I didn't watch the Rubio response to the SOTU, so I missed the slurp heard 'round the world. But it seems clear that the guy has wedded himself to the undying GOP lie that Fannie and Freddie -- not lack of regulation, not Wall Street greed -- caused the great recession.
This nonsensical claim flies in the face of the evidence presented in a sizable library of books, including Matt Taibbi's Griftopia (the best of the lot) and Stiglitz' Freefall and Sinn's Casino Capitalism and...and and and. One could also mention some great documentaries, like Inside Job and Frontline's Money, Power and Wall Street and Inside the Meltdown and...and and and.
There's really no point in listing more examples, because anyone who blinds himself to the facts would have to be the kind of idiot who also thinks that evolution is "just a theory."
Deregulation, the explosive growth of virtually unregulated shadow banking, lax lending standards by loan originators who sold their loans off as soon as they were made, had nothing to do with it — it was all the Community Reinvestment Act, Fannie, and Freddie.
Look, this is one of the most thoroughly researched topics out there, and every piece of the government-did-it thesis has been refuted; see Mike Konczal for a summary. No, the CRA wasn’t responsible for the epidemic of bad lending; no, Fannie and Freddie didn’t cause the housing bubble; no, the “high-risk” loans of the GSEs weren’t remotely as risky as subprime.
This really isn’t about the GSEs, it’s about the BSEs — the Blame Someone Else crowd. Faced with overwhelming, catastrophic evidence that their faith in unregulated financial markets was wrong, they have responded by rewriting history to defend their prejudices.
"GSE" stands for Government Sponsored Enterprises -- that is, Fannie and Freddie. Mike Konczal has written his own excellent response to Rubio; see here.
Another fine long-ish explanation as to why Freddie and Fannie should not be blamed for the disaster can be found in this NYRB article. It was written in response to a book called Reckless Endangerment, which the rightwingers use as the intellectual cornerstone of their pseudoargument.
In fact, as abundant data show, Fannie and Freddie’s affordable lending programs had virtually nothing to do with the recent crisis. The crisis was caused by Wall Street’s bad bets on complex securities based on subprime mortgages. These bets were mostly placed during the mid-2000s.
The right-wingers believe that Bill Clinton's revision of the 1977 Community Reinvestment Act forced Fannie and Freddie to ruin the economy by giving mortgages to undeserving black people. In a 2008 Cannonfire post, we published an excellent rejoinder to this absurdity...
• Did the 1977 legislation, or any other legislation since, require banks to not verify income or payment history of mortgage applicants?
• 50% of subprime loans were made by mortgage service companies not subject comprehensive federal supervision; another 30% were made by banks or thrifts which are not subject to routine supervision or examinations. How was this caused by either CRA or GSEs ?
• What about "No Money Down" Mortgages (0% down payments) ? Were they required by the CRA? Fannie? Freddie?
• Explain the shift in Loan to value from 80% to 120%: What was it in the Act that changed this traditional lending requirement?
• How exactly did legislation force Moody's, S&Ps and Fitch to rate junk paper as Triple AAA?
• What about piggy back loans? Were banks required by Congress to lend the first mortgage and do a HELOC for the down payment -- at the same time?
• Internal bank memos showed employees how to cheat the system to get poor mortgages prospects approved that shouldn't have been: Titled How to Get an "Iffy" loan approved at JPM Chase. (Was circulating that memo also a FNM/FRE/CRA requirement?)
• The four biggest problem areas for housing (by price decreases) are: Phoenix, Arizona; Las Vegas, Nevada; Miami, Florida, and San Diego, California. Explain exactly how these affluent, non-minority regions were impacted by the Community Reinvesment Act ?
I doubt that a recitation of these facts will change Republican mythology. People will believe whatever they want to believe -- and if they prefer to blame black people and Bill Clinton, they will twist reality itself into knots.
Perhaps that is to be expected. What bugs me is that the official "inside the beltway" responders to Rubio didn't call him out on his myth-making. But they did talk about that swig of water.
Added note. Konczal offers a "fun fact" which reminds us of some history that Republicans want us to overlook.
