Saturday, September 20, 2008

Playing The Blame Game

My mum and Jeff and I had a lovely chat yesterday (Mom no longer reads my blog - sadness! - thus effectively cutting my readership by 50%) about the wretched financial crisis we're in. For the three of us, at least, we shared a common sense of outrage and worry and bewilderment with a situation that seems to require a degree in economics to fully comprehend.

This morning I read something on Think Progress regarding Bush touting rising home ownership as part of his crafty "Ownership Society" theme back in 2004. I remember that, although I'm sure I heard it earlier... I could have sworn I him heard take credit for it in his first SOTU address. No matter. The point is that this snowball started rolling down the hill a long time ago.

It's interesting now to watch everyone trying to find THE person to blame for this mess when, in fact, there are many. McCain is anxious to make this a Freddie and Fannie issue because he finds it politically expedient to do so but Freddie and Fannie did not dissolve the regulatory line between investment brokerage and commercial banking. They did not spawn innovative new "products" and the shadow banking system. They did not create the greed-fueled "anything goes" lending practices that started with subprime and eventually wound their way through Alt-A and, finally, conventional loans. Freddie and Fannie also did not wildly speculate in the real estate market, creating a bubble. Nor did they manipulate interest rates to make it advantageous for everyone to over-leverage. Nor did they pass bankruptcy legislation in 2005 that allowed predatory lending to continue unabated while making any form of bankruptcy extremely difficult to file... thus incenting people to simply pack up their minivans in the middle of the night and drive away from a losing situation.

Freddie and Fannie may be ideologically suspect for its half public / half private perversion but it did not create the mess we're in now any more than any other single participant like Lehman or Bear Sterns.

For at least two years now there have been voices in the wilderness trying to point out that we've created an unstable, untenable economic brew while guys like Larry Kudlow sat around in their 3-piece suits, reaping the profits, insisting that the naysayers were partisan and full of shit. While people much smarter than myself have been screaming that this consumer-driven economy is a house of cards, BushCo has been insisting that the fundamentals are strong. While Reaganites kept insisting that national debt was inconsequential, we've now found ourselves dependent on foreign countries to buy our debt in order for us to stay solvent. The biggest fear in this mess, as far as I can tell, is that foreign countries will find us a bad investment and take their money elsewhere... in which case we'd face a total and utter collapse. The situation we've gotten ourselves in here is really quite breathtaking.

So here we are... nobody likes this crazy bailout scheme but what's the alternative? I don't think anyone is willing to risk finding out what's behind curtain #2.

For me, I blame the kind of greed that insists the party must continue as long as the guys at the top are still making money... damn the consequences. The kind of greed that concocted the convenient lie theory of "trickle down economics." The kind of greed exhibited by the people in power who stack the deck to ensure they benefit from that power. The kind of greed that refuses to acknowledge that naked capitalism is a zero sum game... one in which, without intervention, the rich get richer at the expense of everyone else. The kind of greed that insists on personal responsibility as long as it's not their person.

It is the Republican platform that has embraced and embodied the Gordon Gekko "greed is good" mantra. When I blame Republican principles for the mess we're in, this is where I'm coming from.

But you know who I am most angry at? The ancient and powerful Democrats in office who not only failed in their mission to be a counter weight to the power elite, they aided and abetted the ruse. I mean, at least the post-1980 Republicans have been forthright about holding fast to their greed-as-a-principle ideology. The Dems were supposed to provide balance. At this point, as much as I loathe Phil "a nation of whiners" Gramm, I can't even stand to see Nancy Pelosi's overly-botoxed face on my teevee.


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