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Rime of the ancient narrator
Posted by: MichaelW on Saturday, December 20, 2008

Is there any doubt that any decent summation of the subprime mess and its ensuing financial crisis would have to mention the roles played by Barney Frank, Chris Dodd and Franklin Raines? Surely there will be many players discussed in the history books, but these three individuals will necessarily play starring roles. Thematically underpinning their roles will be the Community Reinvestment Act, including its invigorating amendments made law in the mid-90's. But history is not now, and the New York Times seems determined to keep it at bay for as long as possible.

In its latest article regarding the causes of the subprime mess, the Gray lady channels Peter Pan, painting a picture of Neverland for the world to see rather than growing up and facing reality. The title of the article really says it all: "Bush's Philosophy Stoked The Mortgage Bonfire."

Without even reading the article it's easy to surmise that the NYT will attempt to lay the entire financial crisis we currently face squarely at the feet of George W. Bush and conservatism. It's common knowledge that Bush often touted the historic highs of home ownership during his presidency as something of which he took great pride. Today, we also commonly know that a good number of those people should not have been given mortgages in the first place. What the NYT wants to add to that common knowledge base is the idea that Bush and conservative, laissez-faire principles were the ultimate cause of the meltdown.
Eight years after arriving in Washington vowing to spread the dream of homeownership, Mr. Bush is leaving office, as he himself said recently, “faced with the prospect of a global meltdown” with roots in the housing sector he so ardently championed.

There are plenty of culprits, like lenders who peddled easy credit, consumers who took on mortgages they could not afford and Wall Street chieftains who loaded up on mortgage-backed securities without regard to the risk.

But the story of how we got here is partly one of Mr. Bush’s own making, according to a review of his tenure that included interviews with dozens of current and former administration officials.

From his earliest days in office, Mr. Bush paired his belief that Americans do best when they own their own home with his conviction that markets do best when let alone.

He pushed hard to expand homeownership, especially among minorities, an initiative that dovetailed with his ambition to expand the Republican tent — and with the business interests of some of his biggest donors. But his housing policies and hands-off approach to regulation encouraged lax lending standards.
According to the NYT, we would not be in this mess if not for Bush's cronyism, political aspirations and belief in free-market principles. Strangely, the article fails to mention Barney Frank, Chris Dodd, or even Maxine Waters, who famously uttered, "We do not have a crisis at Freddie Mac and particularly Fannie Mae under the outstanding leadership of Frank Raines." (For more, see here, here and here.) And mismanager supreme Franklin Raines only surfaces (well more than halfway through the lengthy article) to play the part of an ally in the dastardly schemes of President Bush:
At the time [in 2003], Fannie and Freddie were allies in the president’s quest to drive up homeownership rates; Franklin D. Raines, then Fannie’s chief executive, has fond memories of visiting Mr. Bush in the Oval Office and flying aboard Air Force One to a housing event. “They loved us,” he said.

So when Mr. Falcon refused to deep-six his report [warning of a financial meltdown led by Fannie Mae/Freddie Mac practices], Mr. Raines took his complaints to top Treasury officials and the White House. “I’m going to do what I need to do to defend my company and my position,” Mr. Raines told Mr. Falcon.
So, you see, if not for Bush's meddling, Raines reign would have ended precipitously and the mortgage mess would have been averted. Or something to that effect.

To be fair, the NYT piece does note the fact that Bush pushed for something to be done about Fannie Mae and Freddie Mac, but only to introduce the idea that the president backed off of doing anything substantive and eventually let the financial system come crashing down around his ears:
Mr. Bush did foresee the danger posed by Fannie Mae and Freddie Mac, the government-sponsored mortgage finance giants. The president spent years pushing a recalcitrant Congress to toughen regulation of the companies, but was unwilling to compromise when his former Treasury secretary wanted to cut a deal. And the regulator Mr. Bush chose to oversee them — an old prep school buddy — pronounced the companies sound even as they headed toward insolvency.

