Philosophy Weekend: How To Yell About The Economy

A hilarious video of a self-proclaimed Tea Party Congressman from Illinois yelling at his constituents during a campaign appearance made the rounds this week. Representative Joe Walsh (no relation to the talented rocker, whose best song is right here) makes himself ridiculous, though to his credit he seems to realize by the end of this two-minute video how badly he’s lost his cool (the woman he’s yelling at easily wins the fight with the simple power of a patient smile). Here’s what he’s saying:

CONGRESSMAN: I don’t want government meddling in the marketplace. Yeah, they move from Goldman Sachs to the White House. I understand all that. But you’ve got to be consistent.

And it’s not the private marketplace that’s created this mess. What created this mess is your government, which has demanded for years that everybody be in a home, and we have made it as easy as possible for people to be in homes. All the marketplace does is respond to what the government does. The government sets the rules. Don’t blame banks and don’t blame the marketplace for the mess we’re in right now. I am tired of hearing that crap.

WOMAN: Don’t you think —

CONGRESSMAN: I am tired of hearing that crap.

WOMAN: — exploiting the situation? Taking and doing out money to people they know couldn’t afford —

CONGRESSMAN: They’re are already mechanisms in place —

WOMAN: You don’t have to scream at me, I can hear you.

CONGRESSMAN: This pisses me off. Too many people don’t listen. There are already mechanisms in place to do that. Are they doing their job? No. But what do you want to do? You want to bombard them with more regulations, more government?

WOMAN: No, I want smart reform.

CONGRESSMAN: Government screwed this problem up. You know what you got? You got Dodd-Frank. You got Dodd-Frank now, that’s tying everybody’s hands. You want more reform, more regulation? That’s what you got. Do you want more regulation? Is that what you want? Do you want Dodd-Frank?

Even though this foolish tantrum is funny enough to go viral, the tone of Rep. Walsh’s tirade is sadly typical of the level of many public discussions about the US economy. Opinionated citizens on the left and right feel proud of their rage; we deliver our loud speeches as a cry from the heart. We’re mad — aren’t you impressed? With the Tea Party movement and the Occupy Wall Street movement both in full swing, we now have loud protests on both the right and the left, and yet there’s little indication that the better ideas of either protest movement are actually changing the way our government or banks operate. It’s easy for concerned American citizens to feel bewildered and helpless amidst all the noise.

I proposed last weekend to begin a series of blog posts examining how intelligent and well-meaning protesters inspired by either the Tea Party or Occupy Wall Street might find common ground on their core principles and work together to promote meaningful change. We’ll break this into four sections over several weeks: the economy, social issues, foreign policy and the environment. The financial disaster that followed the economic crash of 2007/2008 is often the primary topic in both movements, so let’s start by talking about the economy.

This is a topic of monumental complexity, but we can’t let this fact discourage us, because a unified protest platform might be the only way to rescue our public dialogue (as currently manifested in insipid television news, newspaper and radio coverage) on critical problems: if we protesters truly care about the US economy, we better start working together, because the lack of a coherent public voice has left our government dysfunctional. Currently, the single biggest barrier to common ground between Tea Party and Occupy protesters on the economy is the divided narrative over what went wrong when our banking system crashed between February 2007 and September 2008, depleting the savings and destroying the livelihoods of many hard-working Americans. Two separate narratives have emerged to explain what went wrong to cause this crash.

Historians have observed that different nations often develop vastly different narratives for past events (consider, for instance, the vast difference in the way Israelis and Palestinians describe the Six Day War, or the way English, French, Russian or German 19th Century writers portray Napoleon). What’s amazing about the divided narrative between conservative and liberal Americans over the economic disaster of 2007/2008 is that this divide is sustained within a unified society. It is not foreigners but our own neighbors, co-workers and even family members who hold radically incongruous beliefs about what happened in our own country three years ago. We speak the same language, and yet we’ve developed vastly different stories.

