The United States of Amnesia
“Between 1997 and 2006, consumers, lenders and builders created a housing bubble, and pretty much the entire establishment missed it. Fannie Mae and Freddie Mac and the people who regulate them missed it. The big commercial banks and the people who regulate them missed it. The Federal Reserve missed it, as did the ratings agencies, the Securities and Exchange Commission and the political class in general.”
Well, Bobo, that is not exactly true. In fact, that is entirely untrue.
The entire establishment, meaning GOP-appointed head of the Federal Reserve Alan Greenspan, actually championed bubbles, the so-called irrational exuberance. Greenspan kept interest rates so artificially low that something was bound to happen. And I seem to recall him telling people that they should get out of their fixed rate mortgages (at extremely low rates) and refinance using some of the more exotic mortgage devices, that they should take money out of their homes and use it for vacations, cars, big teevee machines… And the innocent did, they believed Greenspan, and now many of them have either lost their houses or are in the process of losing their houses. Thanks, Alan!
His doppleganger, the disingenuous Ben Bernanke, carried forward the same policies, uninterrupted.
And Bobo, the regulators did not look for irregularities. In fact, they did not regulate at all.
Let’s not forget that our Xristian Xrazy President, Chimpy McStagger appointed Christopher Cox to the head of the SEC (after slashing their budget dramatically to make it and most other regulatory agencies a ghost town, and those regulators that remained were, um, watching a little porn, I’m told).
Let’s say Cox’ methods of regulation and investigation were a bit lax.
Bobo, the point is that ever since the lunatics took over the asylum in the ’80s, it was not enough to just say that Government is the problem, they had to prove it, too. Anytime the government did anything right, or efficient, or (horrors!) better than the private sector, it laid waste to the claim from Saint Ronnie that the government must be destroyed, or as Grover Norquist said, made small enough to drown in the bathtub. They started by starving the beast, cutting off funding for departments that actually were doing their jobs. But that was not enough.
So Chimpy appointed a clown car-load of freak-show water heads to be in charge of the various agencies. It was not just political patronage (thought it was that, too), it was about ensuring massive, colossal failure in all areas. Our best example is of course FEMA, under the leadership of Heckuva Job Brownie, a horse-show promoter who was completely unprepared for Katrina. That was the expected result.
But back to Christopher Cox, a man you said that you have been covering for 20 years, the point man at the SEC when the whole house of cards collapsed. Here’s your opinion of him from The News Hour in 2005:
DAVID BROOKS: My broker is, I hope. But Chris Cox is one of the smartest people on Capitol Hill, so I have a lot of faith in him as a person. He went to Harvard Law and Harvard College but that not withstanding.
He strikes me as a sort of a Jack Kemp Republican — not quite in tune with the current House leadership Tom DeLay sorts, but he really goes back to the Reagan years and I think he was there with Jack Kemp.
JIM LEHRER: He worked in the Reagan administration.
DAVID BROOKS: He worked in the Reagan administration.
JIM LEHRER: He was one of the counsel —
DAVID BROOKS: And he’s just someone who, is on a policy level, extremely serious. And so I have a lot of faith in him, a lot of faith in his intelligence. And I would also say as a politician when there’s a scandal he will understand the importance of playing to the public about it and responding to public cries for reform
And the final thing to be said is there’s no contradiction being pro-free market and wanting to crack down on the bad guys. So I just don’t think it’s right to pre-judge him either way.
Yes, Bobo, there’s no contradiction on being pro-free market and wanting to crack down on the bad guys, but Cox was only pro-free market, as the records show. Cox fiddled while rome burned, so to speak. And it is amazing to me that to this day no one has called him on the carpet to testify.
So when you say, Bobo, that No one saw it coming, I think you are indulging your fantastic amnesia superpowers again. Everyone saw it coming. It was planned from the get-go. But to admit to anything other than complete surprise would be to admit to being part of the vast, failed experiment that is supply-side economics, deregulate everything, free-marketeering, and waiting for that rising tide to lift all boats. Funny how it only lifted the yachts.
But more importantly, it would mean that you, Bobo, would have to admit to being wrong again. Fantastically wrong.