Our financial system is crumbling this week.

[Hungary Jack]

I think the GSE's had a pretty pivotal role in the mortgage mess as an enabler. Most figures I have seen claim that the GSE's hold roughly half of the mortgages in the US, and perhaps a larger share of the bad ones.

We've had this discussion how many times before? You seem rather immune to evidence. Once again:

No. I'm just immune to your posts.

[Hungary Jack]

But both you guys are right. I had seen data that suggested otherwise, but the delinquency rate on mortgages held by the GSEs is considerably lower than those held by private entities. The GSEs have avoided, relatively speaking, a lot of crap that now saddles the private sector banks. Mea Culpa.

[greenback44]

I think the GSE's had a pretty pivotal role in the mortgage mess as an enabler. Most figures I have seen claim that the GSE's hold roughly half of the mortgages in the US, and perhaps a larger share of the bad ones.

We've had this discussion how many times before? You seem rather immune to evidence. Once again:

Careful, this is issuance versus holding. The GSEs were supposed to serve low-income housing, which they frequently accomplished by purchasing subprime (private-label) loans.

***

The US has attempted to improve the training of the workforce, and the primary consequences have been sky-high tuition costs and scummy for-profit schools generating enormous profits from student loans.

[Arthur Dent]

Careful, this is issuance versus holding. The GSEs were supposed to serve low-income housing, which they frequently accomplished by purchasing subprime (private-label) loans.

Ok, here's the rate of change in holdings. Doesn't change the conclusion at all. The explosion in lending that drove the bubble was primarily non-GSE, though they did pile in late in the game.

[AdmiralKird]

The US has attempted to improve the training of the workforce, and the primary consequences have been sky-high tuition costs and scummy for-profit schools generating enormous profits from student loans.

From what I understand a huge portion of that are these online resources that universities dump millions of dollars in, yet are rarely used by students except for writing a few papers.

I think a lot of Universities have moved from servicing students to more servicing themselves and using students, donations, and grants to grow like a virus. One of my professors at SLU always ripped on their system of raises because they're directly tied to how many research articles they publish and not at all towards student satisfaction.

[TheoSqua]

[longhornbaseball]

How is manufacturing output measured? A decent portion of work is subcontracted out overseas with final assembly occuring in the US, so I'm curious if that's where the employment isn't matching the output.

Manufacturing output is the amount of GDP that comes from the manufacturing sector. The primary reason employment hasn't matched output over the years is increased efficiency. We are producing more with machines, which require less people to operate them. Or in economics language, our production has become more capital intensive. This is a good thing when you are able to utilize labor in a different way, but unfortunately it has probably led to some structural unemployment.

[greenback44]

Careful, this is issuance versus holding. The GSEs were supposed to serve low-income housing, which they frequently accomplished by purchasing subprime (private-label) loans.

Ok, here's the rate of change in holdings. Doesn't change the conclusion at all. The explosion in lending that drove the bubble was primarily non-GSE, though they did pile in late in the game.

Krugman's point with this graph is unclear, but it's hard for me to see it as conclusive. The GSEs were buying 30-40% of all subprime issued during the bad period. If you want to call Peter Wallison a hack, then I'm fine with that, but with that kind of support of the market, it's kinda hard to argue with a straight face that the GSEs didn't play a significant role in the debacle.

[Arthur Dent]

Krugman's point with this graph is unclear, but it's hard for me to see it as conclusive. The GSEs were buying 30-40% of all subprime issued during the bad period. If you want to call Peter Wallison a hack, then I'm fine with that, but with that kind of support of the market, it's kinda hard to argue with a straight face that the GSEs didn't play a significant role in the debacle.

Maybe you could point me to the Wallison bit you're referring to?

What is the "bad period" you are referring to? During the period roughly from 2002-2005 when the bubble started inflating, the GSEs were rapidly losing market share as private lending exploded. Later, they did get into the subprime game (though bad loans were not limited to subprime, all loans at bubble inflated values were bad) to try and recover their position. I'm not really trying to defend the GSEs here. The point I was responding to was whether they played a pivotal role i.e. were they the cause? The answer is clearly no. That doesn't mean that they behaved well or that their existence is a particularly great idea. They are being blamed because it fits the conservative template explanation of every economic problem - that they are caused by government interference in the perfection of the market system. Since the conclusion is known in advance, you more or less don't have to check the evidence.

[Hungary Jack]

How is manufacturing output measured? A decent portion of work is subcontracted out overseas with final assembly occuring in the US, so I'm curious if that's where the employment isn't matching the output.

Manufacturing output is the amount of GDP that comes from the manufacturing sector. The primary reason employment hasn't matched output over the years is increased efficiency. We are producing more with machines, which require less people to operate them. Or in economics language, our production has become more capital intensive. This is a good thing when you are able to utilize labor in a different way, but unfortunately it has probably led to some structural unemployment.

It also means that Skynet has become self aware. Judgment Day is nigh.