The narrative behind the Tea Party protest, often reflected also by traditional conservative or Republican pundits and politicians, is that the economy crashed because the US government pushed a program of easy and cheap home ownership for lower middle class Americans, creating a mortgage bubble that crashed in 2007 when many of these home owners could not pay their mortgages. According to this narrative, the government’s plan amounted to an insidious form of socialism, manipulating “funny money” to control the economy and subsidize the poor while profiting from the financial exploitation of everyone involved.

The narrative behind the Occupy Wall Street protests, often reflected also by traditional liberal or Democratic pundits and politicians, is that the economy crashed because the regulations that have kept our banking system honest since the Great Depression had been gradually removed in pursuit of unnatural levels of profit, allowing executives of companies like Chase, JP Morgan, Citibank, Wells Fargo, Wachovia, Goldman Sachs, Bank of America, AIG, Lehman Brothers and Merrill Lynch to become obscenely wealthy while disregarding the obvious risk their new products of unregulated finance — hedge funds, credit default swaps, securitized mortgages — presented to the American economy. According to this narrative, the fact that securitized mortgages from the housing bubble caused the 2007/2008 crash is nearly irrelevant; Wall Street had already become rotten with “too big to fail” schemes and scams by this time, and if the mortgage bubble hadn’t taken the economy down, something else would have soon enough.

Who’s right? The answer is simple: both narratives speak the truth. And both narratives converge when they describe what happened next: embarrassed Wall Street-fed Republicans and embarrassed Wall Street-fed Democrats, including both President Bush and President Obama, agreed to bail out the banks to prevent complete economic collapse. We were told that this was a necessary step, and it may have been, even though it outraged Americans of every political persuasion. So, if Tea Partiers and Occupiers can agree on our outrage about the bailout of 2008, why must we continue to sustain separate narratives about what led to the failure in the first place, and why is there so little clarity about what is needed to restore honesty and common sense to our economy?

In order for concerned Americans to take the first step towards a unified protest platform, we must all come to terms with the full narrative of what went wrong to cause the crash of 2007/2008. It’s a double-guilt narrative: unregulated capitalism and big government both failed us. It’s a sad fact that every bad financial decision made by the banks was enthusiastically supported by our Congress and our Presidents (and, let’s not forget, by our “brilliant” and highly educated business journalists, pundits and economics professors too). The deregulation trend that began under the presidency of Ronald Reagan continued under George H. W. Bush, Bill Clinton and George W. Bush. Both Democrats and Republicans backed the activities of government mortgage associations like Fannie Mae and Freddie Mac. Every single major American politician in recent memory seemed to endorse the gung-ho economic optimism — grow! grow! grow! — of the Federal Reserve Board’s celebrity chairman Alan Greenspan.

But the greatest confusion lying within our divided narratives involves the role of regulation in the US economy. Congressman Joe Walsh’s tirade is not only remarkable for its obnoxious delivery but also for a logical fallacy at its core. Tea Partiers are correct to be angry about the government, but their argument becomes highly suspect when they begin throwing around the word “regulation”. The government was a big part — maybe the biggest part — of the problem, but not because it was regulating too much. Fannie Mae and Freddie Mac were not regulating bodies. The bailout of 2008 was an obscene act of government arrogance and injustice — but the bailout was not an act of regulation. It was, in fact, the erosion of regulations, like the revocation of the important Glass-Steagall Act in 1999, that allowed banks to become too big to fail, leading to the disaster that followed.

To put this in simple logical terms, the following two statements are true:

PREMISE 1. The federal government’s activities in the mortgage market were a primary cause of the crash.

PREMISE 2. The federal government is responsible for regulating the financial marketplace.

However, these premises do not imply that:

CONCLUSION: Federal regulations were a primary cause of the crash.

This is an invalid and clearly false conclusion, and I challenge anyone to support Congressman Joe Walsh’s strange tantrum by providing an example of how government regulation, rather than government deregulation, led to the crash of 2007/2008.

