Did 9/11 Cause the Financial Crisis?

prospect.org.../11_cause_the_financial_ crisis

"http://prospect.org/cs/articles?article=did_9/11_cause_the_financial_crisis"

I find this article true and most people don't see the forest because of the trees so they never connect the dots to understand what happened. This is something people should do more of specially the reporters out there. Cause and effect is something that is ignored to much by the MSM. The MSM just want to do reports on effects and ignore the cause. But I guess picture of a disatour sells not th story of why it happened.

Before Hurricane Katrina in 2005, the state of Louisiana asked the Bush Administration several times to fund the Southeast Louisiana Urban Flood Control Project, resources that would have gone toward building up drainage and flood-protection infrastructure in New Orleans. Instead, the federal government cut its funding every year, starting in 2002. A January 2005 memo from the Office of Management and Budget (OMB) denied their last request before the storm, explaining that flood protection was not one of the administration’s priorities; at the time, “fighting the War on Terror,” “strengthening our homeland defense,” and pro-growth economic policies took precedence, the OMB explained.

Even after New Orleans and other parts of Louisiana and Mississippi were under water, the federal government’s focus abroad kept it from responding effectively: 8,200 National Guard troops whose job it would have been to respond to just such a crisis, along with two brigades’ worth of their equipment, were stuck in Iraq. The financial cost—not to mention the cost in human lives—of Hurricane Katrina weighs in at around $100 billion. “It is undeniable,” says Anita Dancs, an economics professor at Western New England University who writes on the economics of war, “that we would not have had such a poor response had we not been in Iraq.”

And they go on to show the cause can have more then just one effect. A chain reaction is often created like the shattering of glass of a window is a bunch of small cracks but the spider webbing of the cracks can grow very large and cover the whole window and the cause is ussally a small little chip that started it all.

The Financial Crisis Inquiry Commissions (FCIC), the bipartisan group asked by Congress to determine the causes of the crisis, wrote in its final report that in that during this time, “Money washed through the economy like water rushing through a broken dam. Low interest rates … helped fuel the boom.”

One of the consequences of money flowing through the economy, combined with low-interest rates, was that banks were able to entice homebuyers with adjustable-rate mortgages that had low interest rates in the short term. But the Fed couldn’t—and didn’t—keep rates down forever. When they shot up starting in 2005, mortgage payments followed. Then the defaults began, and soon banks’ balance sheets were wiped out. After September 2008, the economy lost $648 billion to slower economic growth; the Troubled Assets Relief Program (TARP) cost taxpayers $230 billion; declining home-values cost homeowners $3.4 trillion; and the stock market lost $7.4 trillion in value.

“This is a ‘connect the dots’ situation,” Bilmes wrote in an email. The instability in the Middle East, she says, ” was one of the factors that led the Fed to lower interest rates so much which was one of the factors that contributed to the housing and credit bubbles, which were part of the reason for the financial crisis.” The point for Bilmes is that the wars had an impact on the economy beyond just increasing the Pentagon’s budget.

This article caught my attention because it reminds me of a thread I posted not to long ago. I tried to follow the little trails of the many things most people see wrong today to find a cause or trace it back to that small chip that started it all. I hope to see more of these kinds of articles that trace the effects back to the source so we can all learn from the past. For example right now Texas is burning to the ground. But if you follow the effect back to the cause you will find out Rick Perry has cut the budget of the fire department in Texas by 75%. So then you get a effect of Texas burning to the ground. And I would like to see ATS start doing threads where they can connect the dots and build bigger pictures of what is going on in this crazy world we all live in. And this is not a bash Republicans thread just a bash the people who are the cause of the major problems we are all having to live with.

Dismantling the Bush Empire of spying, war and Republican rule.
www.abovetopsecret.com...

The financial crisis really started about a 100 years ago with the creation of the Federal Reserve Bank. We've just had more bubbles created after every engineered boom and bust.

The dollar itself has depreciated 95% of its value since the birth of the Federal Reserve.

So did 9/11 cause the financial crisis? It only accelerated US debt to record breaking levels and other irresponsible policies carried out by the US Government. But it did not directly cause the 2008 sub prime crisis and the recent "in the works" 2011 Global Economic Crisis (which is going to be the worst ever in human history).

Looks very interesting but for one reason or another the article will not load for me at the TAP website. I'll make sure to try the site again and give this article a read.

Thanks for sharing.

reply to post by CasiusIgnoranze


I guess you could say the creation of taxes to support our military was the cause to. But what did our country do they doubled down with another untouchable money pit that nobody can stop. Homeland Security. You would be chased with pitch forks if you ever said you need to cut there speding. And what do they do with the money? How about the protection of Libyas internet or Chinas internet. Why does our homeland security include China, Libya and other countries infrastructure? Our they part of our homeland?

www.abovetopsecret.com...

www.reuters.com...

NEW YORK, June 16 (Reuters) - Software widely used in China to help run weapons systems, utilities and chemical plants has bugs that hackers could exploit to damage public infrastructure, according to the U.S. Department of Homeland Security.

