There will be no economic recovery in the country as long as the Republican Party exists.

[Elwood P Dowd]

http://www.economicpopulist.org/content/scapegoating-fannie-and-freddie-new-republican-orthodoxy

Scapegoating Fannie and Freddie - the New Republican Orthodoxy

Submitted by Michael Collins on Thu, 12/16/2010 - 21:42


You have to be blind, dumb, or maliciously misleading to miss the contribution of Wall Street to the housing bubble and the financial crisis.


Yesterday the four Republican members of the 10-member Financial Crisis Inquiry Commission issued their own report on what caused the credit crisis of 2008-2009. They did this because they wanted to put down a “marker” on what they think happened to the markets and the economy, before the whole commission releases its official report next month. Many observers say this unusual move will damage the credibility of the official report, and reflects yet again the bitter partisan struggle that is taking place in Washington between Republicans and Democrats.

This is not a partisan political struggle going on here, at least not for the most part. Enough Democrats on the Commission have spoken up that we see what is really happening. The Democrats who run the Commission are using fact-based arguments and reality-based research to determine what happened during the financial crisis. The Republican minority members are all theologians using a faith-based approach that says government is evil and fundamentally at fault here, the market is all-pure and all-wise, and the “financial industry” is certainly not to blame.

As reported by one of the Democratic Commission members, Brooksley Born, the Republicans demanded but failed to get the Commission to remove all references in the final report to “Wall Street” and “shadow banking”. Sure enough, you will not find these phrases in the Republican 13-page document issued yesterday, which is a fantasy statement that complies with Republican theology on the markets, but conforms very little to a realistic view of what happened during the credit crisis. We should definitely pay attention to the Republican statement, not for what it says about the financial crisis, but for what it says about the state of the Republican Party.

<snip>

Democrats on the panel apparently spent most of the summer negotiating with the Republicans over conclusions and wording in the final report, only to realize that no agreement was possible. They did not comprehend they weren’t dealing with men who valued rationality or consistency, or who respected the evidence in front of their eyes. The Republican Commissioners are theologians in the tradition of the new Republican Party, and they are every bit as rigid and dogmatic in their thinking as the evangelical Christian Republicans who equate abortion with murder. These men cannot and will not ever accept anything but the party line, even if it does originate from the likes of Rush Limbaugh.

One of the conclusions that the Democrats should come to, but which they may not print, is that a principal contributor to the financial crisis was the Republican belief in the infallibility of the markets, and the consequent dismantling of the Glass-Steagall act and any meaningful regulations over the shadow banking system.

An even better conclusion is this: there will be no economic recovery for this nation, and no way to solve our many serious problems, as long as the Republican Party exists. The Republican Party needs to die, and be replaced by a whole new political party that respects and abides by what the intellect and rational thought can adduce. The reliance on fantasy, wishful thinking, propaganda and other forms of deceit – all of which are the hallmarks of a theistic and authoritarian organization – must cease, as must the practice by certain Democrats of negotiating and “compromising” with such people as if they were principled and reasonable actors.

[The Magistrate]

1. Mr. Collins Is Quite Correct, Sir

[Kennah]

2. Not True

All it takes is 60 Progressives in the Senate, 218 in the House, one in the White House, and watch the recovery begin.

[moondust]

3. Plutocrats and their fools.

Holding the world hostage with no end in sight. On the contrary, voters just gave them a big boost in the midterms.

:smoke:

[GreenTea]

4. Oh absolutlutely....this is fact!

[sendero]

5. The removal of Glass-Stegall..

.... was signed by Bill Clinton.

Obama had the perfect opportunity to reinstate it functionally, but he did not.

I'm not exactly sure why anyone would think the Dems are any less culpable for our current mess than the Republicans.

[Laelth]

6. Culpable, yes, but still rational. n/t

-Laelth

[sendero]

8. The Democrats..

... talk better than the Republicans. They blather about the "working man". When it comes time to do something for the working man they fold like a paper napkin.

I'm sorry, anyone that thinks that any currently extant political party is going to lead us out of our bankster-controlled wilderness is a fool.

[Raine]

9. Totally agree they are co-enablers

who take turns playing good cop/bad cop and to thing otherwise is just totally naive.

[Laelth]

10. I agree and have so argued.

Here: http://laelth.blogspot.com

:toast:

-Laelth

[Dokkie]

7. I guess this means

we should brace ourselves but a Republican or independent candidate come 2012 cos if you think Obama is getting re-elected without an economic recovery then you must be high on something. This is the kind of divisive fear mongering that drives me crazy.

[jtuck004]

11. There will be no recovery w/o demand, regardless of what party exists.

And while there is very likely to be no demand as long as the income inequality we have exists, there is an even greater likelihood that there will be no demand without a program of sufficient size that focuses on building in full employement for the next century. (Perhaps along the lines of or larger than what China is doing by allocating $1.5 trillion to "strategic industries", such as alternative energy and high speed rail, and projects such as the canal that will bring water from the South of the country to the more populated North).

Our problem goes back a bit, to the point when Ronald Reagan fired Volcker and hired Greenspan. Volcker did a tremendous job lowering inflation back to single digits, which was his job. But Reagan wanted someone who was anti-regulation, and he found that in Greenspan. Greenspan is famous for saying there is no need for regulation, because economic transactions are rational, and a rational person would not enter into a bad deal. Starting with this complete and total lack of a grasp on reality they began to dismantle protection for unions and accelerated the movement of industry out of the country.

Clinton, with Rubin and Summers, enthusiastically passed the Gramm-Leach-Bliley Act, which was the end of Glass-Steagall, and, perhaps worse, signed the Commodities Futures Modernization Act. That, done in the last weeks of the administration, created the structure of allowing investment banks to create instruments such as collateralized debt obligations, or CDO's and other weapons of mass financial destruction. Clinton has also shown some regret over that, saying that he got bad advice.

Regardless, that created the engine, but Wall Street and the lack of regulatory oversight during the Bush Administration (glad to see Brooksley Born back - Greenspan kept her from making CDO's and other instruments that would ultimately cause so much damage a real issue) allowed the banks to create an estimated $450 to $750 TRILLION dollars of leveraged "value" on top of our $13 trillion housing market, selling this crap to pensions, state funds, and investors around the world.

President Obama has hired the Bernank and the Geithner, both players of this earlier era, close associates of those who may still prove to be the instruments of the destruction of this country (this isn't over - it's just in remission. They are already ramping up these instruments again). But rather than work on the demand side, they have funneled money to many banks and investors, including major donors to President Obama's campaign fund, such as Goldman Sachs, Chase, GE and others, apparently under the presumption that making those entities very wealthy again will cause the economy to come back. Somehow. (The reasoning was that the whole world's financial system would have collapsed if they didn't. Kinda like we had to attack Iraq because of WMD's).

It is documented that up to $24 trillion dollars was allocated for various programs to help investors recover, most of which was in the nature of loans, although about about $3 trillion has been paid out and will not be recovered. Unfortunately much of this exists behind a cloud of secrecy and obfuscation created and maintained by the Federal Reserve, Treasury, various investment banks and investors around the world working with these "off-the-books" transactions have remained that way. Regardless, there are many books and reliable references to pieces of this, the Federal Reserve has recently released some parts of their actions, and a more robust, yet still incomplete, accounting of a larger piece of this is to be released in 2011.

Compared to this, however, there have only been token efforts to address demand.

[moondust]

12. +

Capitalists can scoff all they want at commie five-year plans but...they have their advantages. Those kinds of big, expensive, long-term, "strategic" projects are apparently not politically viable in the U.S. so we go without.