OPEN LETTER TO BARACK OBAMA ON HIS AUTOBIOGRAPHY “A PROMISED LAND” Part 59 “The financial system was in a meltdown and taking the American economy with it. Although Iraq had been the biggest issue at the start of our campaign, I had always made the need for more progressive economic policies a central part of my argument for change. As I saw it, the combination of globalization and revolutionary new technologies had been fundamentally altering the American economy for at least two decades”

Former U.S. President Ronald Reagan (L) presents then, president-elect Bill Clinton (R) with a jar of jelly beans during Clinton's visit to Reagan's office in Los Angeles in this November 27, 1992

Ronald Reagan Bill Clinton with a jar of jelly beans in November of 1992. 

January 19, 2021

Office of Barack and Michelle Obama
P.O. Box 91000
Washington, DC 20066

Dear President Obama,

I wrote you over 700 letters while you were President and I mailed them to the White House and also published them on my blog http://www.thedailyhatch.org .I received several letters back from your staff and I wanted to thank you for those letters. 

I have been reading your autobiography A PROMISED LAND and I have been enjoying it. 

Let me make a few comments on it, and here is the first quote of yours I want to comment on:

The financial system was in a meltdown and taking the American economy with it.
     Although Iraq had been the biggest issue at the start of our campaign, I had always made the need for more progressive economic policies a central part of my argument for change. As I saw it, the combination of globalization and revolutionary new technologies had been fundamentally altering the American economy for at least two decades. U.S. manufacturers had shifted production overseas, taking advantage of low-cost labor and shipping back cheap goods to be sold by big-box retailers against which small businesses couldn’t hope to compete. More recently, the internet had wiped out entire categories of office work and, in some cases, whole industries.
     In this new, winner-take-all economy, those controlling capital or possessing specialized, high-demand skills—whether tech entrepreneurs, hedge fund managers, LeBron James, or Jerry Seinfeld—could leverage their assets, market globally, and amass more wealth than any group in human history. But for ordinary workers, capital mobility and automation meant an ever-weakening bargaining position. Manufacturing towns lost their lifeblood. Low inflation and cheap flat-screen TVs couldn’t compensate for layoffs, fewer hours and temp work, stagnant wages and reduced benefits, especially when both healthcare and education costs (two sectors less subject to cost-saving automation) kept soaring.
     Inequality also had a way of compounding itself. Even middle-class Americans found themselves increasingly priced out of neighborhoods with the best schools or cities with the best job prospects. They were unable to afford the extras—SAT prep courses, computer camps, invaluable but unpaid internships—that better-off parents routinely provided their kids. By 2007, the American economy was not only producing greater inequality than almost every other wealthy nation but also delivering less upward mobility.
     I believed that these outcomes weren’t inevitable, but rather were the result of political choices dating back to Ronald Reagan. Under the banner of economic freedom—an “ownership society” was the phrase President Bush used—Americans had been fed a steady diet of tax cuts for the wealthy and seen collective bargaining laws go unenforced. There had been efforts to privatize or cut the social safety net, and federal budgets had consistently underinvested in everything from early childhood education to infrastructure. All this further accelerated inequality, leaving families ill-equipped to navigate even minor economic turbulence.
     I was campaigning to push the country in the opposite direction. I didn’t think America could roll back automation or sever the global supply chain (though I did think we could negotiate stronger labor and environmental provisions in our trade agreements). But I was certain we could adapt our laws and institutions, just as we’d done in the past, to make sure that folks willing to work could get a fair shake. At every stop I made, in every city and small town, my message was the same. I promised to raise taxes on high-income Americans to pay for vital investments in education, research, and infrastructure. I promised to strengthen unions and raise the minimum wage as well as to deliver universal healthcare and make college more affordable.
     I wanted people to understand that there was a precedent for bold government action. FDR had saved capitalism from itself, laying the foundation for a post–World War II boom.

You seem to blame Ronald Reagan and conservative policies for the 2008 meltdown but in fact Bill Clinton should get a lot of the blame.

Are the Clintons the real housing crash villains?

PUBLISHED SAT, MAY 28 2016 12:50 AM EDTUPDATED SAT, MAY 28 2016 9:06 AM EDTLawrence Kudlow and Stephen Moore, chief economist at the Heritage Foundation SHARE

We are going to reveal the grand secret to getting rich by investing. It’s a simple formula that has worked for Warren Buffett, Carl Icahn and all the greatest investment gurus over the years. Ready?

Buy low, sell high.

It turns out that Donald Trump has been very, very good at buying low and selling high, and it helps account for his amazin business success.

But now Hillary Clinton seems to think it’s a crime. 

