yeah, i think the clintons - i suppose mostly bill - is much of the architect of the economy that blew up in 2007. he was the one who deregulated the banking system in 1999 and the one who pursued policies making it easier for "poorer" aka people with bad credit to get home loans. this was a typical clinton-esque, we can all get along, 3rd way type of compromise: buy off the financial sector and help the poor by getting them into home ownership, so their wealth will go up.
this worked for a long time - the economy grew a lot because of the financial sector and housing (and tech), but then the tech bubble burst, it continued to survive and grow until both the financial and housing bubbles burst together. and today, we are still just "managing" the recession by pumping up the stock market and housing w/ ridiculously low interest rates.
clinton's world view is mistaken. most poor people are poor because they don't have the skills to make them wealthier - fair or unfair. some have bad luck. either way, getting them into housing cannot make them more skilled to maintain the wealth or get better luck. if it were that easy, someone else would have figured it out before. the way to get people out of poverty is to teach them useful skills and to enact policies that encourage local job creation. you can't just throw cheap credit at someone to make them middle class.
i left out obama because the guy seems out of his element and just to be bumbling along
Look at the arrows in Drum's graph. How in the world can you look at that and say Fannie and Freddie (or Clinton or Barney Frank) were the architects of the housing bubble? To quote Drum from the another of his posts he links to in the one above:
"Fannie and Freddie screwed up badly during the tail end of the housing bubble, and they certainly played a general role in promoting home ownership for many years before that — a role that was pretty enthusiastically endorsed by everyone else in Washington too, both Democrat and Republican. They shouldn't be let off the hook for that. But did they drive the housing bubble? No. Wall Street is desperate for confirmation that they weren't really to blame for the collapse in underwriting standards and the securitization mania that followed in the early aughts, but they shouldn't be allowed to get away with this no matter how many conservative think tanks are in the bag for them. Whether you love government agencies or hate them, the evidence is clear: The bubble-induced financial collapse of 2008 was mostly the fault of the private sector, which went almost literally insane with its financial engineering and tacit endorsement of mortgage fraud from 2000 through 2006. Like it or not, 'twas Wall Street that killed the beast."
look, i'm not going to claim expertise on the world economy and i'm not saying freddie mac and fannie mae are to blame vs. wall street. but here's what i remember --
driving during college in 1999, listening to bill clinton's state of the union or some speech where he boasted of home ownership being higher than ever before because the loan requirements had dropped to 10% down rather than the traditional 20% down. and i remember thinking to myself - what a load of bullshit. you make it easier to buy a home, with less money down, and of course home ownership will go up. that was 1999. fast forward 5 years and i'm working a summer job during film school for like 15-20 bucks an hour and one of my coworkers is buying investment property in arizona. and i'm thinking to myself - how is this possible making 15-20 bucks an hour. and why is she buying investment property in arizona when she lives in los angeles? then fast forward 4 more years and people are buying homes with zero money down and adjustable mortgages. and now you expect me to believe this was all wall streets fault? as if we all didn't know wall street was a bunch of crooks since the 1980s - liar's poker, wall street, etc. gimme a break.
Fair enough. But to track back to my initial puzzlement, what's weird about blaming Clinton is that you seem to be saying that deregulating that banking system was HIS IDEA. You are basically blaming him for compromising with Republicans who, as has always been the case, are hell-bent on deregulating everything. They were in charge of Congress from 1994-2006. Shouldn't they get more blame than the guy who compromised with them in order to get something done?
I mean, Republicans were just fine with poor people getting outrageous loans as long as they came from private companies. What you call Clinton's worldview is actually very mild compared to the Republican view, which is essentially to get out of the way, even if that means and letting the housing and banking sector melt down the entire economy.
Sure, in retrospect maybe sensible people like Greenspan, Bernanke, and Clinton should have done some things differently. But it seems bizarre to blame them and ignore the craziness of what they had to deal with. That kind of centrist analysis is why Republicans get away with being so crazy.
a couple things. i suppose the argument that congressional republicans took a crazy turn in the late 90s and is to blame for the financial crisis is at least somewhat plausible. i guess i wouldn't generally toss the blame at "republicans" because all during reagan and bush 1 and even back to nixon, none of them got rid of the glass-steagal act, which is the specific thing i'm referring to.
and listen - i'm fine with private companies loaning outrageous sums to poor people as well, so long as when they can't pay those private companies go out of business and a) aren't allowed to break legs in order to collect or b) get bailed out by taxpayers that isn't a republican position, that's just how the free market works. all sorts of stupid people try businesses and fail. some of stupid ideas end up changing the world, like facebook.
i don't think you can blame centrists for allowing republicans to act crazy. craziness and dishonesty feed on one another. but what do i know. perhaps this is why i'm not involved with politics.
