Sunday, October 05, 2008

Buy A House, Give Bin Laden The Finger

Maybe the most predictable part of the current debacle is the attempt to blame Bill Clinton, Democrats, Barney Frank, etc -- usually via some contorted interpretation of policy involving the GSEs during the 1990's. I've noticed that those pushing this most stridently aren't exactly known for their expertise on either economic policy or the financial markets. It's true that neither political party's hands are clean on all this. But look: it's undeniable that a cornerstone of the administration's domestic policy in its first term was -- in concert with the Federal Reserve and to the benefit of Wall Street -- a historic expansion of the homeowner class by any means necessary.

The public face of that policy was a psychological nexus of ownership, religion, and patriotism. Take a few minutes to read this 2003 speech by Bush, which he made in a part of the country that's now a poster child for foreclosures. Here are a few snippets -- and remember, this is all from one speech, and they appear below in the same order they were spoken:
  • "It's been my honor to come to a place that's embodiment of the American Dream. See, what we believe is, we believe people in this country ought to be able to work hard and dream big, and realize their dreams."

  • "We just had what we call a roundtable discussion -- it happened to be at a square table. (Laughter.) About home ownership, the idea of people owning a home is part of the American Dream."

  • "When I landed at the airport I met a fellow named Denny Klaseus...Out of the First Church of the Nazarene, he has become a volunteer, see. He has heard the call, the universal call of all religions to love a neighbor just like you'd like to be loved yourself."

  • "The enemy hit us, on September the 11th, 2001, and that hurt us. It hurt the economy; it hurt the psyche of the American people. But we're a tough people."

  • "Low interest rates has helped the American citizens. It's helped them buy a home. It's helped them refinance if they own a home. It's put more money in circulation, which is good for job creation. Low interest rates makes it easier to buy a home. And home ownership is at near-record highs -- and that's good because we need to be an ownership society in America. We want people owning their own home. If you own your own home, you have a vital stake in the future of this country."

  • "And even though home ownership is at near-record highs, we've got too many of our fellow citizens who happen to be minorities who don't own a home -- 75 percent of the Anglos in America own a home; the minority home ownership in America is below 50 percent. And it seems like to me we've got to do something about it. If it's good for America that people own a home, we want people from all walks of life owning their own home. And so I let out a goal. I said over the next decade, we want there to be 5.5 million new minority home owners."

  • "But here are some of the things that we intend to do and we discussed today earlier. Sometimes people have trouble finding the down payment for a home. It makes them nervous when they hear the down payment. We need to have a down payment fund to help people with down payments if they qualify."

  • "And so we've doubled the amount of money available for community-based programs, faith-based programs -- (applause) -- to be able to brief their parishioners and/or their fellow citizens about the opportunities and the hope and what it takes to be able to purchase a home."

  • "We're overcoming the challenges to our economy. And I also want you to know we're answering the great threats to our security. September the 11th, 2001 moved this country from grief to action."

  • "And we now see the nature of the enemy very clearly. These people are terrorists, cold-blooded killers."

  • "Since the liberation of Iraq, our investigators have found evidence of a clandestine network of biological laboratories, advanced design work on prohibited longer-range missiles, an elaborate campaign to hide illegal programs."

Read the full text here. As they explain this period in U.S. economic history, I suspect future historians will focus on this theme.


Anonymous Anonymous said...

Looking at a lot of these "explanations" on how the Democrats caused the economic crisis, the racial subtext is glaring. In fact its barely even a subtext for a lot of these wingnuts. In their imagination the cause is poor blacks being encouraged to buy houses they couldn't afford because of laws like CRA, companies like Freddie/Fannie etc

And this will work 30-40% of the population. The rest of the media will ignore that these ideas are out there and who put them out there.

10/05/2008 8:40 PM  
Anonymous Anonymous said...

Those who blame Clinton et. al. won't care what Bush said. To those people, Bush is now officially a liberal. As Glen Greenwald has pointed out, conservatism can't fail, it can only be failed.

10/05/2008 9:12 PM  
Blogger Jimmy the Saint said...

Anon 8:40,
Charlie Gasparino tried to trot that BS out there on Friday. Barry Ritholtz promptly told Charlie that he was full of it.

10/06/2008 12:51 AM  
Anonymous Anonymous said...

It had to be Clinton. How could it not be?

10/06/2008 8:38 AM  
Anonymous Anonymous said...