Fun fact: These same conservatives sang a different tune before the crash. They argued that the CRA and the GSEs were getting in the way of getting risky subprime mortgages to risky subprime borrowers. See Should CRA Stand for ‘Community Redundancy Act? from Cato in 2000 or AEI’s Peter Wallison in 2004 arguing ”study after study has shown that Fannie Mae and Freddie Mac are failing to do even as much as banks and S&Ls in providing financing for affordable housing, including minority and low income housing.”
Before 2008, the Libertarians were telling us that Fannie and Freddie were not aggressive enough in giving loans to poor people. Now, the Libertarians want to erase from our collective memory the words they wrote then. They want us all to pretend that they said something very different. But the record is the record is the record.
Please dump the un-signed post prior to this repeat post. Hit enter at the wrong time, sorry.
I remember arguing with right of center friends of mine at the time as to the cause of the meltdown. They blamed it on the CRA, Freddie, and Fannie, and of course Barney Frank. (What with him being gay and all, and a Democrat, blaming stuff on him no doubt gained them extra "Winger Points" among their peers.)
I said the cause was the repeal of the Glass Steagall Act via the Gramm Lech Bliley Act, the Commodity Futures Modernization Act, and, as documented by Spitzer in the WaPo, the Bush Administration's use of the Office of the Comptroller of the Currency to preempt state attorneys generals from enforcing their State's predatory lending laws; thereby, rendering State Banking laws null and void.
Now the facts are out, but the lies have served their propose: convince people that the crash was caused by Democrats, i.e. the Black People's party, and not by the GOP's Holy Grail: Deregulation.
Members of the Grand Oligarchy Party seldom provide evidence for anything they claim. They just pull stuff out of their nether orifices, muddy the waters, and create enough doubt to make it hard for the average person to figure out the truth. At which point lots of people give up and go with the Bumper sticker answer. Works most every time on just about any subject.
posted by DanInAlabama : 10:22 PM
"Now the facts are out, but the lies have served their propose: convince people that the crash was caused by Democrats, i.e. the Black People's party, and not by the GOP's Holy Grail: Deregulation."
I'm reminded of the California energy crisis, the one that ended Grey Davis' career. The crisis hit hard only in those areas that had deregulated. L.A., where regulation stayed in place, was more or less untouched.
And yet the Libertarian propagandists continued to insist -- during the crisis and after -- that the crisis was caused by too much energy regulation, not by deregulation. I'm sure that there are still people around who would make that claim, even after we learned the truth about Enron.
If you repeat a mantra often enough, you become entranced.
"I'm reminded of the California energy crisis, the one that ended Grey Davis' career."
Now, that was a "malice aforethought" trumped up crisis. The sole intent being the recall of Whatever Democrat happened to be in charge. The entire crisis could not have happened without the deregulation of energy in California via past Republican Party Rule.
Soon after Grey Davis was elected the operatives and opportunists, such as Darrell Isa, Enron, Duke energy, et al., moved in to manipulate the energy market. After 10s of billions of dollars in profits, and after California citizens were reeling due to rising prices and rolling blackouts, after they had Granny by the short hairs, the Bush Administration said "Go ahead, kick her again".
Then the aforementioned GOP cabal used said crisis to publicly beat their opponent over the head and financed the recalled Gray. And, in the end, once again, the GOP profited from the very problem they created.
Nice game if you can get away with it because the hard part was keeping the tenaciously anti-GOP "Liberal Media" watchdogs quiet about the facts.
Ha ha, I think I just had a mini-stroke.
posted by DanInAlabama : 12:16 AM
Good work Joseph
posted by ANonOMouse : 7:53 AM
It's quite amazing that the so-called 'Savior' of the Republican party, our good man Marco Rubio, spouts out the same old garbage that the GOP has been spinning for decades and with the exception of handful of columnists/pundits, he gets away with it and is even cheered for his 'courage.' We've witnessed the same thing with the glorification of Paul Ryan, the 'serious' numbers guy. Only the numbers don't add up.
