The View From 1776

Parson Moyers’s Prevarication

Bill Moyers’s PBS presentation on Cleveland’s real estate foreclosure problem was a product, either of economic ignorance, or of deliberate distortion for political purposes.

Posted by .(JavaScript must be enabled to view this email address) on 07/23 at 01:31 AM
  1. Mr. B - Permit me to suggest a contrasting vision:

    In tortured logic, "The View" attempts to lay the blame for massive mortgage defaults solely at the feet of the hated socialist "Liberals." But those with a stronger grip on reality will appreciate that most of the blame should fall on the Republican Bankers and Wall Street scions who insisted on "deregulation" of the banking system.

    ("Deregulation" is always a conservative virtue, whereas any "Regulation" whatsoever is prima facie evidence of "liberal" evildoing.)

    20% down payment? Not needed! Income stream to pay off loan? No employment checks any more! It was once again Reagan's "Morning in America!" and every home owner was a millionaire.

    The deregulation allowed a flood of con-men to sell "low interest" loans, with balloon payments hidden in the fine print, to uneducated, gullible people. The rip-off artists got their commission, sold the loans off to bundlers and disappeared.

    Even you grudgingly recognize the truth of this by saying,

    "None of this excuses unethical lending methods."

    But you reserve the lion's share of the blame for "welfare-state citizens," neatly assuming every default was the result of a greedy Welfare Mama (no doubt driving a Reagan Cadillac) who believed she was entitled to "free money."

    If regulation of the banking system is not needed, the result is truly a social Darwinest's playground, where the gullible are not protected from the unscrupulous, and if they lose their homes because of it, well, too bad for them. Survival of the fittest, you know!
    Posted by .(JavaScript must be enabled to view this email address)  on  07/23  at  03:57 PM
  2. Mr. Henrie, laying the blame entirely on deregulation and Republican bankers and Wall Street scions is more than odd.

    First, as I've written (in this post and in many others), there could have been no subprime bubble at all if the Fed had not been wildly over-expanding the money supply. The Fed does so, because the 1946 Employment Act, passed by liberal-progressive Democrats, added to the Fed's duties managing the entire economy to promote full employment. Promoting full employment, in the liberal-progressive Keynesian lexicon means continuously expanding Federal deficit spending.

    When there is excess liquidity as a consequence of the Fed's funding of Federal deficit spending, interest rates fall (the supply of money exceeds the real underlying demand for it). Lenders and investors look for new, generally riskier, places to lend or to invest their excess funds. Hence the dive into subprime lending and other risky investments (as in the Clinton era bubble).

    Second, bankers are far from uniformly Republican. Wall Street's contributions are usually greater to Democrats than to Republicans. And don't forget two prominent ex-Goldman Sachs socialists: Jon Corzine and Robert Rubin. This is particularly true among the younger bankers, who, after all, are products of our secular and socialist educational system.

    Third, scions of Wall Street suggests that you believe bankers inherit their positions. Until the 1970s that was somewhat true, especially in the investment banks. But the advent of personal computers and the flood of highly numerate MBAs coming into Wall Street completely upended that pattern. Now, it's brain power alone that gets people up the ladder. Wall Street, once a patrician preserve, is now entirely democratic.

    A prime example is Lew Ranieri, a poor boy from the wrong side of the tracks who rose to a top position at Salomon Brothers by creating the process of securitizing real estate loans in the late 1960s and early 70s.

    An unfortunate by-product of that transition is that lending experience and assessment of borrowers' personal character are no longer focal points of training for commercial and investment bankers. Now, as in the socialist welfare state, it's an abstract numbers game. If someone fits the regulatory pattern, he gets a welfare hand-out; if not, he doesn't, with no possibility of shading for special circumstances. If a mass of numbers fleeting across the computer screen displays an anomaly, the trading desk computer jocks push billions into it in a split second.

    Lenders and investors today too often look at averages of large numbers, without investigating character and capacity to repay of individual borrowers.
    Posted by .(JavaScript must be enabled to view this email address)  on  07/23  at  05:17 PM
  3. I put much of the blame at the feet of Republican bankers and the Republicans in Congress and the administration. For years they had the political majority. Thus they had ample opportunity to correct things monetarily and financially. Instead, in their drive to make the market freer they ignored logic and reality. However, real conservatives knew of the financial train wreck ahead. It's their brethren, though, the neo-cons, that ignored the signals because they thought they could remake the world as they wanted it.

    Alan Greenspan, a Republican banker, can take a lot of the blame because he too ignored reality and thought a new dawn had arrived. One of his downfalls was that he was too eager to please his Republican handlers, those in the Bush administration.

    In a way it is very comforting that we have come full circle. It is still the economy, stupid. Bush felt certain the at least he would have a favorable legacy in the economy. Now even that legacy is shot to hell because of his lack of smarts.
    Posted by .(JavaScript must be enabled to view this email address)  on  07/25  at  01:16 PM
  4. Also, The View relies to much on the past and old worn out arguments to make its case. It argues as though we live in a static world and anything outside the bounds of its constitution dogma is a recipe for disaster.
    Posted by .(JavaScript must be enabled to view this email address)  on  07/25  at  01:25 PM
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