As of 9-30-2007 we owe the SSI trust fund 2.2 trillion

Good Luck said:
Yes, you hit it on the head, and what the government has been basically doing for over 50 years. Encouraging people to purchase on credit is what they use to prop up our unstable economy. Buy a house on credit and we'll let you deduct some of the credit expenses from your taxes. Buy, buy, buy because that stimulates economic growth.

You did well back then, as did a majority of people who acted as you did. (I already had my house paid for and did not desire to go in debt to buy another.)

Then there were the small minority who did NOT do well. But too bad for them, huh?

So we come to 1999, and the changes made to GLBA. Those changes were NOT made, as you seem to imply, to give the banking corporations license to
grab profits at the expense of the consumer. The economy was stagnating in the face of the dot-com crash. To stimulate the economy, credit purchasing needed to be opened up even farther than it already was. But what business is going to make sub-prime loans unless the laws are changed so they can profit from sub-prime loans. A business exists to make a profit. Those who don't make a profit do not last long. This is not evil or wrong in itself, though undoubtedly there are those who did abuse the situation for their gain.

So the law was changed, the lenders opened up sub-prime loans to a sector of the economy who could not otherwise qualify for home loans. The economy was again stimulated through encouragement of deficit spending. People bought houses. Contractors built more houses due to increased demand. Lumber companies and other manufacturing facilities sold the materials to build the houses. Furniture stores, bed and baths, etc. sold items to furnish, decorate and stock the houses. everyone was having a high time on deficit spending. And like 1993, the majority of people made good on the increased availability of housing credit.

But this time enough did NOT make it that the lenders themselves were left over extended, and we find ourselves in the sub-prime lending crisis.
Click to expand...

Actually, the GLB bill did make it easier for banks to market these subprime loans. It was the Fair Lending act of 1995 that forced banks to offer more subprime loans. The GLB act helped take the liability off of the lenders as they were able to turn around and sell the loans into the investment vehicles.

What Desh fails to understand is that the CDOs are NOT new. They have been around since the late 1980's. GLB simply allowed banks and brokerages to merge and thus removed some of the due dillegence that was there in the past.

The cause of the blow up is the 40 year lows in interest rates.... and the increased pressure from the idiots in DC to get "more people owning homes than ever before". The CDO and SIV universe exploded during the low interest rate period because investors were looking for higher yielding securities given the low rates on treasuries, munis and even many corp bonds. These CDO investments provided the higher yields they were looking for at the time.

What Desh also fails to understand (largely because she wants to blame Reps... especially with Gramms ties to McCain) is that the Glass Steagall Act's dismantling process actually occured from 1992 to the early 2000's. It was not one bill that killed it. GLB was certainly a part of it, but not all encompassing as she wishes to believe.
 
Remember all the talk for the last several years, about how Social Security would go bankrupt in (6,7,9,12,13,15,20,30, insert latest politician's number here) years? They basically said it would be able to keep paying out benefits on schedule, until that time. After that, all the money in the Trust Fund would be gone, and contributions into the fund weren't enough to make the payments of benefits after that.

Well, guess what. All of those numbers assumed there would be CASH in the trust fund, ready to pay out, and that the cash would run out after that many years.

But there isn't even cash in the trust fund. Just a bunch of IOU's from other parts of the government who "borrowed" the funds. This means, that for the trust to last even as long as the politicians predicted, all those funds needed to be paid back in to the SS trust fund, so they could then be paid out to retirees etc.

BTW, the Social Security Trust fund isn't the only one the Fed govt has. There's also the Medicare Trust Fund, the Highway Trust Fund, the Federal Employee's Retirement Fund, and a bunch of others. (see http://www.census.gov/compendia/statab/tables/08s0462.xls). And the Fed govt has been "borrowing" from every one of them.

In 2006, the National Debt had reached $8.4 trillion (Yes, trillion with a "T"). And of that, $3.6 trillion was owed to these trust funds. That's about 43% of the entire National Debt. (see http://www.census.gov/compendia/statab/tables/08s0456.xls)

So, if you believe the prediction that SS and other trust funds would last another, say, 20 years, that means that the government would have to pay back the money it borrowed from them by that time, so that the funds could then be paid out to the people getting benefits as scheduled.

Does anyone know of any government plans to pay off 43% of the National Debt in the next 20 years? Me neither. Last time I checked, the National Debt was increasing every year, and has been since at least the 1930s.

(The stories the Clinton administration told about running surpluses for several years in the 90s, were just that: stories. We have never run a surplus in living memory. Imaginative bookkeeping just made it look like we did... but the National Debt increased in every one of those years, too).

But if that much isn't paid back by that time, those trust funds are going to start going bankrupt a lot sooner than that.

Something to keep in mind next time the Congress decides it's OK to raise the legal limit on the National Debt Ceiling for the 318th time.
 
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No One piece of leglisation cause this, there were multiple pieces of legislation involved, all staged to allow this to happen. Some safeties were removed that had worked well for many years and we shot ourselves in the foot. Perhaps both feet, time will tell.
 
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