Gee, imagine all the various ways in which vast sums of money could have been made if only one could know, with high certainty, in around July-Aug 2001 that interest rates would be taken down so incredibly low.

10/06/2008 9:08 AM  
Blogger Mr. Hedley Bowes said...

There's a meme emerging in some corners that the current crisis has the quality of a 'controlled demolition' of the economy. Perhaps it is no coincidence that JPMorganChase called Lehman just a few weeks ago. Note the date of the call.

10/06/2008 12:11 PM  
Anonymous Anonymous said...

Good find.

Like Wolfowitz said, Use "whatever sticks."

I think few politicians have a clue what is an American Dream.

Through the years it seems:

- When Republicans are asked a question, they do not answer it. Instead, they turn around and ask a question about the other candidate or party.

- Republicans call someone a liar and flipper for insane reasons. For example, if the candidate says they are for free trade in one speech, but has problems with NAFTA in another.

- Republicans never do any wrong or have any weak points, but they'll gladly tell you about everyone else.

- Republicans don't want to convert you or inform you, they want to steam roll over you.

I don't see how Republicans can solve anything, because in order to solve problems, you have to understand it, define it, and communicate, and that takes honesty, courage, and the willingness to listen and work with people.

Naomi Klein had an interesting speech at the University of Chicago:
Wall St. Crisis Should Be for Neoliberalism What Fall of Berlin Wall Was for Communism

Floyd Norris on job creation.
My favorite response was: "Ask any Midwest American farmer and he will tell you why the Democrats create more jobs than Republicans — A beat cow gives less milk." His blog today, is a run down of the world financial markets, and not only is the American Dream in jeopardy but the World's.

10/06/2008 1:50 PM  
Anonymous Thomas Daulton said...

Talking about the "controlled demolition" of the economy... was it from the comments of this blog where I got this? Here is a page which purports to have seen the Federal contingency plan for what-if the U.S. government decides to default on its debt.

Now, TCR's take, that Bush made a national priority of getting people into unwise home ownership, is very sharp. (Although every single President I can remember in my lifetime promoted home ownership. Anyone remember Ronnie Reagan talking about his idea to give M. Gorbachev a helicopter ride over the California suburbs, with their pools and houses, and tell him "Look Mr. Gorbachev, the difference between our countries is that in my country all those workers OWN their own houses" ?? I remember hearing about that in the 1980s and thinking to myself, 'Ronnie you old dodder, the workers don't own those houses, the banks do. Miss a couple of mortgage payments and see who really owns that factory worker's house.' Looks like I was a bit more prescient than the Great Communicator, eh?)

The currently popular talk-show idea that the crisis resulted from black people getting home loans, of course, strikes me as bunk as well.

But I can't discount the fact that the Clinton-Era repeal of Glass-Steagall Act set the stage for this crisis by allowing the banks to issue derivatives based on debt. I'm not an economist, so I doubt I really understand the subtleties. And this was certainly a Republican-led initiative. But Democrats wholeheartedly supported it and stand by it even today.

The Clinton Administration set the stage for many of the appalling developments we see today: domestic spying (nobody remembers ECHELON ??), repeal of Posse Comitatus, "Reinventing Government", the whole bit. This is my big problem with Democrats since about 1980: they don't protect the citizens and consumers, instead they look for ways to accomplish Republican goals in a kinder, gentler manner. Then later when the Republicans get into office, they exploit the openings which the Democrats carved out for them. It's all just a game of good-cop, bad-cop, with the American public as the torture victim.

10/06/2008 2:03 PM  
Blogger Mr. Hedley Bowes said...

"This is my big problem with Democrats since about 1980: they don't protect the citizens and consumers, instead they look for ways to accomplish Republican goals in a kinder, gentler manner. Then later when the Republicans get into office, they exploit the openings which the Democrats carved out for them. It's all just a game of good-cop, bad-cop, with the American public as the torture victim."

Well said, Mr Daulton. I've come to the conclusion that it's all about trust. The Democrats trust that deregulation will bring about a new age of prosperity and innovation (repeal of Glass/Steagall, the '96 Telecommunication Act, et al). The Republicans trust that after the enabling legislation has passed, and the fleecing of the markets is nearly complete, they can retire to whatever privileged corner of the world without fear that the Democrats, or anyone, will have the power to hold them accountable.

10/06/2008 2:17 PM  
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