Communists are as bad as Nazis, and their defenders and apologists are as bad as Nazis’ defenders, but far more common. When you meet them, show them no respect. They’re evil, stupid, and dishonest. They should not enjoy the consequences of their behavior.
I’m not even sure “as bad as” is sufficient. Deaths due to Communism outnumber deaths due to Nazism by a wide margin.
But he got pushback from someone living in the halls of academia, who wants to assure us that those Marxists aren’t really so bad:
As someone who works in academia, I run into my fair share of Marxists. While I disagree with their politics, many of them are decent non-evil people most certainly deserving of respect. There is, to my mind, a big difference between communism and Nazism: it is possible to be a communist with the “good will,” i.e. to sincerely wish the best most prosperous future for everyone. I think it’s pretty obvious that communism is not the way towards that goal, but intelligent people can disagree. Nazism, on the other hand, is fundamentally impossible to commit one’s self to with a good will. It is inherently racist, hateful, and concerned with elevating particular groups of people on the basis of the subjugation and dehumanization of others.
Put another way: communism, like it or not, is an Enlightenment project and an Enlightenment ideology. The evils of communism my be intrinsic, but they are not built into the ideology itself. I.e. Marx never advocated for any society like the Soviet Union or for gulags, etc. The same cannot be said of Nazism.
This is not to give communism a “pass,” but rather to separate the ideology and intentions of the believer, from, say, crimes like the Great Leap Forward. One does not convince communists to give up their creed by calling them Nazis and refusing to show them a modicum of respect. One convinces them (and I speak from personal experience) but engaging them as people who want the good, but don’t realize that their politics cannot and will never be able to effect the society they seek.
This is so wrong-headed that I don’t know where to start. Let’s go phrase by phrase and point out some of the highest caliber foolishness.
While I disagree with their politics, many of them are decent non-evil people most certainly deserving of respect.
No, they’re most certainly not deserving of respect. They might or might not be “non-evil”, but if they still defend the rotten corpse of Marxism and its legacy of death, they’re idiots, and therefore deserving of no respect, no matter what degrees they hold or how much cocktail-party glibness they possess.
Naturally, someone in academia is likely to form some psychological accommodation to these idiots. They’re just down the hall, don’t ya know, and the kids play soccer with them, probably in games where it’s not allowed to keep score. Letting them know that they’re idiots is career-affecting, and seriously curtails opportunities for social activities on campus. So it’s pretty easy for someone in that environment to convince themselves that “on a personal level, those Marxists are not really that bad” from their own need to find a rationalization to avoid friction with them.
There is, to my mind, a big difference between communism and Nazism: it is possible to be a communist with the “good will,” i.e. to sincerely wish the best most prosperous future for everyone.
First, this is the classic leftist fallacy: that good intentions are enough to excuse anything. They’re not.
Second, it’s patently untrue. “Everyone” includes people who have a lot of wealth. Communism explicitly says such people are supposed to give up that wealth for others, and be brought down to supposedly becoming equal with them. How in Hades is that the “best most prosperous future” for those wealthy people?
That’s even leaving out the reality that goes even beyond the iron-clad logic above: Many (most?) of the wealthy were murdered in every case where Communism was tried. Anyone who can hand-wave that aside and still sincerely believe that communism offers the “best most prosperous future for everyone” has a pretty narrow definition of “everyone”.
Instead, I think it’s an indication of the Marxist’s view (shared by many academicians even if they don’t realize it) that the wealthy are nothing but a bunch of immoral exploiters. It’s easy to leave them out of “everyone” if you hold that view of them.
I think it’s pretty obvious that communism is not the way towards that goal, but intelligent people can disagree.
No. Stupid people and people who crave a reason to control others can disagree. Intelligent people only have to look at a century long string of failure and death to know that communism is not the way towards that goal. If a person can’t see that, I can’t conceive of how they can be labeled “intelligent”. (Of course, my definition of “intelligent” includes a connection to reality, which often seems to be strangely missing from the academician’s definition of “intelligent”.)
Put another way: communism, like it or not, is an Enlightenment project and an Enlightenment ideology.
Wrong again. The ideology that inspired the terms “groupthink”, “double-think”, and all the rest isn’t an Enlightenment ideology. Communism in practice is profoundly anti-Enlightenment. It distorts every meaning that it touches, and disposes of rationalism as soon as it challenges the ideology. Hence the Soviet joke “We pretend to work and they pretend to pay us.”
