economic times. But the government-subsidized corporation may run into trouble in an economic downturn, prompting a government rescue similar to that of the savings and loan industry in the 1980′s.

    From the perspective of many people, including me, this is another thrift industry growing up around us,” said Peter Wallison a resident fellow at the American Enterprise Institute. ”If they fail, the government will have to step up and bail them out the way it stepped up and bailed out the thrift industry.”

    What do we have, even in the pages of the New York Times? A prediction that as soon as the economy cooled off, the mortgage market would explode like a depth charge and the government would have to step in to prevent a catastrophe. And from a Clinton program, at that.

    The same man – Peter Wallison – who had predicted the disaster from 1999 wrote a September 23, 2008 article in the Wall Street Journal entitled Blame Fannie Mae and Congress For the Credit Mess.”

    September, 2003:

    The Bush administration today recommended the most significant regulatory overhaul in the housing finance industry since the savings and loan crisis a decade ago.

    Under the plan, disclosed at a Congressional hearing today, a new agency would be created within the Treasury Department to assume supervision of Fannie Mae and Freddie Mac, the government-sponsored companies that are the two largest players in the mortgage lending industry.

    The new agency would have the authority, which now rests with Congress, to set one of the two capital-reserve requirements for the companies. It would exercise authority over any new lines of business. And it would determine whether the two are adequately managing the risks of their ballooning portfolios.


    ”These two entities — Fannie Mae and Freddie Mac — are not facing any kind of financial crisis,” said Representative Barney Frank of Massachusetts, the ranking Democrat on the Financial Services Committee. ”The more people exaggerate these problems, the more pressure there is on these companies, the less we will see in terms of affordable housing.”

    Representative Melvin L. Watt, Democrat of North Carolina, agreed.

    ”I don’t see much other than a shell game going on here, moving something from one agency to another and in the process weakening the bargaining power of poorer families and their ability to get affordable housing,” Mr. Watt said.

    Oh, and there’s this:

    Seventeen. That’s how many times, according to this White House statement (hat tip Gateway Pundit), that the Bush administration has called for tighter regulation of the government-sponsored enterprises (GSEs) Fannie Mae and Freddie Mac.

    September, 2003:

    “I want to begin by saying that I am glad to consider the legislation, but I do not think we are facing any kind of a crisis. That is, in my view, the two government sponsored enterprises we are talking about here, Fannie Mae and Freddie Mac, are not in a crisis. We have recently had an accounting problem with Freddie Mac that has led to people being dismissed, as appears to be appropriate. I do not think at this point there is a problem with a threat to the Treasury…

    The more people, in my judgment, exaggerate a threat of safety and soundness, the more people conjure up the possibility of serious financial losses to the Treasury, which I do not see. I think we see entities that are fundamentally sound financially and withstand some of the disastrous scenarios. And even if there were a problem, the Federal Government doesn’t bail them out. But the more pressure there is there, then the less I think we see in terms of affordable housing.” — Barney Frank, Democrat

    July, 2008:

    Fannie Mae and Freddie Mac are so big — they own or guarantee roughly half of the nation’s $12 trillion mortgage market — that the thought that they might falter once seemed unimaginable. But now a trickle of worries about the companies, which has been slowly building for years, has suddenly become a torrent.

    August, 2008:

    REP. BARNEY FRANK, D-MASS: “I think this is a case where Fannie and Freddie are fundamentally sound, that they are not in danger of going under. They’re not the best investments these days from the long-term standpoint going back. I think they are in good shape going forward.”

