Bush is an idiot – another example

If you needed another example of how badly Bush sucked as leader of the US, here’s one from Today’s Daily Reckoning:

When the going was good, a small addition to the financial sector’s capital would be multiplied many times. The limit for Wall Street’s investment firms was 12 to 1…until it was increased to 33 to 1 in 2004. Thereafter, if you put $100 into an investment bank…counterparties would soon have about $3,300 worth of credits.

Easy come…easy go! When the financial system rolled over last year, the banks lost money. Suddenly, $100 less in bank capital forced the banks to reduce outstanding credit by as much as $3,300. Cash disappears and everyone is forced to cut back.

Here’s a link to a NY Times article from October 2nd, 2008 that describes how the Bush Administration made this debt crisis much worse.  The story reads in part:

But decisions made at a brief meeting on April 28, 2004, explain why the problems could spin out of control. The agency’s failure to follow through on those decisions also explains why Washington regulators did not see what was coming.

On that bright spring afternoon, the five members of the Securities and Exchange Commission met in a basement hearing room to consider an urgent plea by the big investment banks.

They wanted an exemption for their brokerage units from an old regulation that limited the amount of debt they could take on. The exemption would unshackle billions of dollars held in reserve as a cushion against losses on their investments. Those funds could then flow up to the parent company, enabling it to invest in the fast-growing but opaque world of mortgage-backed securities; credit derivatives, a form of insurance for bond holders; and other exotic instruments.

One of these days I’ve got to take the time to document all of the lame-brained, half-assed decisions that led me to conclude that Bush is an idiot – and that he’ll go down as the worst President in our history.  And it’s pretty tough to be worse than my former number one – Jimmy Carter.

gk

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  1. […] their required capital ratio of 33-1 (which is what the idiot Bush administration changed it to – read about that part of this mess here.) so they had to raise […]

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