This is not to give communism a “pass,” but rather to separate the ideology and intentions of the believer, from, say, crimes like the Great Leap Forward.
But separating the supposed intentions from a century of results is giving them a pass! These people defended the Soviet Union my whole life, far past the point where it was clear that it was a murdering, thuggish regime capable of producing only deprivation and violence.
Academic historians were among the worst such defenders. They’ve never come clean about their support of the Soviet Union. These Marxist fools are still supporting Chavez and Castro today! Sorry, their supposed good intentions shouldn’t give them a pass for that.
One does not convince communists to give up their creed by calling them Nazis and refusing to show them a modicum of respect. One convinces them (and I speak from personal experience) but engaging them as people who want the good, but don’t realize that their politics cannot and will never be able to effect the society they seek.
First, saying that their ideology produces results just as bad or worse as Nazism isn’t calling them a Nazi. It’s stating the clear truth.
But there’s an even better reason to treat their "creed" with complete contempt. Behaving otherwise makes their beliefs acceptable, even respectable, in academia.
Those beliefs should not be respectable. It’s time their ideology joined phlogiston, the luminiferous ether, phrenology, and Lamarkian biology in the historical gallery of failed concepts. They shouldn’t be coddled for believing in nonsense; they should be ridiculed for it.
Giving them any respect whatsoever means that get to continue to indoctrinate new generations in the same idiocy, meaning we still have the problem of academic idiots pushing an evil, failed ideology into the indefinite future.
Far better, I believe, to make it clear and obvious that their belief is not a respectable one. That in fact, continuing to believe in Marxism at this late date means defending over a hundred million deaths committed in its name, and advocating a philosophy that has caused hundreds of millions to live their lives in misery, deprivation, and de facto slavery. That should be beyond the pale, not treated as some sort of ideological quirk to talk someone out of.
The left wants us to play by different rules from what they impose on themselves. By their lights, believing in principles espoused by the founders of this nation is extreme and racist, but believing in principles that have killed more than a hundred million and enslaved hundreds of millions more is just an ideological quirk.
I believe that not more than one in a thousand can be convinced by the gentle means advocated by this academician. After all, they don’t really seem to learn from history or reality. They took no responsibility for the support of the Soviet Union, Cuba, North Korea, or today’s Venezuela. And I wonder how many of this academic’s friends are *still* siding with the Sandinistas in Nicaragua.
So no more coddling. Just ridicule. If they don’t like it, well, too bad. I think it’s time they suffered the consequences of total ridicule for their idiocy; maybe that would convince some of them to re-examine it.
Iran is again upping the ante in the game of brinksmanship it is playing with the US and the rest of the Western world. It’s latest move? An agreement with the anti-US regime in Venezuela to base medium range ground-to-ground missiles there.
Iran is planning to place medium-range missiles on Venezuelan soil, based on western information sources, according to an article in the German daily, Die Welt, of November 25, 2010. According to the article, an agreement between the two countries was signed during the last visit o Venezuelan President Hugo Chavez to Tehran on October19, 2010. The previously undisclosed contract provides for the establishment of a jointly operated military base in Venezuela, and the joint development of ground-to-ground missiles.
At a moment when NATO members found an agreement, in the recent Lisbon summit (19-20 November 2010), to develop a Missile Defence capability to protect NATO’s populations and territories in Europe against ballistic missile attacks from the East (namely, Iran), Iran’s counter-move consists in establishing a strategic base in the South American continent – in the United States’s soft underbelly.
Some of us are old enough to remember the Cuban missile crisis of the Kennedy era and the fact that we went to the very brink of nuclear war to prevent the USSR from establishing missile bases in Cuba.
Of course the USSR was a nuclear power at the time and so the possibility of nuclear weaponry being a part of those missiles was both real and likely. Iran, on the other hand, isn’t yet a power with nuclear weapons (or so say it and the rest of the world). But it is anticipated that they will soon have that capability.
