A post by Maynard
I continue to check in on Peggy Noonan. She lays out her thinking in a way that brings us a step closer to clarity, even if I don’t always agree with her conclusions. Today she writes about Washington’s claim that it’s trying to shed light on our economic dysfunction.
We ask who (or what) laid the groundwork for the financial collapse. Enquiring minds want to know! We feel we’re getting snowed. It looks like the people who made the problem are still running the show, and they can only stay on top if the citizens remain in a daze.
In noting a campaign of obfuscation by government and media and other guilty insiders, I don’t want to oversimplify. To a fair extent, we’re the victim of thinking we could get something for nothing. Too many of us lived as if our houses were self-filling bank accounts. Never forget the extent to which we’re participants in our own plunder.
Anyway, after observing the most recent round of Washington hearings, Noonan wrote this article: “After the Crash, a Crashing Bore”. It includes this fantasy (that is, not real!) testimony by Charles Prince, former CEO of Citigroup. Here’s what Noonan imagines Prince might have told Congress if we lived in a world where people spoke the plain truth:
Let’s be real. This is what happened the past 10 years. You, for political reasons, both Republicans and Democrats, finagled the mortgage system so that people who make, like, zero dollars a year were given mortgages for $600,000 houses. You got to run around and crow about how under your watch everyone became a homeowner. You shook down the taxpayer and hoped for the best.
Democrats did it because they thought it would make everyone Democrats: “Look what I give you!” Republicans did it because they thought it would make everyone Republicans: “I’m a homeowner, I’ve got a stake, don’t raise my property taxes, get off my lawn!” And Wall Street? We went to town, baby. We bundled the mortgages and sold them to fools, or we held them, called them assets, and made believe everyone would pay their mortgage. As if we cared. We invented financial instruments so complicated no one, even the people who sold them, understood what they were.
You’re finaglers and we’re finaglers. I play for dollars, you play for votes. In our own ways we’re all thieves. We would be called desperadoes if we weren’t so boring, so utterly banal in our soft-jawed, full-jowled selfishness. If there were any justice, we’d be forced to duel, with the peasants of America holding our cloaks. Only we’d both make sure we missed, wouldn’t we?
Of course, Prince didn’t say any of those things. The actual Citigroup testimony, as summarized by Noonan, is this: “We didn’t do anything particularly wrong, and what happened is all so sad, isn’t it?” So everyone exchanged a big group hug and went home.
You can’t fool all the people all the time. But that’s not Washington’s goal. All they need to do is confuse 51% of the people for a single day in November. They’ve done it before, many times. And unless someone in the political arena can speak the hard truth, loud and clear, it will happen again.
A lot can speak the hard truth. Newt Gingrich, Sarah Palin. It is which truth one chooses to believe. Or which truth one can fit into ones ideology. That is it. 51% chose to believe Obama’s truth. Now look where America is. Conservatives need 51% of our kind of truth to win the next one. Conservatives have November to vote in doable ideas. Not just new congressmen or senators that are republican. From now on, substance matters!!
I don’t quite believe this spin. Wall St was not the real crooks here. Well, maybe Lehman. Garbage in, garbage out. They had a wonderful product — bundled mortgages that the Democrats and their handmaidens Freddie and Fannie turned into pure sludge. When Greenspan kept interest rates low for four years, they set up big savers for a search for any return at all. They bought up all the good bundled mortgages. And needed/wanted more. Unfortunately, Clinton’s Community Reinvestment schemes had been burnished and handed off to the likes of Countrywide. Deadbeats could breathe on a mirror and cool, the life of the flipper was born. Late nite infomercials would have hours of how to’s. And then there was the “Money Store”. Mortgages turned into you-give-money-and-I’ll-repay-you-only-if-I-can-unload-this-overpriced-turkey, (otherwise I’m out of here). Second mortgages let people steal their properties increased valuations. And yup, they did.
I highly recommend the Irving Housing Blog. It has everything right. Like last week when they posted how one schemer sucked out $681,000 in each of four years (tax free cash) and then quit paying his mortgage. He’s still living in his mansion, squatting since December ’08….
Maynard,
I have long thought that this whirling economic shit blizzard was whipped up by an impatient American Society’s demand for more and more unaffordable stuff. Over the last generation or so our Bill of Rights has been replaced slowly and insiduously by a Bill of Right Nows, an ever burgeoning list of seemingly essential commodities, like the latest shining techno-gadget or bigger-than-the Joneses McMansion, that must be acquired immediately. Screw the tired old practice of earning the money first to purchase the things we want but don’t really need. No longer is it acceptable merely to be born free within the borders (as porous as they may be) of history’s greatest nation where the opportunity to succeed or fail through one’s own individual effort is Constitutionally guaranteed but today, if we fail to earn these things because we are either unable or unwilling to do so, we must be given each and every one of them by a good and ever more generous Government. Unfortunately, this has been necessitated by the failure of a patently cruel and capricious God (or Nature if you will) to fairly bestow talent, ability and initiative equally among the population. Surely a Goverment made by Man can, in it’s greater wisdom, restore “fairness” to this flawed design. And until we find a way to redistribute talent, ability and initiative (and brains and beauty for that matter) we must be beholden to our representatives in Washington for the reapportionment of the fruits of individual endeavor.