Rubio has the unmitigated gall to tell people he won't do anything to hurt seniors, children or the disabled when the whole thrust of Republican theology is to dismantle every safety net in sight. And if anyone has questions about what an 'oasis of liberty' might look like, stroll over to Skydancing and read Dak's piece on Bobby Jindal. Dak is a NOLA resident, so she has a front row seat to the wreckage that Jindal has created in her state.
Unless we want the whole country to look like Mississippi, these fools should be laughed off the planet. The Republicans theory appears to be: say the Big Lie a gazillion times and it will become true.
Only if you're brain dead!
posted by Anonymous : 10:01 AM
Needed: Journalists with brains and Democrat legislators with a spine. I can't see either making an appearance anytime soon. We are so boned.
posted by Mr. Mike : 11:17 AM
From the Video in Joseph's post:
"... the global and economic crisis, I think was brought on mostly by the over expansion of the financial sector. Some people say it was the real estate, or it was various forms of deregulation. Some people even say it was too much regulation. I think you need to step back and think about the broader picture, the longer run.
It wasn't a three, or five, or even a ten year phenomenon. It was twenty, or thirty year, perhaps almost, movement of resources into the financial sector.
Initially some of this made sense. Initially there was some reasonable deregulation, let's say in the 1980s. But as this economic sector became more profitable it became more powerful. It turned their economical resources into political resources, and they used that to get a lot of advantages in the 1990s that allowed further expansion.
An enormous amount of money and very talented people went into this sector. They persuaded themselves, and us I would say, that they knew what they were doing. They could manage risk appropriately.
They grew even bigger as a percentage of the economy. A as a share of corporate profits finance accounted for forty percent in the early two thousands. It's extraordinary. One sector was forty percent of all corporate profits.
And it turned out that they really didn't know what they were doing. They mismanaged the risks, or failed to completely understand the risks. At the same time they persuaded legislators and regulators and members of the executive to look the other way.
That's the reason the crisis is so big and so severe. Because I don't think the underlying problems of economic and political power are being anyway near being addressed...."
Now, for my rant:
My friend BartCop has a saying. "Any time a person or entity makes a "mistake" that puts extra money (or power) in their pocket, expect them to make that "mistake" again and again and again."
While I think the expert speaking above is correct as far as being informative and knowledgeable about the subject to which he is speaking, he does not see the 2008 Melt Down as I see it. (I know, bad grammar.)
To me, we are dealing with criminals who know full well the ramifications of what they are doing and do not give a crap who suffers or dies as a result of their actions as long as it enriches them.
I also think what we have done to the rest the world with our monetary policy via the IMF, the World Bank, etc... (Confessions of an Economic Hitman) is now being turned inwards upon the American people. Disaster Capitalism, Vulture Capitalism, Austerity; whatever you want to call it, in order to destroy the very idea of the 99% making a living wage. Having Unions. Sick leave, Social Security, Medicare. Overtime. Vacation. Holding Corporations accountable for the harm they do to human beings and poisoning the earth in the name of profits.
Etc. etc. Chelyabinsk is the Russian version of England's Warminster. Many UFO events have been witnessed over the city, going back several years.
Not that I go for the extraterrestrial hypothesis. In late December 1989, there were widely reported (in the USSR) accounts of a UFO landing near a housing estate in Voronezh (1000 miles from Chelyabinsk) and a young boy being taken aboard. These got a lot of TV coverage at the same time that an important political meeting was happening.
The Chelyabinsk regtion has a nuclear power station and also a nuclear waste storage and treatment centre.
"Scientists have played down suggestions that there is any link between the event in the Urals and 2012 DA14, an asteroid expected to race past the Earth on Friday at a distance of just 27,700km (17,200mi) - the closest ever predicted for an object of that size."
"[Some professor] said there was 'almost definitely' no connection."
"One reason is that 2012 DA14 is approaching Earth from the south, and this object hit in the northern hemisphere," he told BBC News."
Gotta wonder what the other reasons are.
""This is literally a cosmic coincidence, although a spectacular one."
OK so let's not panic then!
posted by b : 5:37 AM
UFOs in Russia in 1989 and all you can come up with is ETs? Why don't you examine that other big event that occurred in 1989. Has nothing to do with aliens but might explain 50 years of ongoing strange and unfortunate events between the USA and Russia.