So, if the report is true will the US allow the establishment of such missile bases in Venezuela? And with the possibility of the regime in Iran developing nuclear weapons, the possibility they’ll “share” them with Venezuela has to be taken serious. The agreement apparently allows Iran to establish a military base there manned by Iranian missile officers, soldiers of the Iranian Revolutionary Guard. The base with be jointly occupied by Venezuelan military as well.
And then there is this bit of ominous news about the agreement:
In addition, Iran has given permission for the missiles to be used in case of an "emergency". In return, the agreement states that Venezuela can use these facilities for "national needs" – radically increasing the threat to neighbors like Colombia. The German daily claims that according to the agreement, Iranian Shahab 3 (range 1300-1500 km), Scud-B (285-330 km) and Scud-C (300, 500 and 700 km) will be deployed in the proposed base. It says that Iran also pledged to help Venezuela in rocket technology expertise, including intensive training of officers
The reported missile won’t reach the US, but the Iranians also have the Ghadr-110 which has a range of 2,500 to 3,000 km which is capable of hitting the US (Texas and Florida are less than 2,000 km from Venezuela. New Orleans is 2900 km from Venezuela).
Not only all of that, but it seems it is through Venezuela that Iran is planning to bypass UN weapons sanctions as well:
Russia decided not to sell five battalions of S-300PMU-1 air defence systems to Iran. These weapons, along with a number of other weapons, were part of a deal, signed in 2007, worth $800 million. Now that these weapons cannot be delivered to Iran, Russia is looking for new customers; according to the Russian press agency Novosti, it found one: Venezuela.
Novosti reports the words of Igor Korotchenko, head of a Moscow-based think tank on international arms trade, saying that if the S-300 deal with Venezuela goes through, Caracas should pay cash for the missiles, rather than take another loan from Russia. "The S-300 is a very good product and Venezuela should pay the full amount in cash, as the country’s budget has enough funds to cover the deal ," Korotchenko said. Moscow has already provided Caracas with several loans to buy Russian-made weaponry, including a recent $2.2-mln loan on the purchase of 92 T-72M1M tanks, the Smerch multiple-launch rocket systems and other military equipment.
If Iran, therefore, cannot get the S-300 missiles directly from Russia, it can still have them through its proxy, Venezuela, and deploy them against its staunchest enemy, the U.S..
So, thus far, this is what the US’s “unclenched fist” has brought. A move by Iran – whether admitted or not – to establish a way at striking at the US should the US strike Iran. Additionally, it has found an ally to help it avoid weapons sanctions and obtain advanced weaponry that would help protect it’s nuclear facilities from air strikes through a proxy (of course, training and maintenance and parts may be difficult to obtain should Venezuela buy them and send them to Iran).
Iran has obviously not been sitting idly by while the West contrived to choke it off from the weaponry it wants. Additionally it has found a way to make any strike on their facilities much more risky for the US.
Anna Mahjar-Barducci of Hudson New York (Hudson Institute) concludes:
Back in the 1962, thanks to the stern stance adopted by the then Kennedy administration, the crisis was defused.
Nowadays, however, we do not see the same firmness from the present administration. On the contrary, we see a lax attitude, both in language and in deeds, that results in extending hands when our adversaries have no intention of shaking hands with us. Iran is soon going to have a nuclear weapon, and there are no signs that UN sanctions will in any way deter the Ayatollah’s regime from completing its nuclear program. We know that Iran already has missiles that can carry an atomic warhead over Israel and over the Arabian Peninsula. Now we learn that Iran is planning to build a missile base close to the US borders. How longer do we have to wait before the Obama administration begins to understand threats?
Her points are dead-on. The unclenched fist, as we predicted, has caused the aggressors of the world to decide to push the envelope. Believe it or not And why not? There’s no penalty evident for doing so. As I’ve told anyone who would listen, 2009 would be a year that the bad guys watched the new guy on the block and assessed him (weak or strong?). If they decide he’s a weak sister, they will begin to test him in 2010 and 2011. North Korea is right now in the middle of doing that and, as this deal indicates, Iran (and Venezuela) has absolutely no fear of the US’s reaction to basing missiles capable of hitting the US mainland in Venezuela. And START does nothing to address this situation, obviously. Yet that’s the administration’s current priority.
The phone is about to ring at 3am. You have to wonder when it does if it will just go to the answering machine.
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“In a wave election, … you feel powerless. Everything I feel I know how to do, that I’m trained to do, I can’t do.”