6 comments:
The Clintons?
yeah, i think the clintons - i suppose mostly bill - is much of the architect of the economy that blew up in 2007. he was the one who deregulated the banking system in 1999 and the one who pursued policies making it easier for "poorer" aka people with bad credit to get home loans. this was a typical clinton-esque, we can all get along, 3rd way type of compromise: buy off the financial sector and help the poor by getting them into home ownership, so their wealth will go up.
this worked for a long time - the economy grew a lot because of the financial sector and housing (and tech), but then the tech bubble burst, it continued to survive and grow until both the financial and housing bubbles burst together. and today, we are still just "managing" the recession by pumping up the stock market and housing w/ ridiculously low interest rates.
clinton's world view is mistaken. most poor people are poor because they don't have the skills to make them wealthier - fair or unfair. some have bad luck. either way, getting them into housing cannot make them more skilled to maintain the wealth or get better luck. if it were that easy, someone else would have figured it out before. the way to get people out of poverty is to teach them useful skills and to enact policies that encourage local job creation. you can't just throw cheap credit at someone to make them middle class.
i left out obama because the guy seems out of his element and just to be bumbling along
Sorry, but this line of thought is mistaken. Short version here:
http://voices.washingtonpost.com/ezra-klein/2010/06/no_fannie_and_freddie_did_not.html
Longer version here:
http://www.motherjones.com/kevin-drum/2011/12/housing-bubble-and-big-lie
Look at the arrows in Drum's graph. How in the world can you look at that and say Fannie and Freddie (or Clinton or Barney Frank) were the architects of the housing bubble? To quote Drum from the another of his posts he links to in the one above:
"Fannie and Freddie screwed up badly during the tail end of the housing bubble, and they certainly played a general role in promoting home ownership for many years before that — a role that was pretty enthusiastically endorsed by everyone else in Washington too, both Democrat and Republican. They shouldn't be let off the hook for that. But did they drive the housing bubble? No. Wall Street is desperate for confirmation that they weren't really to blame for the collapse in underwriting standards and the securitization mania that followed in the early aughts, but they shouldn't be allowed to get away with this no matter how many conservative think tanks are in the bag for them. Whether you love government agencies or hate them, the evidence is clear: The bubble-induced financial collapse of 2008 was mostly the fault of the private sector, which went almost literally insane with its financial engineering and tacit endorsement of mortgage fraud from 2000 through 2006. Like it or not, 'twas Wall Street that killed the beast."
look, i'm not going to claim expertise on the world economy and i'm not saying freddie mac and fannie mae are to blame vs. wall street. but here's what i remember --
driving during college in 1999, listening to bill clinton's state of the union or some speech where he boasted of home ownership being higher than ever before because the loan requirements had dropped to 10% down rather than the traditional 20% down. and i remember thinking to myself - what a load of bullshit. you make it easier to buy a home, with less money down, and of course home ownership will go up. that was 1999. fast forward 5 years and i'm working a summer job during film school for like 15-20 bucks an hour and one of my coworkers is buying investment property in arizona. and i'm thinking to myself - how is this possible making 15-20 bucks an hour. and why is she buying investment property in arizona when she lives in los angeles? then fast forward 4 more years and people are buying homes with zero money down and adjustable mortgages. and now you expect me to believe this was all wall streets fault? as if we all didn't know wall street was a bunch of crooks since the 1980s - liar's poker, wall street, etc. gimme a break.
Fair enough. But to track back to my initial puzzlement, what's weird about blaming Clinton is that you seem to be saying that deregulating that banking system was HIS IDEA. You are basically blaming him for compromising with Republicans who, as has always been the case, are hell-bent on deregulating everything. They were in charge of Congress from 1994-2006. Shouldn't they get more blame than the guy who compromised with them in order to get something done?
I mean, Republicans were just fine with poor people getting outrageous loans as long as they came from private companies. What you call Clinton's worldview is actually very mild compared to the Republican view, which is essentially to get out of the way, even if that means and letting the housing and banking sector melt down the entire economy.
Sure, in retrospect maybe sensible people like Greenspan, Bernanke, and Clinton should have done some things differently. But it seems bizarre to blame them and ignore the craziness of what they had to deal with. That kind of centrist analysis is why Republicans get away with being so crazy.
a couple things. i suppose the argument that congressional republicans took a crazy turn in the late 90s and is to blame for the financial crisis is at least somewhat plausible. i guess i wouldn't generally toss the blame at "republicans" because all during reagan and bush 1 and even back to nixon, none of them got rid of the glass-steagal act, which is the specific thing i'm referring to.
and listen - i'm fine with private companies loaning outrageous sums to poor people as well, so long as when they can't pay those private companies go out of business and a) aren't allowed to break legs in order to collect or b) get bailed out by taxpayers that isn't a republican position, that's just how the free market works. all sorts of stupid people try businesses and fail. some of stupid ideas end up changing the world, like facebook.
i don't think you can blame centrists for allowing republicans to act crazy. craziness and dishonesty feed on one another. but what do i know. perhaps this is why i'm not involved with politics.
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