This is an absolutely critical point, and I wish I could meet with Representative Joe Walsh of Illinois and yell this back in his face (if I could get him to calm down long enough) to see if he can possibly formulate a counter-argument. I doubt he’d find much to say. There’s plenty wrong with our government and our banking system, and these systems need to be radically changed. But attempts at sane regulation like the Dodd-Frank Bill are not part of the problem; they are weak (too weak) attempts at a solution.

Please let me know how you think this experiment in rational public dialogue is going so far. Of course, we can’t cover everything we need to discuss regarding a unified protest platform for the US economy in a single blog post, so I’d like to pick this topic up again next weekend from a different angle.

18 Responses

  1. Enjoy your perspective Levi,
    Enjoy your perspective Levi, but I don’t think debating with conservatives/tea partiers is going to work most of the time. They are thinking of their profits instead of the best solution. Our logical approaches are on different plains. Nonetheless I am like you; always ready to try and work something out together … that is until my opponent starts getting personal.

    Thanks again for your perspective Levi, very refreshing.

  2. But, Eamon, are the average
    But, Eamon, are the average Tea Partiers really “thinking of their profits”? I’ve talked to many people who are strongly in favor of the Tea Party message who have absolutely no stake in any profit based on the policies (unregulated capitalism, reduced government) the Tea Party seems to support. Similarly, many wealthy people who might not benefit financially from the changes the Occupy movement seems to support are cheering for the Occupy movement. Even Warren Buffett published a (great) article in the NY Times asking Congress to stop giving tax breaks to rich people. I really do believe that most people base their political views on what they think and feel, more than on the personal benefit they get from any political position. I hope I’m right about this …

  3. Both sides are so entrenched
    Both sides are so entrenched in their thinking and dislike of the other side, I doubt they could even talk. Let us not forget, the vast majority of people are not involved with the tea party or OWS but sit in the middle which makes them dislike partisanship of both sides. It won’t be the tea party or OWS that will decide 2012 but the middle and independents, who probably will enter that voting booth holding their nose.

  4. Is this not an example of two
    Is this not an example of two opposing ideologies trying to correct a problem using tools that are incompatible for that very problem?

  5. Why do you say that, mtmynd?
    Why do you say that, mtmynd? I don’t get what you mean. It seems to me that the kinds of practical financial industry regulations instituted during the FDR administration after the Great Depression (and then eroded under Reagan, Bush and Clinton, leading to the scandal-ridden era of the Savings & Loan crisis, Enron and Bernie Madoff as well as the mortgage bubble) is the main tool that will solve the problem.

  6. I get so tired of hearing
    I get so tired of hearing people blame Dodd-Frank for the housing crash. Critics say the government forced mortgage companies to lend money to people who couldn’t afford to pay it back. But lets look at why they couldn’t pay it back.

    The mortgage companies said, “We’re taking bigger risks with these low-income borrowers, so to compensate for our risk, we need to charge higher interest with variable rates.” This is kind of like someone asking King Kong to put them down, so he THROWS them down out of spite and says, “Well, you said to put you down.”

    Sure, the mortgage companies were taking a bigger risk with poor people, but let me ask this: Were they really mitigating their risk by practically doubling the home buyers mortgage payment within a few years? Not everyone understands the significance of a few interest points. So the buyer starts out with a 2% interest rate, but every year it goes up 2%, and after five years the payment has increasesd more than 75%. The banks knew damn well they were going to repossess a lot of the houses.

    Had the mortgage companies been less GREEDY, they could have sold these houses to low-income people at a higher interest rate, FIXED not to increase, and still made money. And sure some people still would have defaulted, but not as many. Of course, the banks didn’t lose anything because they got a couple of years worth of payments, then they got the house back.

    Of course, we know the other thing that happened: Mortgage companies began selling bundles of these bogus mortgages to banks, but don’t get me started on that. I’ll lose my cool and start SHOUTING.