The title comes from a quote by a pollster for the Democrats in this article. Most of the article is about the resignation that the GOP will take the House, with some Democratic strategists predicting as many as 70 Republican pickups.
I highlighted that quote because I think it indicates what is different about this election and what is wrong with most elections.
Democratic consultants, pollsters, and strategists have a tried-and-true playbook. It includes some of the following:
To be sure, Republicans sometimes dabble in the same tactics. They can’t depend on the media to carry water unless they are pretty lickspittle to the press and talk trash about other Republicans, but some of them do that. And generic promises and backroom special interest deals are a staple among professional politicians of all stripes. The interesting thing about this election to me is that some of those Republicans faced the same difficulties as the Democrats (an “adverse political climate“) and some are already gone from the field.
This election is different because there is a contingent of voters that simply does not give the benefit of the doubt to either professional politicians or the media any longer. In fact, it’s worse than that. They assume what they’re hearing from those entities is distorted or dishonest. They assume the media has chosen sides. They assume that the professional politician cares more about his power and perqs than about governing responsibly.
They have every reason to assume all of this, because it’s all true.
I see two things that have made the difference this time around. First, the media trashed any remaining credibility they had in relentlessly pimping for Obama. They covered up every potentially damaging fact that came up about him, never challenged him on specific policies, and basically acted as though they would be happy to bear his child (even the men) if that could be made to happen. This level of obsequiousness was detectable even in people who don’t pay much attention to politics.
Second, the failure of leftism, and the arrogance of leftism even in the face of its own failure, is more obvious than ever. Obama and his cronies have made no attempt to hide their contempt for the foundational principles of the country. They believe they know better than the common citizens what is best for the common citizens.
That arrogance has been around for a while. There are Democrats who have been trying to nationalize healthcare since Medicare passed in the sixties.
The difference is that now it’s on open display. Barney Frank can now be caught saying outright that he wants single payer, but it can’t pass right now, so Obamacare is the best progress they can make this time around. Multiply this by thousands as the words Democrats are used to telling the faithful (and expecting to be hidden from wider view by a complicit media) now get played on YouTube to millions of pi$$ed off voters.
We have a generation of political consultants and strategists who have basically looked at voters as a large group of marks and suckers. With good reason, since tactics based on that attitude have worked to put odious, nasty leftists like Frank, Henry Waxman, Nancy Pelosi, Chuck Schumer, Pat Leahy, and many others in office for decades.
My biggest hope based on this election is that our incompetent and corrupt ruling class has at last awoken a critical mass of voters who refuse to be marks and suckers. Who work relentlessly to expose the true arrogance and ineptitude of pro politicians, and the feckless bias of the media.
We’ll have to wait until 2012 to see if that’s the case. But then, I’ve waited all my life to see that critical mass awaken, and I’d almost given up even trying to talk to people about the dangers we face from unbridled government. I can wait a while longer to see if I’ll be disappointed again.
Whitman’s maid claims Whitman knew she was an illegal immigrant. Whitman posts the maid’s falsified employment docs. http://bit.ly/bormPh
California Gov. signs bill against loud aftermarket motorcycle exhausts. Now we’ll see if loud pipes really save lives. http://bit.ly/bUiFG9
Wow, that Gloria Allred is a c … uh … committed advocate for her client, huh?
Meg’s maid felt “exploited, disrespected, humiliated, and emotionally and financially abused.” But stayed for 9 years. http://lat.ms/auFy6P
Soooo, that went well. Meg Whitman Housekeeper Flakes On Allred Press Conference. http://bit.ly/9T7DmF
Two Things Loretta Sanchez (D-CA) Can’t Stand: Racial Intolerance and Vietnamese. http://bit.ly/cEShrW
This quote from Susan Collins says more about what’s wrong with our current governing class than any single quote I’ve seen in the last few years.
Senate Republicans do not deny that Mr. DeMint has opened a rift. “It is a new and shocking development to have a member of our conference opposing incumbent Republicans,” Ms. Collins said….
Shocking, indeed! To think that someone in public office might actually stand by his principles and do what he thinks is good for the country instead of being loyal to the fellow members of the ruling class. Can’t have that, now, can we?
