TeeJaw Blog

Destructive Government Policies, Economic Wreckage, Toady Journalism, and a False Narrative of Blame

Posted in Government and Politics by TeeJaw on Wednesday, October 12, 2011, 12: 32 PM

If you are not already a subscriber to the Wall Street Journal I wish you’d go out an buy today’s edition at your earliest convenience.  It will be the best two dollars you’ll spend all day just for Peter Wallison’s op-ed piece on page A21 titled, “Wall Street’s Gullible Occupiers.”  The article is available online here, but you must be a subscriber to the digital edition.  Too bad, everyone should read it.  If you don’t buy the paper maybe they’ll make it available at the free site called “Opinion” (or something close), but don’t count on it.

It’s one thing that our Government makes a regular habit of adopting destructive economic polices that result in financial wreckage, but quite a worse thing that government, with the help of its toady reporters in what Rush Limbaugh calls the “state-run media” (because they act just like they were run by the government), is then able to shift the blame for its own dereliction to the private sector.  Thus was created the false narrative in the media that the financial crises and the ensuing deep recession is all the result of “greed”* and recklessness of investors and  insufficiently regulated Wall Street investment bankers, as well as commercial banks making risky subprime mortgage loans.

The truth is that the whole thing is the fault of reckless politicians, mainly the duo of Massachusetts Representative Barney Frank and Connecticut Senator Christopher Dodd, with the help of the Clinton administration, for pressuring banks to increase the percentage of subprime loans they were making, and requiring Fannie Mae and Freddie Mac to increase their percentage of mortgage financing for subprime loans.  The ostensible goal was to increase home ownership in America.

So what did the government get for these horribly unwise policies?  An increase in home ownership from 65% (where it had been for years) to 69%.  But it didn’t remain there for long.  As the housing bubble grew and home prices rose, delinquencies and defaults on subprime mortgages were staved off by sales of homes when the original borrowers could not meet their payments. Investors saw that the securities created by these mortgages, called MBS’s for “mortgage backed securities” were offering high yields and the risk appeared less than expected on an otherwise inherently risky investment.  Thus, demand for MBS’s grew substantially.

But the housing bubble began leaking by 2007 and finally burst in 2007-2008.  Holders of MBS investments began incurring losses.  Mortgage defaults and delinquencies shot upward.  The financial crises was on, soon to be followed by recession, to be followed by deep recession.  And what do we get, we the truly innocent who did nothing to cause any of this?  We get a piece of horrible legislation that goes by the name of the “Dodd-Frank Financial Regulatory Act,” that is supposed to protect consumers from “predatory” banking practices but in reality will do more harm to consumers than all the banks in the world can do and has already resulted in increased fees for checking accounts and debit cards, and will lead to more and more banking fees as banks endeavor to recoup the costs imposed on them by Dodd-Frank.  As further salt in our wounds this atrocious legislation bears the name of the two most culpable politicians in causing the very economic mess we all live with today.

The toads in the state-run media lap up the government’s false narrative and repeat it over and over so that everyone is confused and misinformed and laying blame in all the wrong places.  And now this:  a bunch of crazed gullible weirdos occupying Wall Street, making nutty demands, defecating on police cars, and creating havoc — all for nothing worthwhile but to alleviate their empty-headed rage at their own helplessnes.

Do get today’s Wall Street Journal and read Peter Wallison’s op-ed on page A21.  It is a clear and concise explanation of the subprime mortgage crisis and the causes of the housing bubble.


*A brief note on”greed.”  Greed is a human universal.  Being ever present, it explains nothing.  We all are greedy in the sense that we are acquisitive.  We want things, and we always want more. That drives us to work, invest and achieve.  It’s not a bad thing.  In fact, it’s a good thing.  But here is what is important to understand:  nothing as universal and natural as greed can ever be the cause of anything. To say something happened because someone was greedy is non-sensical.  Such protestations obscure rather than enlighten.


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  1. […] October 12, 2011 — Destructive Government Policies, Economic Wreckage, Toady Journalism, and a False Narrative of Blame […]

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