This belief that it is our birthrite to receive a ‘fair” share of the American dream is the legacy bequeathed by the preceding “Me Generation”. In addition to teaching us all that a feeling of self-worth is indeed the most sacrosanct right they have taught us as well that stuff equals self-esteem, hence our frenzy to salve our Souls with more and more tangible assets. And they have proven too beyond any doubt that a right is not simply the legally protected opportunity to engage in a particular behavior (like purchasing a home or health insurance) but that a right is a guarantee that if one should fail to avail himself or herself of that opportunity he or she will be made to do so or be punished under penalty of law. Soon we will not only be granted the right to free speech but we will be compelled to speak like all those Obama Care defaming CEO’s. Maybe some day every right will become a goverment mandate and we will be forced to bear arms (or perhaps to not buy guns at all) and abort our children rather than being left to choose to do what we are too stupid to know is in “our own best interest”. Eventually, rather than continuing to be a noble land built upon the rock solid foundation of both personal and national sovereignty, we may even become a country of spoiled and ungrateful children, sharper by far than any “serpent’s tooth”, who will forever be suckling at the teat of a government that itself is a big, neurotic, self-loathing beast that desperately latches onto the cash cow of China (hopefully they will never try to wean us).
So finally, in addition to being governed by a Bill of Right Nows, we can proudly herald the signing of this revised Declaration of Dependence as we sing our new national anthem; “Freedom’s Just Another Word for Nothing Left to Lose”.
The bundling is beyond me, unless it’s like mixing a tanker of milk with a tanker of manure then selling it as two tankers of milk?
I think of the rot that suddenly emerged as the product of a machine (that was running for decades?) The “Fannie Mae and Freddie Mac, Democrat political correctness driven, banker fear and greed, spread the wealth, risky investment machine.”
The bundling was done to improve the rating of the security. If GMAC buys one mortgage they have the risk that the mortgagor will default. That risk is the default rate of those who have similar quality mortages. Add 10,000 more mortgages into the bundle, and the default risk appears to drop, statisticly speaking. As we saw, 10,000 bad mortgages does not turn a stinker into a rose. AIG made matters worse by selling “credit default swaps” against the bundled mortgage bonds. The CDOs were not required to have reserves held against them, because regulators all agreed they were not insurance, and should be virtually unregulated, even though they were sold as a “swap” for a bad bond. To get the rates for CDOs (virtually free money to AIG as long as the game went on) they endlessly bundled the mortgages to get a AAA rating with a default risk of near zero. That qualified them to sell to foriegn banks, IRAs, life insurers, governments, they appeared to meet the most stringent and prudent investor tests as rock solid risk free bonds. The AIG bailout was a way to repay foriegn investors for foolishly believing they were investing in good assets. Without it, there would probably have been a much louder cry for an international financial regulating body. Individual governments were threatening to limit U.S. investments. The cry for global regulation started to die down, after U.S. taxpayers began reimburseing foriegn investors through AIG.
This is what happens when politicians prostitute themselves, handing out free lollipops to all the brain-damaged children who then dutifully vote for their favorite “sugar daddies”. Thanks to all the whores (both “R”s and “D”s), and their willing accomplices in the media.
“On Wednesday, Mr. Greenspan said it’s easy to look back and see your mistakes, but what is to be gained by endless self-examination? ”
what part of people with no credit who make at or bellow the poverty level can’t afford a mortgage for a MacMansion and the government should not be involved in forcing banks to make such loans was so hard to fathom at the time ?
it’s not “endless self-examination” if it’s actually no self examination but rather a wink wink nudge nudge mutual admiration society whose only objective is self preservation. no one wants to be on the bad side of a hitler when everything from the banks to labor to health care are under his thumbs.
although hitler was funneled money from the international banking community, eventually he saw his way around the jooooo bankers and their zionist schemes by printing his own money not backed by gold. if one can’t outright take banking systems over especially beyond your boarders( germany was drowned in debt and reparations from ww1 as the world wide depression descended- they were dependent on outside economic support) the next best thing is to circumvent them. in this way hitler was able to grow a war machine that was able to conquer most of europe and keep germans employed and fed through to the end.
by giving tax payer money to banks this allows the fascists to control who the banks lend to- one more brick in the road to serfdom. once hitler had unlimited power he forced banks to rid themselves of their jewish employees- many did so willingly- and eventually forced them to aid in the confiscation of jewish wealth and the turning over of jewish companies to aryans- some did it willingly, although of course there was truly horrific means of compulsion at hand.
by leaving aryan bankers and businessmen nominally in charge of their respective concerns, but loading them up with government enforced rules and regulations, hitler perpetrated a leftist socialist take over of a country. hitler was never one to let a crisis go to waste- even if he had to create it to begin with.
it just all seems too too familiar . germany was left with remnants of the nanny state parts of national socialism and the autobahn. what will be left with if we don’t stop this crazy thing?