  7. well said, bill ! . . .
    well said, bill ! . . . *applause* . . .

    tea party demagogues who routinely throw out the words “government regulation” as the root of all evil in their rants— only seems to reinforce my impression that this movement is, for the most part, corporate-sponsored and not of a true grass roots nature.

    the second (o.w.s.-oriented) narrative is much closer to the truth as i see it. government didn’t “push” home ownership— more likely a case of being “persuaded” to legislate and deregulate in that direction by various armies of lobbyists.

    which perhaps brings us to the crux of our difficulty in any scenario of “getting both sides together to solve problems and open up dialogue”— unless we can get the pervasive influence of big corporate money out of electoral and legislative processes, how can anything change?

  8. Hi Levi,
    Do you feel there

    Hi Levi,

    Do you feel there was a point in the last two decades where the economy was healthy? If so, if it could be regained, would it work today?

    You may have seen Jack Abramoff on 60 Minutes two weeks ago. He seemed genuinely contrite about what he had done to the economy, even giving examples of how he had hidden deceptive clauses deep inside bills that allowed his clients to benefit at our expense. I wonder if we could interest him in retracing his steps and showing us where all of his “bodies are buried.”

    Mammals are born into corruption. The first things we get in life are a free bath and a free lunch. Subtly warping a law lets fundamentally honest people benefit and still sleep at night.

  9. Hello, Levi.
    In response to

    Hello, Levi.

    In response to your reply: Congress is responsible for any expenditures of our Treasury which is who we turn to when we are in financial difficulty as we are now. FDR’s admin relied on their own Congress to pass laws which, as time went by, were overturned to Congress, albeit under the control of another Party. But it is exactly that problem “we the people” endure time after time to correct what that very Congress has overspent and are unable to correct in due time.

    Here we are today patiently awaiting the answers of the “Super Committee” made up of 10 people divided by our two party system – (5) Republicans and (5) Democrats. This “Super Committee” is busy finding common ground to cut 10% ($1.5 Trillion) of our National Debt, ($15 Trillion) over a 10 year period! Ten years to finalize a 10% cut to a debt that we are led to believe will one day be paid off! There is no reasonable way for our Nation to pay of a debt of $15 Trillion when we have to add an additional $40 Trillion in our State, Local, business and personal debts (based on the U.S. National Debt Clock posted online by our Federal Reserve).

    Clearly, that amount of debt is not only unsustainable but unreasonable for any country’s Government to ever pay off. For us to actually believe that our “Super Commission” will ever have an answer to a debt load as enormous as that, will have to be through deception if not downright lies.

    So let us ask why we are utilizing Congressional members to correct a problem which they themselves have voted to spend in the first place? Have we, with the world’s most prestigious Universities, asked any one of them for their assistance in dealing with the most crushing problem we may ever face – economic disaster which will affect not only the U.S. but the entire global economy? No, we simply turn to the ‘honorable’ members of our bought and paid for Congressional leaders who could care less about correcting anything but fulfilling the demands of their financial supporters. As it’s been said, our politicians are up for auction to the highest bidder. Take (10) of them and call them a “Super Committee” and we await with baited breath for their decision to cure all the ills of our sick economy, the same economy that they themselves have voted to spend and squander our National Treasury.

    I truly believe that our Politicians, Congressional and Presidential, have at their disposal the full facts of our current malaise and have known of it’s problem for years. They just don’t know how to correct a problem that is as conclusive as a person whose body is littered with cancer cells without a chance of ever surviving, but our Politicians continue fueling the belief that the cure is just around the corner in hopes that they can turn the dying body over to a new Congress.

    This is why I have written “two opposing ideologies trying to correct a problem using tools that are incompatible for that very problem.” We have lived with the current belief in our Capitalist System for many years, reaching its zenith at the end of the 20th Century… a system that has given us all we have to be proud of today. But this same system has also given us the negative side – unsustainable debt that we have never had to deal with before in our country’s history (and that of our global neighbors). Sure, we can find small pockets here and there that are sustainable as far as food and a limited energy source to keep them going, but let’s not fool ourselves into believing that this same system will continue providing us and our progeny with what we have been raised with. It’s an archaic belief in a system that fit the problem 200 years+ ago.