As early as 2006, top advisers to Mr. Bush dismissed warnings from people inside and outside the White House that housing prices were inflated and that a foreclosure crisis was looming. And when the economy deteriorated, Mr. Bush and his team misdiagnosed the reasons and scope of the downturn; as recently as February, for example, Mr. Bush was still calling it a “rough patch.”

The result was a series of piecemeal policy prescriptions that lagged behind the escalating crisis.
Nevermind that the last sentence completely undermines the narrative that Bush's policies "stoked" (i.e. caused) the mortgage meltdown (how can policies that "lagged behind" the problem cause the problem?). There is much in the article that is logically at odds with the narrative. And pay no heed to the failure to mention that it was Democratic congressmen pronouncing Fannie Mae and Freddie Mac as completely healthy. Such facts are merely a distraction.

What the NYT seems to think is most important is that a small-government, hands-off approach to the issues at hand, manifested by a trust in free market principles, is understood to be the culprit. Bush's "laissez-faire" approach (as it's called later in the piece) must be unmasked as the real villain in this financial tragedy. In short, the economic straits in which the world finds itself are the direct result of market failures aided, abetted and "stoked" by an incompetent leader who eschewed the prescient advice of his "good" advisors while heeding every whim of the "evil" ones. Yet, what's never explained is how a crisis stemming from White House goals for increasing homeownership, and its policies for using government to achieve those goals, can possibly be a failure of the market.

The reason such an explanation is lacking is because the battle space must be prepared for more government intervention. The blame for our current woes must be squarely pinned on private concerns and anti-statist principles. If, instead, government meddling in the affairs of the private sector is understood to be the problem, then the inevitable government solutions coming down the pike will receive less than a sympathetic hearing. Indeed, any culpability government may have had in the crisis is chalked up to a failure of leadership and misguided policies. The stormy financial seas are therefore the unmitigated fault of Bush in this media narrative, and the his albatross will be fastened tight around the free-market philosophy's neck.

One can only hope that history serves the same justice upon the purveyors of such a farcical narrative, as the purveyors have visited upon the truth.
 
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Its not impossible for economic stories to be written in a non-partisan manner. Its probably easier than for most areas of journalism. And it is very important, because otherwise these memes get built up and we get the public making poor choices based on them.

The MSM and the education system to me are very dangerous in this regard, and I am not sure what to do about it.

I think that even some Democrats would agree that it is NOT a good idea to convince people that the economy is entirely in the control of the President and his party. Well, there will be more of those in the next few years at least.
 
Written By: Harun
URL: http://
The NY TIMES - "The Paper of record."

Oh wait that should be "THe paper with the record of losing the most readership, firing more people, losing the most money, being the most biased, and becoming the most irrelevant piece of trash in history".

Look at what liberalism has done for the NY TIMES.

That is what it will do to America.


 
Written By: retired military
URL: http://
History still does not correctly identify why the Great Depression lasted so long. Instead, it seems to applaud the government programs that prolonged the downturn

Nor does the "history" taught in government schools teach both of the main causes the 1929 recession turned into a depression. (Smoot Hawley is sometimes mentioned, but the Federal Reserve restricting the money supply is not)

Many are left with the impression that the stock market crash of ’29 was a cause rather than a symptom.

History is written by the winners. In this case, the winners are the ones that control the education establishment.
 
Written By: newshutz
URL: http://
Golly, which New York Times am I supposed to believe? The above article or the one from 1999.
Fannie Mae, the nation’s biggest underwriter of home mortgages, has been under increasing pressure from the Clinton Administration to expand mortgage loans among low and moderate income people and felt pressure from stock holders to maintain its phenomenal growth in profits.
’’Fannie Mae has expanded home ownership for millions of families in the 1990’s by reducing down payment requirements,’’ said Franklin D. Raines, Fannie Mae’s chairman and chief executive officer. ’’Yet there remain too many borrowers whose credit is just a notch below what our underwriting has required who have been relegated to paying significantly higher mortgage rates in the so-called subprime market.’’
No wonder that old lady is grey. Trying to keep track of all their stories.
 
