It seems the only thing most Republicans know about economics is the price of propaganda to get job killing corporate and special agendas through Congress. This time is a winner, winner, chicken dinner. For a $2 buck derivatives bet you can blame the poor and middle class.
Ya know the housing bubble, all of those derivatives, the sub-prime disaster, credit default swaps that caused financial Armageddon? Oops, not so, say four Republicans on the Financial Crisis Inquiry Panel. They hate truth so much, they are going to write their own report, a tale of spin built upon the weave of woe. Call it Goldisachs in Kansas, or My Pet Scapegoat, but do not call it anything founded in economic theory and financial statistical reality.
The four Republicans appointed to the commission investigating the root causes of the financial crisis plan to bypass the bipartisan panel and release their own report Wednesday, according to people familiar with the commission's work.
The Republicans, led by the commission's vice chairman, former congressman and chair of the House Ways and Means Committee Bill Thomas, will likely focus their report on the explosive growth of subprime mortgages and the heavy role played by the federal government in pushing mortgage giants Fannie Mae and Freddie Mac to purchase and insure them. They'll also likely focus on the Community Reinvestment Act, a 1977 law that encourages banks to lend to underserved communities, these people said.
The Republicans' report is expected to conclude that government policy helped inflate the housing bubble and that prices weren't expected to crash because the government pushed homeownership so aggressively. They say that the report will note that once the bubble burst, a financial panic followed because firms weren't adequately prepared.
Calculated Risk came to prominence due to his unnerving economic accuracy, in particular on housing data. This is what he had to say about this report:
If Nasiripour story is correct, the explanations offered by these four individuals are blatantly false. Lets name names: Bill Thomas, Peter Wallison, Keith Hennessey and Douglas Holtz-Eakin. These are all subprime thinkers.
This whole line of thinking is garbage, the financial policy equivalent of arguing that the sun revolves around the earth. Yes, the US and other countries provide overly generous subsidies to housing, and curtailing them over time would not be a bad idea. But that’s been our policy for decades. Calling that a major, let alone primary, cause of the crisis, is simply a highly coded “blame the poor” strategy, In reality, both the runup to the crisis and its aftermath were on of the greatest wealth transfers from the citizenry at large to a comparatively small group of rentiers in the history of man.
Ritholtz on the AEA propaganda paper of similar chants:
I’ve given up reading anything from the AEI. They are idiot savants, minus the savant part.
Its a bore reading the same discredited, data-free memes: The CRA caused the crisis, Fannie Mae caused the crisis, the FHA caused the crisis. Its become embarrassing to read.
Their latest release combines all three memes in one giant clusterfuck of imbecility:
Paul Krugman also had some choice words:
I really do wonder how this country can remain governable, when one party insists on creating its own reality. Next thing you know they’re going to reject the theory of evolution. Oh, wait …
Economic fiction has got to stop. Just because some corporate lobbyist writes up a PDF and even puts some pictures in it, doesn't make it so. Trust the above bloggers, they read this stuff and I do too. So should you. Learn to get a critical eye on this never ending snow job on what policy does what and which events caused what. Learn to understand a number, recognize a manipulated chart. Over and over again we have pure financial and economic fiction being spun as fact, due to some special interest or corporate lobbyists' desired agenda. It's running this country into the ground.