Please write and send praise, critique, interesting links or random musings to touchthehandthatfeedsyou@yahoo.com

Friday, November 4, 2011

Mayor Bloomberg's "Marie Antoinette Moment"

Nov 4th, 2011
by F. Grey Parker - NSFW

The only thing more annoying than the dissemination of certifiably provable bullshit is the constant and calculated repetition of that bullshit. People that do so, when they know better, are referred to as as 'bullshit artists.'

In pushing back against the Occupy Movement recently, New York Mayor Michael Bloomberg demonstrated a true mastery of that form. 

Speaking at a "business breakfast" this week, he smarmed that the protesters should be blaming the government and not Wall Street for that which ails us. The real bogeyman, in his estimation? Why, Fannie Mae and Freddie Mac... of course. 


This is, as I stipulated above, total bullshit.

How do we know this? Facts. The First Conservator's report to the FHFA in August of last year proves it. Business Insider parsed the report at that time and gave us the bullet points:
Fact One: Fannie and Freddie’s primary business of subsidizing conventional loans was not a driver of the housing bubble.
Fact Two: Fannie and Freddie lost market volume during the boom.
Fact Three: The major losses to Fannie and Freddie came through their expansion into guaranteeing non-traditional loans, not through their portfolio
Fact Four:The key change in the Fannie / Freddie business model was their expansion in the types of loans they were willing to guarantee. In particular moving into the Alt-A and Interest-Only categories.
Fact Five: The higher number of Alt-A and Interest Only loans combined with ultimately higher delinquency rates have meant that a plurality of losses have come from these two categories.
Fact Six: Areas with the largest collapse in home prices have accounted for most of Fannie and Freddie losses.
For more explanations of just how and why this running, slack-jawed meme is bullshit, you can click HERE, HERE or HERE.

What makes the Mayor's pronouncements so much worse than the usual drivel exploiting this falsehood is the fact that he really does know better. Matt Taibbi lays it out flat and calls it Bloomberg's "Marie Antoinette moment." From Rolling Stone:

"This whole notion that the financial crisis was caused by government attempts to create an "ownership society" and make mortgages more available to low-income (and particularly minority) borrowers has been pushed for some time by dingbats like Rush Limbaugh and Sean Hannity, who often point to laws like the 1977 Community Reinvestment Act as signature events in the crash drama.

But Rush Limbaugh and Sean Hannity are at least dumb enough that it is theoretically possible that they actually believe the crash was caused by the CRA, Barney Frank, and Fannie and Freddie.

On the other hand, nobody who actually understands anything about banking, or has spent more than ten minutes inside a Wall Street office, believes any of that crap. In the financial world, the fairy tales about the CRA causing the crash inspire a sort of chuckling bemusement, as though they were tribal bugaboos explaining bad rainfall or an outbreak of hoof-and-mouth, ghost stories and legends good for scaring the masses.

But nobody actually believes them. Did government efforts to ease lending standards put a lot of iffy borrowers into homes? Absolutely. Were there a lot of people who wouldn’t have gotten homes twenty or thirty years ago who are now in foreclosure thanks to government efforts to make mortgages more available? Sure – no question.

But did any of that have anything at all to do with the explosion of subprime home lending that caused the gigantic speculative bubble of the mid-2000s, or the crash that followed?

Not even slightly. The whole premise is preposterous. And Mike Bloomberg knows it.

In order for this vision of history to be true, one would have to imagine that all of these banks were dragged, kicking and screaming, to the altar of home lending, forced against their will to create huge volumes of home loans for unqualified borrowers.

In fact, just the opposite was true. This was an orgiastic stampede of lending, undertaken with something very like bloodlust. Far from being dragged into poor neighborhoods and forced to give out home loans to jobless black folk, companies like Countrywide and New Century charged into suburbs and exurbs from coast to coast with the enthusiasm of

Rwandan machete mobs, looking to create as many loans as they could.

They lent to anyone with a pulse and they didn’t need Barney Frank to give them a push. This was not social policy. This was greed. They created those loans not because they had to, but because it was profitable. Enormously, gigantically profitable -- profitable enough to create huge fortunes out of thin air, with a speed never seen before in Wall Street's history."

It is one thing to parrot emotionally satisfying and popularly plausible prevarications when one does not have either the information or the intelligence to see through them. 

It is another matter altogether when those who promote them know them to be outright lies.

1 comment:

  1. It seems to me that if the government is guilty of anything, it is guilty of lax oversight.

    ReplyDelete