Written By: tom scott
URL: http://
As they write that tripe in their nortgaged headquarters, because the NYT- such stalwart and astute economists - have run their own business into near bankruptcy.

I have a spare dollar, I think I’ll buy 1,000 shares of NYT stock. I’m out of t-paper.

I’d be annoyed with this article but know two things:

1) The only people who’ll fall for this are the ones who already believe it (ie: the Times entire readership)
2) The Times entire readership is a rapidly shrinking demographic anyway, and the Times credibility is shrinking even faster.

Faster please.
 
Written By: shark
URL: http://
I’d be annoyed with this article but know two things:

1) The only people who’ll fall for this are the ones who already believe it (ie: the Times entire readership)
2) The Times entire readership is a rapidly shrinking demographic anyway, and the Times credibility is shrinking even faster.
I’d agree, shark, except for what newshutz points out:
History still does not correctly identify why the Great Depression lasted so long. Instead, it seems to applaud the government programs that prolonged the downturn

Nor does the "history" taught in government schools teach both of the main causes the 1929 recession turned into a depression. (Smoot Hawley is sometimes mentioned, but the Federal Reserve restricting the money supply is not)

Many are left with the impression that the stock market crash of ’29 was a cause rather than a symptom.

History is written by the winners. In this case, the winners are the ones that control the education establishment.
I guess one of the reasons this sort of media narrative gets under my skin so much is because I was taught it, and bought it, for so long. It’s one thing to be taught a plausible version of historical events, and it’s quite another to be force fed a version that’s contrafactual and intended to paint one side of the debate as uninformed and ill reasoned. The NYT is the vanguard in the latter version.
 
Written By: MichaelW
URL: http://qando.net
I must congratulate the NYT for an outstanding piece of pseudo-history. It is almost as if Congress didn’t exist, and when it does, it is only doing the bidding of the President. Only one Democratic Congressman is named, Rahm Emanuel, and he was opposing Bush’s laxity. Even Franklin Raines has been transformed into a Bush crony.

The three authors of this article are assured of employment in the Democratic establishment when the NYT finally goes down the tubes. Alternatively, they can also enter Academia, where their message of Bush/Republican incompetence and cupidity are gospel (if it is not too scandalous to use a religious term).

Again, I express my admiration for an excellent piece of propaganda. It would be a textbook example, if any textbook author or user would dare consider it anything other than THE TRUTH.
 
Written By: timactual
URL: http://
I guess one of the reasons this sort of media narrative gets under my skin so much is because I was taught it, and bought it, for so long. It’s one thing to be taught a plausible version of historical events, and it’s quite another to be force fed a version that’s contrafactual and intended to paint one side of the debate as uninformed and ill reasoned. The NYT is the vanguard in the latter version
Well, the NYT is playing a short-term game but in the long game, the Times (and their fellow travelers)are quite simply killing themselves off with antics like this.

Knowing that the end destination is the dissolution of the Times and the like, I can put up with stuff like this- to a point anyway. I am becoming convinced that in my lifetime, I’ll see them shut their doors. And I’ll be there to urinate all over the grave. And to laugh at the mourners.

You also make the case for homeschooling quite well.
 
Written By: shark
URL: http://
I, for one, am praying soon for the day when the retards at The New York Times come out and announce that the paper is dead and will be closing up.

That will be a great day for America. Because it will be the end of one of the worst propaganda sheets since Pravda. And Pravda was fair and more balanced by comparison.
 