The department issued an advisory on Thursday warning of vulnerabilities in software applications from Beijing-based Sunway ForceControl Technology Co that hackers could exploit to launch attacks on critical infrastructure.

And heres the one that shows Homeland Security protecting Libyas internet and infrastructure.
Project_Cyber_Dawn_Public.pdf
www.unveillance.com...

It forsure it didn't help shooting cruise missiles at people who are dirt poor at their destitute shack is kinda waste of money but while someone still made money off that missiles which only effected the national debt and had little impact on the 08 crises then went viral worldwide hitting global real estate markets after the U.S. Housing Bubble Burst

Honesty in my personal opinion the biggest contributing factors (there are many). That Between 1997 and 2006, the price of the typical American house increased by 124%

Lower interest rates encourage borrowing. From 2000 to 2003, the Federal Reserve lowered the federal funds rate target from 6.5% to 1.0%. This was done to combat the perceived risk of deflation.The Fed then raised the rate between July 2004 and July 2006. This contributed to an increase in 1-year and 5-year adjustable-rate mortgage (ARM) rates, making ARM interest rate resets more expensive for homeowners.

In 2004, the U.S. Securities and Exchange Commission relaxed the net capital rule, which enabled investment banks to substantially increase the level of debt they were taking on, fueling the growth in mortgage-backed securities supporting subprime mortgages. The SEC has conceded that self-regulation of investment banks contributed to the crisis

Predatory lending practices of unscrupulous lenders encourage employees to entice borrowers to sign secured loans for inappropriate purposes, that written extensively in detailed contracts, and swapped for more expensive loan products on the day of closing. Whereas the advertisement might state that 1% or 1.5% interest would be charged, the consumer would be put into an adjustable rate mortgage (ARM) in which the interest charged would be greater than the amount of interest paid. This created negative amortization, which the credit consumer might not notice until long after the loan transaction had been consummated.

Negative-amortization loans, and Sub-prime leading to people with weak credit histories and a high risk of default became popular in the last decade due to incentives offered up to Loan Officers to market and sell this product to people the Loan Officer knowing that after the rate adjust went up there was no way they could afford the home they bought, often setting up fake businesses complete with phone number to qualify them with extra income that only existed till it cleared escrow.

U.S. subprime mortgages was estimated at $1.3 trillion as of March 2007

A classic bait-and-switch method was used by Countrywide Financial, advertising low interest rates for home refinancing. Such loans were common in the early 2000s but as defaults slowly increased from 2006-7 then rapidly increases in both defaults and foreclosures in 2008-2009 leading to devaluations of near by properties the collapse of the U.S housing market as well as the Bank failures and global repression/depression that fallowed

Clayton Holdings—the largest residential loan due diligence and securitization surveillance company in the United States and Europe—testified that Clayton's review of over 900,000 mortgages issued from January 2006 to June 2007 revealed that scarcely 54% of the loans met their originators’ underwriting standards. The analysis (conducted on behalf of 23 investment and commercial banks, including 7 "Too Big To Fail" banks) additionally showed that 28% of the sampled loans did not meet the minimal standards of any issuer. Clayton's analysis further showed that 39% of these loans (i.e. those not meeting any issuer's minimal underwriting standards) were subsequently securitized and sold to investors

drpinna.com...

reply to post by IblisLucifer


Im not sure if you know or not but the first into subprime mess was Carlyle Capital when Bush made changes. They were also the first to try and get out but they were dragged down with the crash. Carlyle Capital is Carlyle Group that was ran by Bush Sr. efore he becae presidet.

www.subprimelosses.com...

The more recent troubles for Carlyle Capital came one week after the Carlyle Group tried, without success, to hold off margin calls and the liquidation of its mortgage assets. Lenders, which reportedly included Deutsche Bank, Merrill Lynch & Co., Bear Stearns Cos. and J.P. Morgan Chase & Co., proceeded to sell the fund's assets, and by March 11, $5.7 billion had been sold.

As of March 12, the fund had defaulted on approximately $16.6 billion of its loans, and expects to default on the rest.

The demise of Carlyle Capital is yet another example of how the credit crunch affects far more than just subprime mortgages. Carlyle Capital's portfolio consisted solely of AAA-rated mortgage backed securities issued by Fannie Mae and Freddie Mac.

In the beginning, the investment strategy for Carlyle Capital looked simple: the fund would exploit the difference between interest earned on its mortgage securities investments and the costs of financing the investments. But as with several hedge funds lately, Carlyle predicament began to unfold when it borrowed too much money. The fund had $670 million in clients' money, but it used borrowings to increase its bonds portfolio to $21.7 billion. That means, before dealers began selling the fund's assets last week, it was about 32 times leveraged.

They tried to leave the banks as the fall guys while they got rich. Turning $670 million into $21.7 billion by trading subprimes around. That had to be criminal activity of some kind. And they were the pioneers of doing it. The rest just follow their lead.