    If we agree that the new tools we have in our arsenal of knowledge and know-how are tools that will build the future, we should be able to see that the entire financial system is undergoing such a radical change, that few of us have the capacity to fully grasp yet… so much of an upheaval is occurring as we speak, changes so dramatic that we live in times so uncertain and incomprehensible that so many of us fear for our lives and our futures, while others find the changes so remarkable that they wish they could live forever!

    Just look around us… the Arab Spring: a time we thought we’d never see in our lives; The People’s Republic of China: we grew up with it being the big, bad Communist country that suppressed their people terribly, and now is modernizing to the extent that the “Old China” is but a memory and not a fond one; the internet: google, Microsoft, Apple, Amazon, Facebook… companies that were unheard of by the vast majority of people only 10 years ago. This is only a beginning of that ‘Brave New World” envisioned by writers and thinkers of yesterday. These are only the simple ideas that will bring such a dramatic change to our lives in the very near future, that our religions, our philosophies, our technologies, our everyday lives will have to change along with these young seedlings of change growing all around us. This includes our economic system that is rapidly gasping for ways to serve the people of our world… the people who need so much of the same things that many of us take for granted… that connection to our “Present Future Modern Now” that is developing quickly. To see (10) people selected by our Government to find a way to curb the debt problem without consulting those that may truly have some clues, if not answers, to the problem is ridiculous, at best. But I reckon that even our Congress has to justify their paychecks from time to time… even if their time produces nothing to correct the real problem – the necessity for a brand new, equitable economic system. It is not only possible but vital to the survival of our species upon this planet.

  10. This response is to both Alan
    This response is to both Alan P. and mtmynd:

    I do not think a functional economy is an impossible dream at all. To paraphrase Elizabeth Warren, who has laid out this argument more clearly than I can, between the presidency of FDR and the presidency of Ronald Reagan, we had a thriving but relatively stable economy. From, say, 1932 to 1980, there were problems (inflation, poverty) but there were no gigantic crashes. A stable economy is a good thing for middle-class Americans — we get hurt the most (and have the least power) when a Wall Street crash or major financial scandal occurs.

    During the presidency of Ronald Reagan and the Federal Reserve Board chairmanship of Alan Greenspan, as I understand it, a trend towards Wall Street deregulation began. So, almost immediately, did the scandals and the crashes.

    To fix the US economy, the first step is simple. Return to the simple regulatory environment that kept banking (relatively) honest between 1932 and 1980. We can start by bringing back the Glass-Steagall Act, which should never have been revoked.

  11. Levi: “To fix the US economy,
    Levi: “To fix the US economy, the first step is simple. Return to the simple regulatory environment that kept banking (relatively) honest between 1932 and 1980. We can start by bringing back the Glass-Steagall Act, which should never have been revoked.”

    The idea is simple, this is true. But the difficulty lies in the ‘return to the Glass-Steagall Act’ which fit the times but I don’t believe will satisfy the current times to the degree it did in 1933… different times require different methods. I believe there is a far better way to handle the problem but first paying of the incredible debt load should be the first priority… and that is where the difficulty becomes insurmountable. We’re speaking of a global economic meltdown on the horizon which necessitates a brand new system.

  12. I’ll amend my comment to say
    I’ll amend my comment to say the government was to blame for relaxing regulations, which allowed the financial institutions to scam us.

  13. i’m curious, cec. what might
    i’m curious, cec. what might this brand new system be, if not a more carefully regulated and more equitably taxed (and “greener”) capitalist-based system? is your statement similar in some ways to mickey z’s view that capitalism must be “crushed,” not fixed?