Written By: James Marsden
URL: http://
My debaters are learning all about Mises, who’s starting to become "cool and radical" just as the Marxists were 10-20 years ago. Mises had a rather remarkable prediction some 50+ years ago about the denial of the institutional elites like the NYTimes who owns much responsibility for this mess. He points out that the interventionalists who distort the economy (e.g. demanding those incapable of paying back a loan should receive one) will blame the free market all the way down as they destroy it. Definitely good reading:


Mises ’66 (Ludwig von Mises, Human Action: A Treatise on Economics, revised third edition, p.855)


THE interventionist policies as practiced for many decades by all governments of the capitalistic West have brought about all those effects which the economists predicted. There are wars and civil wars, ruthless oppression of the masses by clusters of self-appointed dictators, economic depressions, mass unemployment, capital consumption, famines. However, it is not these catastrophic events which have led to the crisis of interventionism. The interventionist doctrinaires and their followers explain all these undesired consequences as the unavoidable features of capitalism. As they see it, it is precisely these disasters that clearly demonstrate the necessity of intensifying interventionism. The failures of the interventionist policies do not in the least impair the popularity of the implied doctrine. They are so interpreted as to strengthen, not to lessen, the prestige of these teachings. As a vicious economic theory cannot be simply refuted by historical experience, the interventionist propagandists have been able to go on in spite of all the havoc they have spread.
 
Written By: HatlessHessian
URL: http://
The economic crisis has a clear set of culprits: 1) America living beyond its means via increased debt (public and private) and high trade deficits; and 2) a bubble economy built on cheap credit where investment was not productive, but instead focused on instruments earning quick ’fake’ speculative returns. It was inevitable that reality would bite back, and yes, lack of regulation was part of the problem.

The answer is a whole new mindset, a new thinking about the economy and America’s role in the world. Things have changed completely and are not going back to pre-crisis mode, any more than the world ever went back to pre-1929 thinking. We are finally starting to confront reality.
 
Written By: Scott Erb
URL: http://scotterb.wordpress.com
From this weeks’ Economist (a magazine that has been edging leftwards for a while now...)
Is today’s Senate any better? Those who say no have seen plenty of recent evidence to buttress their case. Ted Stevens of Alaska was caught trousering gifts from contractors. David Vitter and Larry Craig were caught with their trousers down (though Mr Craig maintains that his were lowered for legitimate reasons). A couple of senators are accused of accepting cut-price loans from a lender they should have been regulating more vigilantly.
Note: 3 Republicans mentioned by name, Dodd and somebody else not mentioned by name.
On December 11th, for example, Senate Republicans blocked a bail-out for Detroit’s carmakers. This thwarted the clearly expressed will of majorities in both the House and the Senate.
10 Republicans voted for it, as explained at QandO that means the Dems could have passed it and the GOP did not actually block the legislation, and yet the Economist’s American expert claims the GOP blocked it. Hmmmmmm.
 
Written By: Harun
URL: http://
As much as I hate to respond to Erb, I have to say that business cycles often come with semi-predictable credit crunches, bank crisis, real estate bubbles, etc.

"the world will never return to pre-1929 thinking" except when we do it all over again starting from tulips, to South Sea bubble, to 1929, S&L crisis, Asian financial melt-down, to the internet bubble, to the present day.

Remember, WW I was supposed to be the War to end all War, and the collapse of the Soviet Union was the End of History.
 
Written By: Harun
URL: http://
Blame the media? All you Regressives need to remember is that Republicans HATE the government, and that’s why they choose not to govern. The savior, Ronald Reagan’s inaugural address stated that "government is not the solution to our problem; government is the problem". It was never a Republican congress, and instead always "Clinton’s" fault, even years later after he left office. The Grover Norquist neo-con wet dream was to shrink government "down to the size where we can drown it in the bathtub". Since the government represents that very necessary regulation and oversight, the country is now drowning in chaos.

The Republican party has been waging a war against the middle class since the beginning of deregulation that began with Reagan. So today Bush pumps $85 billion into the failing insurance giant AIG - American International Group, but then waited for weeks to help The Big Three and the UAW and main street. Senators Shelby and Corker continue to terrorize the middle class by trying to kill deals for the Big Three, while at the same time they used your tax money to entice/bail out foreign car manufacturers to the tune of $200,000.00 per employee. There is a pattern here, and this model represents the base of the Republican party, and it’s called greed.

Just the facts, all you need to do is look past the partisan hype.
 
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