I have long maintained that our political class is far more loyal to each other than to the country or even their own voting base. Here is vivid proof. She genuinely believes that other members of her party ought to support her and her kind no matter what collectivist policies they support, and no matter how often they “reach across the aisle” to help the collectivist opposition.
Ms. Collins, since you have no governing principles of your own, I commend to you an examination of the man your are criticizing so strongly. With just a hint of perception and self-awareness, you might see what such principles look like.
We already know that the legacy left-leaning media is queasy about the Democrats getting hammered this fall. They would like to help prevent it as best they can, though there isn’t a lot they can do at this stage other than outright distortion.
Via Drudge, I just saw that the GOP is up to ten points on the generic congressional ballot. That’s ” the GOP’s largest so far this year and is its largest in Gallup’s history of tracking the midterm generic ballot for Congress.”
Now of course, these numbers are going to wander around a bit in the next few weeks. The article includes this:
One cautionary note: Democrats moved ahead in Gallup’s generic ballot for several weeks earlier this summer, showing that change is possible between now and Election Day.
That led to a question in my mind. Pundits are fond of a conclusion that I find totally bogus – the idea of “peaking too early”. Certainly any candidate would like for their peak to be on election day, but I don’t believe that the peak is under any candidate or party’s control. I think there are just random fluctuations around bigger trends.
However, the idea of peaking too early is tailor-made for a lazy pundit to use in an attempt to restore hope that the Democrats won’t get thrashed. So, for entertainment purposes only, when do you think a pundit for major media will use that theme, and who do you think will be the first to do it?
(For the record, I’m not denying that the Republicans could still blow it and end up with only modest gains. The establishment Republicans are so out of touch that their wins will mostly be due to their opponents’ blunders instead of their own decision. But at this point they would have to screw up big time, or Obama would have to do something really impressive, to keep the Republicans from either gaining control of Congress back or coming close to it.)
Last Sunday, while you were enjoying the day off and the mild weather with your family, SEIU thugs were in the process of trying to intimidate the family of a Bank of America executive. They did it without the press (well, they had a friendly HuffPo blogger there to whom I’m not going to link) and they showed up without notice. They, the 500+, did it strictly to intimidate the executive (a “we know where you live” type of demonstration). This, apparently, is the new tactic of the thugocracy. Unfortunately for the SEIU, Nina Easton of Fortune happened to be the bank exec’s next door neighbor and she writes about it. She also snapped this pic:
As it turns out, the only occupant of the home at the time was a terrified 14 year old boy, the bank executive’s son, who locked himself in the bathroom. The rest of the family apparently was at the Little League game of a younger son.
While the executive, Greg Baer, is the deputy general council for corporate law at BoA and based in DC, it’s unclear what the SEIU and the Chicago based group called “National Political Action” targeted his house other than it was convenient. Why not BoA headquarters or some other BoA institution? Because, as Nina Easton says, this was an attempt at nothing more – nothing more – than pure intimidation. 14 school bus loads – 500 people – on your porch banging on your door and terrifying your family.
There’s some irony here. The Baer family is not exactly the scripted “evil Republican corporate capitalist” family that thug organization like the SEIU like to portray as the enemy of “the people”.
A lifelong Democrat, Baer worked for the Clinton Treasury Department, and his wife, Shirley Sagawa, author of the book The American Way to Change and a former adviser to Hillary Clinton, is a prominent national service advocate.
This is and always will be unacceptable behavior from any group. But it seems to be something the SEIU and other unions have decided is fair play. Easton sums it up nicely:
In the 1990s, the Baers’ former bosses, Bill and Hillary Clinton, denounced the “politics of personal destruction.” Today politicians and their voters of all stripes grieve the ugly bitterness that permeates our policy debates. Now, with populist rage providing a useful cover, it appears we’ve crossed into a new era: The politics of personal intimidation.
It is an “era” which needs to be nipped in the bud now. If ever there was a group displaying fascistic tendencies, it is the SEIU and the groups like National Political Action with which it is associated. This is unacceptable behavior and we need to let the SEIU know it and know it now. Politics is a rough and tumble game – we all know that. But keep families out of it.
Action like the SEIU and NPA took last Sunday were the tactics of thugs. And and unless and until those tactics are abandoned and an apology issued to the family the union attempted to terrorize, they’ll continue to be referred to as thugs.