  14. Good questions, mnaz, and
    Good questions, mnaz, and these questions need to be answered by more people than me. The first to begin with is how do we deal with the nagging debt that seems to be the dark cloud hovering over our country and, indeed, the globe. Is our debt problem a true and believable problem our is it mathematics that has taken over our logic?

    I do not believe what we call ‘capitalism’ will ever be crushed. Capitalism is nothing more than an extension of the barter system which has been in place as long as we know in our history. Once bartering became a bit too clumsy to smoothly function, I believe that’s when the seed of capitalism began to grow – using an intermediate between two (or more items) being bartered for. Thus the coinage which blossomed with the Chinese and paper money (promissory notes).

    It’s apparent in our modern age paper money or even wealth based upon gold has been replaced by plastic (derived, interestingly enough by oil, the great symbol of wealth in the world*), which is used worldwide… many businesses not even dealing with cash.

    (* – Oil will continue being the symbol of wealth for many decades until substitutes, i.e. solar, wind, etc., become fully reliable, which will devalue oil in the distant future)

    If all our value is becoming nothing more than cyber-units that are dealt with at the speed of an electrical impulse, my purchase paid for with a swipe of my credit/debit care which is immediately removed from my account and placed within hours or less into the account of the seller. Nobody sees cash, coin, gold or any other substitute for exchange – simply unidentifiable units exchanged electronically across a worldwide network of fiber cables.

    It makes me wonder when my Social Security is placed into my banking account and I make my necessary monthly payments, without ever seeing cash or otherwise, and the companies I pay are doing virtually the same thing, us there really any transfer of money as we have known it in our not so distant past? If we are operating worldwide on an electronic transfer of ‘units’ what is the true value of these ‘units’ other than a numbering system that has surpassed money as we know it? This new currency, (the currents of electronic exchange), requires a continual interaction of unit exchange in order to continue operating smoothly. When units get clogged up due to something stopping the flow by hording the units (which is unnecessary), that presents a huge problem which must be addressed. We don’t refer to money as currency without reason – as the currents flow so does society.

    This problem we seem to have with our current system we call, “capitalism”, is the continual rise of costs. “Our health care costs” – how many times have we heard that phrase from our political parties? Why does the cost of health care continue rising on an almost daily basis? Who in the health care feeding line is making money off the product(s)? There is obviously a ‘kink’ in the flow that makes the costs unsustainable despite the fact that all people eventually need health care. Is it necessary to make ‘health care’ a strictly profit making enterprise? … product that defines a society?

    We have become more addicted to money than ever before in our history. Look at the debts that have been accrued in the 20th Century by many nations across our globe. These debt loads are unsustainable. As I’ve said before, there is no way to pay off all the debt the world has. Who would get the trillions of dollars that are owed and do those same companies/enterprises/countries NOT owe monies to their lenders? We’re responding to the debt load by saying it has to be paid off or else we will leave it to our children.

    Let’s take a look at a scenario in which in the future where miraculously all debt has been paid off. What do you think the first thing both we as individuals and we as a country would do… purchase things and stuff, we would purchase services and needs that we had been doing without during the pay-off process. Our appetites for new things and necessary services that we has done without would once again be established. Not surprisingly, spending would rise and why not? We’re debt free and can afford it, yes? It’s a hu’man rationality at work. But we do need services to provide for our safety and welfare… these are what make a society “social”… it defines us as the type of people we aspire to become. These social needs should not be profit making enterprises, should they? Our police force, fired departments, postal services, our health services… these are necessary for our society to function in a humane manner. I think our energy needs should not be profit making endeavors other than enough extra to provide for growth and maintenance. If we allow the flow of capital to stop or slow down due to something bleeding off the currency, that is a problem for the society… as much as a terrorist threat may be. Interrupt the flow of the needs of society interrupts the peace and prosperity of that society. We should not allow it under the guise that we are free. We should never be free enough to threaten the social network for the advantage of one individual or corporation.