    The collapse begins in September, 2008 with the collapse of Fannie Mae and Freddie Mac:

    September 7: Federal takeover of Fannie Mae and Freddie Mac, which at that point owned or guaranteed about half of the U.S.’s $12 trillion mortgage market, effectively nationalizing them. This causes panic because almost every home mortgage lender and Wall Street bank relied on them to facilitate the mortgage market and investors worldwide owned $5.2 trillion of debt securities backed by them.[151][152]
    September 14: Merrill Lynch is sold to Bank of America amidst fears of a liquidity crisis and Lehman Brothers collapse[153]
    September 15: Lehman Brothers files for bankruptcy protection[154]
    September 16: Moody’s and Standard and Poor’s downgrade ratings on AIG‘s credit on concerns over continuing losses to mortgage-backed securities, sending the company into fears of insolvency.[155][156] In addition, the Reserve Primary Fund “breaks the buck” leading to a run on the money market funds. Over $140 billion is withdrawn vs. $7 billion the week prior. This leads to problems for the commercial paper market, a key source of funding for corporations, which suddenly could not get funds or had to pay much higher interest rates.[157]
    September 17: The US Federal Reserve lends $85 billion to American International Group (AIG) to avoid bankruptcy.
    September 18: Treasury Secretary Henry Paulson and Fed Chairman Ben Bernanke meet with key legislators to propose a $700 billion emergency bailout through the purchase of toxic assets. Bernanke tells them: “If we don’t do this, we may not have an economy on Monday.”[158]
    September 19: Paulson financial rescue plan is unveiled after a volatile week in stock and debt markets.

    Those are the facts.

    If you want a great depression that will make the last one look like a walk in the beach, if you want to stand in endless food lines where they run out of food so your kids go hungry again, vote Democrat.

  9. Ian Mega Says:

    And that’s why we lost WWII and have been under German domination ever since.

  10. Michael Eden Says:

    Ian Mega,

    I have a feeling you think you just made some kind of point, but danged if I have a clue what you’re talking about.

    You might as well be arguing that the rain in Spain falls mainly on the plain and therefore Obama is the greatest president in the history of the universe. We call your argument “non sequitur.” Because your comment has absolutely nothing to do with anything.

  11. Ritchie Kernighan Says:

    Please look into the pressure from Andrew Cuomo placed upon Fannie and Freddie to get into non investment grade mortgages. Cuomo was Secretary of HUD 1997 – 2001. This is when he initiated the big push.

    The pressure from Cuomo was to include SUB PRIME lending as part of GSE portfolio support, to create “lines” as it were. He sought that because his mission was Community Lending, and he was out to hit a “home run”. He worked on this with apparent passion and tireless resolve.

    The GSE’s essentially act as a secondary market for bank and mortgage bank mortgage origination, and in some cases as an insurer of securitizations of mortgage portfolios. Standards at these entities matters greatly. If the GSE group does NOT accept Sub Prime, then modest amounts of that kind of loan are made, but if the GSE group creates a special product which ACCEPTS Sub Prime, bingo! You now have the run up in Sub Prime loan origination, it’s securitization, and all other elements needed to have debacle type run up. Fannie and Freddie vacuumed up tons of Sub Prime loans in the years of 2005 to 2007.

    These changes at FNMA and FHLMC also had the effect of putting pressure upon the private label (Investment Bank mostly) market for mortgage securitization products. The previous situation is explained in the article referenced below. As this unwinds we see increasing desperation in this part of the mortgage business. Some even leave the area (Morgan Stanley, one of the original IB firms first doing this, gets out around this point; they sense bad things are to come).

    This American Spectator article does a pretty good job of covering it. The whole area of the recent debacle is a vast study area, but there is little doubt that Sub Prime and Private Label CMO lines were a big part of the collapse:


  12. Michael Eden Says:

    Ritchie Kernighan,

    I completely agree, but while I haven’t been mentioning “Andrew Cuomo,” I have been pointing out that it was BILL CLINTON and DEMOCRATS who were ENTIRELY responsible for this disaster that they somehow managed (through a fascist leftist media) to blame on Bush and Republicans.

    Andrew Cuomo is a career Democrat appointed by Bill Clinton. I have documented Bill Clinton’s massive involvement in enormously escalating the role of Fannie and Freddie to become the entity that would necessarily implode and directly quoted the conservative economists and Republican leaders who PREDICTED that collapse.

