Thursday, May 27, 2010

The Blame Game

The previous post was triggered in part by an annoying exchange that I had with some friend of a former coworker, who decided to jump into the midst of a conversation about Texas governor Rick Perry throwing around the word "secession" like a drunken Confederate at a states' rights rally and mock the intellectual merits of a sarcastic comment I had made. In the process he made repeated references to "The State," apparently hoping that such initial capitalization would impress upon the rest of us how threatening and neo-fascist/communist/totalitarian the Obama administration is.

I asked the guy where his outrage against the impositions of The State had been while the Bush administration was busy declaring two wars, wiping out a budget surplus, running up deficits, trying to legislate personal behavior, castrating regulatory functions, expanding executive power (with no checks), and pushing for legislation to curtail civil liberties. Because he only seemed to be concerned about the current administration and all the terrible things it has done, with the last eight years an apparent wisp of imagination.

I also asked if it had been The State that caused the financial crisis that kicked off the recession.

He ignored the first set of questions, but to my surprise, he answered the second with a lengthy (by Facebook standards) explanation that Clinton had caused the financial crisis by making it too easy for banks to make bad loans, nay, pressuring them into making bad loans by promising them TARP bailouts.


This is the point where I ended my participation in the discussion by congratulating the guy on his upcoming post as Minister of Propaganda should the revolution ever come.

But I did want to take up his point, because I believe that the initial facts he stated are, more or less, true: Clinton did approve of an easing on regulations and reassured banks that the federal government would bail them out.  Its his entire interpretation of this as somehow meaning that liberal big government is to blame for the financial crisis that is ludicrous.

First and foremost, note how he easily absolves the private financial sector of all blame for making all the absurdly risky subprime loans in the first place. Not only are they to blame for incompetence, they are morally culpable for their actions. The heads of these companies made a huge amount of money up front from accepting commissions on huge deals involving financial instruments that were crap.

At places like Goldman Sachs, people were shorting the same investments (ie, betting that they would fail) they were telling other investors were safe and low risk. These people are still rich and still around, even if their companies are not. The government had nothing to do with the choices these business leaders made to game the markets by creating suspect financial instruments specifically designed to elude existing regulatory statutes, all to satisfy their own greed.

(And this is supposed to increase my faith in the free market and my trust that business can regulate itself? Really?)

Secondly, note how he implies that Clinton, and thus Democrats, and thus liberals, crafted and implemented this plan in a vacuum, bearing sole responsibility. So nobody in the financial markets was lobbying to get the government to make things easier on them? The Republican Congress played no role in trying to ensure that certain instruments, like derivatives and credit swaps, were not regulated? And Bush didn't push for further deregulation during his administration? The impetus for all of this came directly from one party in government, such that The State is to blame for everything?

Does that make any sense based on even a rudimentary understanding of how lobbying, PACs, and conservative pro-business politicians in this country operate?

You can go here to learn more about how the Office of Thrift Supervision, the federal agency in charge of regulating failed financial giant AIG, went shopping for AIG and other big clients in 2003 by pledging to slash regulations and oversight and let business do business.

That happened in 2003.

Clinton did sign the Commodity Futures Modernization Act of 2000 into law before George W. Bush took office, and that act did basically create a bunch of loopholes for the financial markets to operate in. I'll just note that (a) the Republicans controlled both the House and Senate in the 106th Congress that passed the bill and (b) again, these things don't just appear out of a vacuum. A bunch of legislators didn't get together and craft a complex plan to cater to select corporate interests without being asked to do so and having mock legislation drafted on their behalf by those corporate interests.

I don't think that the federal government is flawless. Far from it. But it pisses me off to have conservative jackasses like this Facebook fellow barge in spouting facts and figures while pretending that big government and the bailout of corporate America are solely representative of liberal, Democratic administrations. Because that's crap. Bush was not only in favor of a bailout, he signed it into law

And beyond the political posturing involved in closing one eye and holding your nose so that you can attempt to blame everything on a single party, how about this "it's all the government's fault" reasoning?

First off, how the hell does anybody with half a functioning brain look at the events that precipitated the financial crisis and presume that the government caused it to happen and that big business doesn't share the bulk of the blame for its own actions? I thought conservatives were big into accountability?

And secondly, if the federal government was to blame for contributing to the bailout, their greatest failure was not in "pressuring" banks to make stupid and reckless loans and investments, but in failing to regulate the financial markets. How does that become an argument for a government with less authority?

Anyway, Facebook is a terrible medium to try to hold a cogent exchange on such a topic, and the cherrypicking of facts and questions that this guy indulged in, much less his interpretations, made it pretty clear to me that I didn't give a shit what he thought. But that doesn't mean I didn't think about why I thought he was wrong, and when I do that, sometimes it just helps to write it down and purge the system.

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