Speaking of disinformation from the GOP—and I was in the last post—consider the financial market meltdown we are living through. I don’t know about you, but it seems kind of obvious to me that the conservative movement and their economic philosophy of deregulation and privatization might bear a wee bit of responsibility for the financial collapse.
My reasoning goes like this: bankers asked to be freed from regulatory oversight, and the GOP said “hey, that fits our philosophy perfectly…let’s do it”. The unregulated bankers then proceeded to
- enter into boneheaded transactions like NINJA loans…( “no income, no job, no assets?—no problem. Stamp that loan APPROVED“)
- spend all the bank’s money on themselves. As a result the nation’s banks have no capital, but the financiers themselves have very fat investment portfolios. And many many houses.
- create a market for financial transactions (this is their business) so opaque, no one knows what they are buying. As Bill Gross put it a while ago, trading in credit markets these days is “like playing Old Maid. No one knows who has the bad cards.”
Now they are asking government to bail them out. In my mind this calls into question the conservative philosophy of “getting government out of the way” and “trusting the individual”.
But, according to the GOP, this is terribly mistaken interpretation of events. Our financial troubles, they say, are caused by
- Fannie Mae, and
- the Community Reinvestment Act (CRA)
Fannie Mae because that’s a big government housing program, right? And the CRA because that 1977 law required banks to make loans to poor people. I guess if you want to believe the conservative line this at least sounds plausible, but if you look at the data—- it’s wrong. The subprime market was dominated by private investment banks (yes, the ones that are failing), not Fannie Mae; and the CRA affected no one originating subprime loans.
If you are interested in the data behind this story, you can read about it here. But the more interesting question is how we even get into this discussion. My take is that the GOP is dominated by people who have a nearly fanatical devotion to a world view that even a financial collapse rivaling 1929 can’t shake—and they have tons of friends in the media who get their story out. And it always seems to be the same story: all problems must be caused by
- the government,or
- poor people (a lot of them are probably colored–wink, wink).
In this instance, the facts on the ground are so contrary to this view that it comes very close to laying bare the premise of conservative thought, which is: rich people create all the wealth and everyone else is a leach. Indeed, if government would get out of the way, the rich could create even more
fabulous wealth for everyone. To paraphrase Rush Limbaugh, conservatives believe that “five percent are pulling the wagon and the rest are riding in it”.
Now, the spectacle of billionaire bankers begging the government for help doesn’t line up very well with this world-view, and those who defend it are starting to look like Baghdad Bob.