    I offer up this bag of ideas for an initial discussion to see if there is an alternative for our present problems. Maybe we are doomed in this Century. May the Mayans were right – 2012 is just around the corner and the world is coming apart at the seams. But we started the problems and we need to be wise enough to correct the problems.

    [note: I must say there is something very valid with a theory of Karl Marx, i.e. there can be no socialism without it replacing capitalism, and there can be no communism without it replacing socialism. Interesting theory that is worthy of contemplation.]

  15. Hi Levi,In answer to your
    Hi Levi,In answer to your question (challenge) regarding the argument behind Walsh’s tirade, I will offer this (while stipulating that I do not speak to defend him or to attribute these words to him, but only to address the “narrative” that informs his speech):

    The conservative argument goes that, not regulation, but the threat of intrusive and disruptive regulatory investigation of bank practices (and possible law suits) ‘coerced’ private banks into a low-rate (adjustable) loaning regime that eventually resulted in the crash. By pressuring banks to meet low-income level quotas for mortgage lending, big concerns like Fanny and Freddie, given their unfairly protected, government-backed status, could pursue an unrealistic social program of home-ownership for all, with impunity, while private mortgage corporations (Banks) had to find ways to loan irresponsibly and simultaneously protect their investors. This, it is said, led to the creation of bundled mortgage securities and, derivatively, credit-default swaps (essentially, unregulated insurance policies against default). The creation of, and failure of, these “financial instruments” (I still marvel at the econo-speak) played a crucial role in the financial collapse of 2008.

    As far as it goes, the history is roughly accurate, to the best of my knowledge. What nobs like Walsh won’t admit – or even grasp, apparently – is that the banks had no right to indulge in unregulated insurance policies (credit-default swaps) and the regulators who were in place had no right to ignore the ruse or the dangers! This brings me to the main point.

    The one area in which Tea Party activists and OWS activists might find common ground is in the admission of the failure of those regulations and regulators which were already, and still, in place even after the loosening of the glass-steagall act’s stricter controls. To sell insurance under another name, and by calling it a “swap” to fool the regulators, is as unconscionable as what Bernie Madoff did. Since no regulator can actually be that stupid and still feed himself, we must assume that they were corrupt or distracted or bought off or all of the above. (Note that the briefest investigation of the oil company regulators after the BP disaster in the Gulf revealed that the regulators were way too chummy with their charges, some of them actually sleeping with executives of the companies they were regulating!)

    My point is this: by focusing on the actual irresponsible acts of the banking industry (there are better ways to protect one’s self than by pawning off the risk) and the outright failure of regulators (remember, Tim “I didn’t see a problem” Geitner was promoted!!!), and hence a governmental system that didn’t fulfill its duties, both groups come to represent a protest of the moral failure (the failure to act and the failure to act responsibly) at the center and origin of the crisis.
    Does this help?

  16. Kevin MacLellan, I believe
    Kevin MacLellan, I believe you are saying what I tried to say in a previous comment: Yes, the government was pressuring banks to approve mortgages to low-income families, but the banks responded by going way overboard in compensating themselves for the risk.

    And of course, I agree with your statement that, “the banks had no right to indulge in unregulated insurance policies (credit-default swaps) and the regulators who were in place had no right to ignore the ruse or the dangers.”

  17. yeah, but it’s another
    yeah, but it’s another “chicken or egg” question. who was pressuring who to amend laws and/or weaken regulations to pave the way for all these bad loans (and create a ruinous bubble) in the first place?

    and was rampant fraud related to the “sub-prime” market, and derivatives / mortgage-backed “securities” simply a matter of banks “protecting their investors?”

    i agree though— corruption within what regulatory processes still remain is yet another manifestation of an out-of-control corporatocracy.

  18. I should have said, “Yes, the
    I should have said, “Yes, the government was pressuring banks to approve mortgages to low-income families, but the banks responded LIKE SPOILED BRATS by going way overboard in compensating themselves for the risk.”

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