Real culprits?

Reusable: Bank owned real estate sign foreclosureA bank owned sign is seen in front of a foreclosed home.Getty Images

Campaigning in California last week she complained that Trump “actually said he was hoping for the crash that caused hard working families in California and across America to lose their homes, all because he thought he could take advantage of it to make some money for himself.” 

She’s assailing Trump for being a good businessman—something she would know almost nothing about because she’s never actually run a business, though she did miraculously turn $1,000 into $1 million in the cattle futures market many years ago.

Hillary’s new TV ads say that Trump predicted the real estate crash in 2006 (good call) and then bought real estate at low prices when the housing crash came in 2008 that few others foresaw. Many builders went out of business during the crash, but Trump read the market perfectly.https://ca6c3c0f1cbb8c418236e2a1c9e77ebc.safeframe.googlesyndication.com/safeframe/1-0-37/html/container.html?n=0

What is so hypocritical about the Clinton attacks is that it wasn’t Trump, but Hillary, her husband, and many of her biggest supporters who were the real culprits here.

Before Hillary is able to rewrite this history, let’s look at the many ways the Clintons and cronies contributed to the Great Recession.

Seeds of mortgage meltdown

The seeds of the mortgage meltdown were planted during Bill Clinton’s presidency.

Under Clinton’s Housing and Urban Development (HUD) secretary, Andrew Cuomo, Community Reinvestment Act regulators gave banks higher ratings for home loans made in “credit-deprived” areas. Banks were effectively rewarded for throwing out sound underwriting standards and writing loans to those who were at high risk of defaulting. If banks didn’t comply with these rules, regulators reined in their ability to expand lending and deposits.

These new HUD rules lowered down payments from the traditional 20 percent to 3 percent by 1995 and zero down-payments by 2000. What’s more, in the Clinton push to issue home loans to lower income borrowers, Fannie Mae and Freddie Mac made a common practice to virtually end credit documentation, low credit scores were disregarded, and income and job history was also thrown aside. The phrase “subprime” became commonplace. What an understatement. 

Next, the Clinton administration’s rules ordered the taxpayer-backed Fannie and Freddie to expand their quotas of risky loans from 30 percent of portfolio to 50 percent as part of a big push to expand home ownership.

Fannie and Freddie were securitizing these home loans and offering 100 percent taxpayer guarantees of repayment. So now taxpayers were on the hook for these risky, low down-payment loans. 

Tragically, when prices fell, lower-income folks who really could not afford these mortgages under normal credit standards, suffered massive foreclosures and personal bankruptcies. So many will never get credit again. It’s a perfect example of liberals using government allegedly to help the poor, but the ultimate consequences were disastrous for them.

Additionally, ultra-easy money from the Fed also played a key role. Rates were held too low for too long in 2002-2005, which created asset price bubbles in housing, commodities, gold, oil, and elsewhere. When the Fed finally tightened, prices collapsed. So did mortgage collateral (homes) and mortgage bonds that depended on the collateral. 

Many bond packages were written to please Fannie and Freddie, based on the fantastical idea that home prices would never fall. Fannie and Freddie, by the way, cost the taxpayers $187 billion.

Just to make this story worse, Senator Hillary Clinton and Senator Barack Obama voted to filibuster a Republican effort to roll back Fannie and Freddie. But on top of all this, while Hillary was propping up Fannie and Freddie, she was taking contributions from their foundations. 

Plenty of blame to go around

Washington Times investigative reportconcluded that Freddie Mac and Fannie Mae’s political action committee and individuals linked to the companies donated $75,500 to Mrs. Clinton’s senatorial campaign. And on top of that, the embattled Clinton Foundation received a $50,000 contribution from Freddie Mac, according to the Times. 

To be clear, there was plenty of blame to go around among both political parties and the horde of housing lobbyists who helped set up this real estate house of cards. It’s a sordid story with plenty of blame all around. And the Fannie/Freddie story is still not solved. It now includes profit sweeping from shareholders to the government, thereby ending any chance to sell the mortgage agencies back to the private sector.

Meanwhile, Hillary’s attempt to blame Donald Trump is utterly absurd. Buying low and selling high is not against the law. In fact, Mr. Trump’s investment acumen may serve America well in the not too distant future.

Commentary by Larry Kudlow, a senior contributor at CNBC and economics editor of the National Review. Follow him on Twitter @Larry_Kudlow.

Stephen Moore is chief economist at the Heritage Foundation  

Sincerely,

Everette Hatcher III, 13900 Cottontail Lane, Alexander, AR 72002, ph 501-920-5733 everettehatcher@gmail.com

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