The real reason that Summers, who started out as President Obama’s favorite for the post, didn’t even get to the starting line has nothing to do with merit and everything to do with the left’s determination to preserve its fundamentally false narrative about what caused the financial crisis of 2008. You see, Larry Summers’ biggest sin was that he had a “past role in financial deregulation.” In Leftyland, interstate banking deregulation, with accompanying “Wall Street greed,” is entirely to blame.The truth is that deregulation is a far distant third on the list of contributors, and would never have been a relevant factor without government regulators’ aggressive handling of the Community Reinvestment Act (CRA) and the conduct of “government-sponsored enterprises” Fannie Mae and Freddie Mac.
[snip]
It is no coincidence that the number of subprime loans, which barely existed before 1995, exploded. Regulators also enthusiastically embraced especially risky “low doc” and “no doc” loans, which came to be known as “liar loans.”
[snip]
In a September 17 column, normally astute economist Robert J. Samuelson, while acknowledging that they were “the exception, not the rule,” noted that in the latter stages of the home-lending bubble, “banks and investment banks (‘Wall Street’) knowingly packaged bad home mortgages in securities that were then sold to unsuspecting investors.” But he failed to recognize that the dollar volume of Fan’s and Fred’s known 15-year deception dwarfed any latter-stage fraud in which “Wall Street” may have engaged.
You see, there were specific causes, not some kind of vague force such as "greed" responsible for what occurred.
is your money really any safer over the long haul than it was five years ago? And have we restructured our financial industry in a way that will truly limit the chances of another crisis? U.S. financial institutions remain free to gamble billions on risky derivatives around the world. A crisis in Europe, for instance, could still potentially devastate a U.S. institution that made a bad bet — and in turn, send shockwaves through the $2.7 trillion held in U.S. money market funds, much of which is owned by Main Street investors.
ReplyDeleteRead more: http://content.time.com/time/magazine/article/0,9171,2151806,00.html#ixzz2fLEoIbZW
Government doesn't exist to mitigate all the risk in our lives.
ReplyDeleteAnd we don't exist for the bankers to suck off of. It's not greed, although that has been recognized, along with fear, as a primary motivator for the stock market ever since markets became markets. What these corporate crooks did and are still doing is nothing short of criminal. And government has a long history of constitutionally preserving domestic tranquility.
ReplyDeleteMark Thoma has shared some maps put together by a graduate student at the University of Oregon, where he teaches, which show how inequality has changed in each state since 1977. In this map, red states are those where the top 1 percent of earners are taking home a relatively normal share of income, whereas green ones are those where the 1 percent gobble up a huge portion of it. Watch the states turn from deep red to dark green over the past 35 years:
ReplyDeletehttp://thinkprogress.org/economy/2013/09/19/2650801/1-percent-map/
Preoccupation with "inequality" and begrudging someone else his wealth is always a poor use of a person's time.
ReplyDeleteProbably, yeah, because the money people are different from I, if not thou, and they simply "want" it more, enough to go to any lengths to get it and keep it.
ReplyDeleteI guess I don't know the definition of the term "money people."
ReplyDeleteWell they are people, with souls, unlike countries which do not have souls, although you write that they do have them. Countries, as you know, may be comprised of souls, according to some religious traditions, although we have yet to prove its existence, probably some war will be fought over it someday, religion seems to have caused its share. Money people are people who are entrusted with our money, well, they make money off our money. They are the bankers, accountants, insurers, stockbrokers, financial planners, who are supposedly educated and trained to help us prosper as they too prosper in return. If affirmative housing efforts in this country was responsible for the bubble in America, how do you explain the world-wide nature of it and its consequent severe economic meltdown? It was book cooking, in essence, that precipitated the meltdown.
ReplyDeleteThe real estate bubble formed the base upon which a series of bubbles in derivatives were built. Specifically, mortgages were packaged in “collateralized debt obligations” (CDOs), which were sold in enormous volumes all over the world. Credit default swaps were then bet against the companies which bought and sold the CDOs.
Now, with housing prices crashing, the CDO bubble is crashing, as is the CDS bubble.
A series of other derivatives bubbles are also crashing. For example, the “collateralized fund obligations” – sort of like CDOs, but where the assets of a hedge fund are the asset being bet on – are getting creamed as hedge funds are forced to sell off many hundreds of billions in assets to cover margin calls.
As everyone knows, the size of the global derivatives bubble was almost 10 times the size of the world economy [Update: It was actually 20 times the world economy]. And many areas of derivatives are still hidden and murky.
So the bust of the derivatives bubble could even be bigger than the bust of the housing bubble.
Read more at http://www.globalresearch.ca/grantham-biggest-housing-bubble-since-807-a-d-has-burst/5312518
Ahh, but I know the current Pope (and most others in our lifetime, actually) is somewhat of an economic dumb ass and guys like Rick Santorum who wear their Catholic judgementalism on their sleeve have the real mainline to Our Father are right on in your book, but just tossing out another zinger from Pope Francis for you to consider, delivered this fine first day of Autumn, 2013, in Sardinia. The pope? How many divisions does he have, as Stalin put it...
ReplyDeleteThe pope, who later celebrated Mass for some 300,000 people outside the city's cathedral, told them: "We don't want this globalised economic system which does us so much harm. Men and women have to be at the centre (of an economic system) as God wants, not money." "The world has become an idolator of this god called money," he said.
Read more at http://worldnews.nbcnews.com/_news/2013/09/22/20638292-pope-attacks-global-economy-for-worshipping-god-of-money?lite