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Like many of us, Michael Barone is puzzled by the administration’s obvious attempts to avoid linking Islam with the terrorists who have attempted to attack us. He wonders:
Why the reluctance to state the obvious truth, that we are under attack from terrorists motivated by a radical form of Islam?
Robert Samuelson sees what is going on with Greece and the PIIGS as the beginning of the end for the welfare state:
What we’re seeing in Greece is the death spiral of the welfare state. This isn’t Greece’s problem alone, and that’s why its crisis has rattled global stock markets and threatens economic recovery. Virtually every advanced nation, including the United States, faces the same prospect. Aging populations have been promised huge health and retirement benefits, which countries haven’t fully covered with taxes. The reckoning has arrived in Greece, but it awaits most wealthy societies.
In fact, it is more basic than that.
The welfare state’s death spiral is this: Almost anything governments might do with their budgets threatens to make matters worse by slowing the economy or triggering a recession. By allowing deficits to balloon, they risk a financial crisis as investors one day — no one knows when — doubt governments’ ability to service their debts and, as with Greece, refuse to lend except at exorbitant rates. Cutting welfare benefits or raising taxes all would, at least temporarily, weaken the economy. Perversely, that would make paying the remaining benefits harder.
Catch 22 – Countries that will, regardless of what they do, adversely effect their economy. They must pick their poison if they want to remain afloat. All Greece demonstrates is a country further down the road toward this death spiral than others. Samuelson points to this in some debt figures as a percent of GDP:
Countries everywhere already have high budget deficits, aggravated by the recession. Greece is exceptional only by degree. In 2009, its budget deficit was 13.6 percent of its gross domestic product (a measure of its economy); its debt, the accumulation of past deficits, was 115 percent of GDP. Spain’s deficit was 11.2 percent of GDP, its debt 56.2 percent; Portugal’s figures were 9.4 percent and 76.8 percent. Comparable figures for the United States — calculated slightly differently — were 9.9 percent and 53 percent.
I think you can see the trend.
Dean Baker disagrees with Samuelson, claiming Samuelson seems to have forgotten there’s a recession going on and parroting the old and increasingly discredited line that this is a time governments must spend more:
During recessions budget deficits always expand as tax collections fall and spending on items like unemployment insurance and other benefits rise.
Contrary to what Samuelson claims in this column. Most European countries have been willing to pay the taxes needed to support their welfare states. And this has not prevented them from maintaining rates of productivity growth (the long-term determininat of living standards) comparable to the United States.
But a quick check of some OECD numbers don’t seem to bear Dean’s claim that they’ve maintained productivity growth has rivaled those of the US (who, btw, is also in trouble and headed down this road):
Take a look at the PIIGS. Other than Ireland, those are not productivity numbers to brag about. In fact, look at the Euro 15. Those are not numbers to sustain the type of welfare system Europe has laid on and they certainly don’t signal healthy economies. They instead point to economies which are quite fragile and susceptible to downturns at any moment.
Samuelson is right – this is the biggest and best warning welfare states are going to receive. We can’t afford what governments have been doing for decades. Greece is the canary in the coal mine. We ignore it at our peril.
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Does Wall Street have come culpability in the financial meltdown we suffered? Of course they do. But so far, Democrats have chosen to focus only on that and ignore the culpability shared to an even larger degree by government.
Slipping through the news cycle yesterday at about 5pm eastern was this little jewel:
Freddie Mac is asking for $10.6 billion in additional federal aid after posting a big loss in the first three months of the year. It’s another sign that the taxpayer bill for stabilizing the housing market will keep mounting.
The McLean, Va.-based mortgage finance company has been effectively owned by the government after nearly collapsing in September 2008. The new request will bring the total tab for rescuing Freddie Mac to $61.3 billion.
The fact that Freddie Mac and his ailing sister Fanny Mae have been hemorrhaging money since September 2008 with no end it sight didn’t stop them from paying retention bonuses to their officers even while private payments such as that were vilified and demonized.
Another bit of fiction that Democrats in Congress like to use is that both are “quasi-governmental” entities, or, in fact, really private institutions. In fact they’re not at all:
As the CBO notes in a recent background paper, the standards for when to include government-sponsored entities in the budget go back to the 1960s, when a Presidential commission laid out a set of questions.