    I’m glad you are aware of it, and I’m glad that American Spectator covered it (I didn’t know about the article). But you merely help confirm what I have been pointing out since 2008 when I started writing about this.

  13. Ritchie Kernighan Says:

    I am impressed with what you have here, so I thought I’d add this bit about Cuomo, who is not likely to lie low forever.

    It’s a many faceted story, but as you say, there were many instances where Clinton admin and other Dem leaders sought to coddle Fannie and Freddie, and to take risks with them. GOP leaders tried to reign in either abuses at the GSEs or tried to create oversight for them (the normal pattern). I just read (it might be your material) that 17 occasions occurred where the Bush admin tried to create oversight or otherwise reign in FNMA and FHLMC.

    The problem, as you and I know, is there is no “magic” way to provide housing, to alter supply and demand. The most effective way to provide greater amounts of affordable housing is to allow builders of housing largely unfettered ability to BUILD HOUSING. It’s pretty simple, its classical liberalism, free market economics, and it works. Instead, we often hamstring builders with ludicrous regulations, then wonder why housing costs skyrocket. It has little to do with lending directly (except that rising market values can justify greater collateral value, and thus loan face amounts rise, but they “follow” the market values). It relates directly to the difficulty in building new projects, or re-mediating old ones.

    Thanks for your web site work!

  14. Michael Eden Says:

    Ritchie Kernighan,

    Yeah, I have on multiple occasions provided the statement plus the supporting source that Bush tried seventeen times to prevent the fiasco known as Fannie and Freddie from collapsing.

    You couldn’t be more right about housing for poor. If governments allowed builders to simply BUILD, we wouldn’t have these problems. But it is frankly amazing the hoops you have to squirm through to build anything. At my church, we would like to make improvements in our land by building a driveway on the north side. There is no development whatsoever on that side. We would like to build a concrete entryway and a paved road. It would be a GOOD thing, right? It would create jobs, it would improve the property and the area. But the county is like, “What’s in it for US? Why should we just LET you do that?” And there are simply all kinds of assessments and fees and taxes and conflicting bureaucracies. And it’s like, maybe let’s just not bother.

    Democrats offer government as the solution to help the poor when there is NO entity on the face of the earth that is a bigger obstacle to a poor person than government.

    Going on, you look at the MOST expensive areas to home homes, and I guarantee you that EVERY SINGLE ONE OF THEM IS LIBERAL. The cost of owning a home SKYROCKETS when liberals are allowed to run a government. Check the price of am average house in Texas or in Oklahoma and then do a comparison in a blue state like Massachusetts or California and see what you get. You look at the damn cost of living in a blue state or a blue city and compare it to the cost in a red state or a red city and it aint even CLOSE.


    Which is another way of saying if you want to know the REAL reason poor people can’t afford to buy a damn house, it’s because of the party of Government as God, the Democrat Party.

    Consider the proto-typical blue city of San Francisco: think about it: how could that city fail? It’s got one of the largest port facilities in the world!!! And to put it in Obama’s words, “[liberalism] didn’t build that.” GOVERNMENT didn’t build that port; GOD built that port in the sense that the natural port was there when the first INDIANS got there. And back east, they’re not merely “wealthy,” they are INSTITUTIONALLY WEALTHY. Wealth accumulated in the east for more than 200 years before Americans began any serious move westward. You can be truly seriously stupid and wasteful when you’re filthy rich. Which explains the mindset of filthy, seriously stupid liberals when it comes to spending. And, of course, in the spirit of the very richest tycoons they love so much to vilify, Government-worshiping Democrats accumulate government wealth and power by stealing it from to other people.

  15. dynam01 Says:

    Reblogged this on I Didn't Ask To Be a Blog.

  16. Michael Eden Says:


    Thanks for reblogging. I just want the TRUTH out because I believe with Jesus that “the truth shall set you free.”

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 )

Connecting to %s

%d bloggers like this: