I want to start by apologizing. I’m going to refer to an article on another blog that I’ve linked to twice already but it is such a perfect example of the kind of thinking so much of the fundamentalist base of the GOP engages in. People often say that they are appalled by the hatefulness and tone of so much of what gets written on the net but I think this is an extremely superficial way to look at it. I consider it more the natural honesty that anonymity engenders. People who would never think of using certain words or espousing particular ideas in public have the opportunity to really be honest online. You want to know what people are REALLY thinking, pay attention to those comment sections. And with that in mind…
The far-right blog Post-American Confederate (previously Daddio’s Dark side) posted an article explaining the current financial crisis the other day. The cause, of course, was liberalism. After all, isn’t the cause of everything that is wrong with the country liberal ideas? I find this sort of attitude common among the Rush Limbaugh/Bill O’Reilly loving shitheads that seems to have become the backbone of the party. It’s a kind of binary thinking that disserves a democracy greatly.
I posted a reply to this absurd idea, but as I’ve noticed in several other conservative* blogs, dissenting viewpoints, even when they are polite and thoughtful, are not posted by the moderator. So I’m going to take a few minutes to reply to this article here.
Al-Ozarka (non de plume of the blog’s author) is not completely wrong about the Democrats being as responsible for this as the Republicans. Both parties have enabled the financial sector to run amok. Part of the responsibility has to lie at the feet of the Clinton administration, who encouraged Fanny Mae and Freddy Mac to underwrite loans to more and more low-income people. But that isn’t surprising, their mandate was to do just that. But what has also led us to this situation is strangely similar to the circumstances prior to the Great Depression. In the 1920s interest rates were low, which spurred a great deal of debt, both private and for investment capitol. The accompanying increase in purchasing caused a big influx of money into the stock market, much of it leveraged on margin (using stock gains to buy more stock without actually paying cash). On Black Tuesday, when stocks began to lose value, brokers started making margin calls and investors couldn’t come up with the money. This exacerbated the losses. Banks, seeing that their investments had lost money, attempted to call in loans. And that didn’t work for the same reason that the margin calls weren’t met- instead of liquid financial reserves what people had was a lot of debt. The big banks were the first to fall (sound familiar?). But this wasn’t the Great Depression yet. Many economists think that even in this situation it could have been simply the recession of ’29 if not for a couple of things. First, the Republican administration at the time attempted to fix prices, which is a bass akwards way of managing a free economy. They did attempt to pump some cash into financial institutions but due to rules about how much money the Fed could dump into the economy (limited by rules tying outlays to gold reserves) it was too little too late by the time they tried to do it. This resulted in a failure in confidence and the eventual run on the banks, causing more banks to fail. This didn’t happen overnight. It took a few years. But few people disagree that what the government did helped little and many feel that it actually made things worse.
It is interesting to note that the Republicans had been in power for the decade prior to the ’29 crash (and the first several years after) and that their policies had contributed both to the boom in the twenties and the severity of the depression. Likewise, as far as the government is concerned, Republicans must bear the brunt of responsibility for our current situation. People have been warning about an impending sub-prime mortgage problem for years now and nothing has been done about it by either party. You don’t have to be an economist to realize that in a country where median income is around $35,000 and median house prices are over a quarter of a million dollars, somebody is living way above their means.
It’s also interesting to note that the previous Bush administration had a similar problem with the Savings and Loan industry. In fact, in my life I’ve noticed that every time we have a Republican administration we get a war and the economy winds up overheating. (In fact, Regan/Bush started two wars and had the S&L crisis, and Bush Jr has started two wars and now had this. Uncanny, huh? Well, Bush Jr. always wanted to out do his father, and he has in spades since his wars and financial crisis’ are far worse. ) As fond as I am of the idea of free markets, I also realize that if you don’t watch the finance industry closely they seem to start playing shell games (repackaging bad loans and selling them to unwitting investors, for instance). My current mortgage was sold to another bank before I got my first statement, and the loan on the last house I bought was sold FOUR TIMES before we even went to closing! And these loans were far from sub-prime.
The bottom line is that our elected leaders have set the ship to sinking and we really have no choice but try to bail ourselves out. Let’s hope they do a better job on this than they have on anything else in the last decade.
Me, I bought another 50 pound bag of rice at Sam’s last week.
*We really need a new word for what the current Republican party is. Conservative in the classic sense is inaccurate. The Goldwater conservatives and Libertarians that used to be a major force in the party are now relegated to its fringes and as appalled by the current administration as many liberals. I’ll work on this for another post perhaps.