To wit: “Who owns the agency?” (In the case of Fan and Fred, taxpayers.) “Who supplies its capital?” (Taxpayers.) “Who selects its managers?” (The federal government.) And finally, “Do the Congress and the President have control over the agency’s program and budget, or are the agency’s policies the responsibility of the Congress or the President only in some broad ultimate sense?” (The feds have control in every sense.)
All that happened in September of 2008 is Hank Paulson put them in conservatorship. In fact, Freddie and Fannie alone will account for up to $391 billion in bailouts over 10 years according to the CBO. So why are the Democrats pointedly ignoring these two institutions? Reread the CBO background paper, especially the part about who selects the managers and who has control over the agency’s program and budget, not to mention control over it’s policies.
Ezra Klein tries to wave it all away as he delicately attempts to explain how Freddie and Fanny are really beneficial to society as a whole and not financial black holes. But now matter who hard he tries, he can’t quite avoid the truth:
The mortgage giants, slightly confusingly, do not sell mortgages. They buy them from the banks that sell them. About 90 percent of them, to be precise. They do that to make mortgages — and thus home ownership — cheaper. That’s fine. If the country wants to encourage home ownership as a policy, subsidizing banks so they can offer better mortgage terms is a sensible way to do it.
I assume he typed that with a straight face. Uh, no Ezra, that’s not the way to do it. That “policy” (Community Reinvestment Act) which was hardly endorsed by the “country” is precisely what incentivized sub-prime mortgages (you sell ‘em, we’ll buy ‘em no matter how bad they are) and the eventual collapse. So that makes it anything but “sensible”.
Klein then attempts to further the myth of “quasi-governmental” status for the two institutions and, in a rather amusing and round about way, admits they were the cause of the whole thing:
Rather than using taxpayer dollars to subsidize mortgages, they were borrowing money very cheaply because their quasi-governmental status assured the market that there’d be a taxpayer bailout in the case of any sort of collapse. That is to say, their business model relied on markets ignoring the risk of their activities. And then, because they were private companies with shareholders to please, they also got into slicing and dicing mortgage packages to make money like an investment bank rather than a housing policy. In theory this should’ve worried the markets where they borrowed their money, but again, the government backstop saved them. Forget too-big-to-fail. This was not-allowed-to-fail.
Their “business model” relied on markets ignoring the risk of their activities? No. Instead their policy (CRA) directed that Fannie and Freddie ignore the risk an buy these mortgages that were a bad deal. In effect, by direction of a policy that encouraged and incentivized it, mortgage companies complied with the CRA and Freddie and Fannie bought the bad paper.
Klein denies this had anything much at all to do with the collapse of the mortgage market – even with $391 billion in bailouts staring him in the face. The most he’ll admit too is they were “part of the problem.” And that is at least better than the Democrats will do.
But he ends up doubling back on himself without seemingly knowing it:
Of course, you don’t necessarily need to eliminate Fannie and Freddie. You could solve the problem by fully incorporating them into the government and making them a straightforward housing subsidy rather than a stealth housing subsidy hidden within a profit-maximizing company. But it’s not clear that bringing more major institutions under the control of the government is going to be popular, either. So what do you do?
Well, it’s hard to say. Procedurally, Democrats think that the Fannie and Freddie question is a housing market question and should be dealt with in the context of a major housing-policy bill. What that bill will do, however, is anyone’s guess. And that’s pretty much where we are on Fannie and Freddie.
As pointed out, they both are “fully incorporated” into government whether that’s technically true or not. They’re certainly not private, and they’ve never really been “quasi-governmental”. They’ve been organs that execute government policy, no matter how absurd or costly. And recommending the two institutions be handled in the context of a “major housing-policy bill”, further cements the point that they’re part of the government that executes policy as it pertains to the housing industry.
And by the way – the payments to these two institutions are being kept “off the books” – meaning they don’t have to be accounted for in budgeting.
Until and unless these two institutions are addressed within any “comprehensive” financial reform bill, the bill isn’t worth the powder to blow it to hell. And when Sen. Chris Dodd (D-CT) announces, “we’ve ended the ‘too big to fail’ debate. So no longer do I expect any argument to be made that this bill exposes the American taxpayer” feel fully entitled to shout that which fans normally shout at officials at sporting events who get the call wrong.
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