An iteresting take on the current financial crisis. It's lengthy, but in my opinion, worth the watch:
h/t to Winds of Change
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2 comments:
Post hoc ergo propter hoc.
This video with its pulsing music and MTV editing is a neat sequence of facts that don't really add up to the conclusions whoever put this together is trying to push.
Nor is it mete for Obama to throw it at McCain or even Bush. The key elements of deregulation that broke down the divisions between commercial banks and investment banks which allowed the creation of these mortgage-backed securities which filled the center of our bubble took place under a Democratic president and a Republican congress. A plague on both our houses.
This video's put together in a rather fetching attempt to lay this on one person's door in retaliation for the Dems making the attempt to do the same. I'll overlook that it ignores little things like the Fannie May lobbiest who runs McCain's campaign and other salient facts which water down much of the lopsided claims in the video.
Anyway, no economic collapse or near-collapse (I hope) happens in a vacuum. It doesn't belong on the Dem's or the Republican's doorstep.
It's on all of us. And the sooner we knock of the pointless finger-pointing, the better. I'm sick of this. The house is burning down and we're arguing about who left the iron plugged in more often and is therefore more likely to be culpable.
While the CRA did affect home prices, there were economic forces underpinning the rise that cannot be simply explained away by one piece of legislation.
De-regulation allowed these complex bundles of mortgage-backed securities to exist. The weak laws that existed prior to Sarbanes-Oxley allowed the companies in it up to their eyeballs to hide it and you can't say that one event or one law broke the back of the American economy. The CRA doesn't "require" banks to issue an ARM on a million dollar home to Bobby Joe and his girlfriend on their word alone that Bobby's an Investment banker worth five bills and his gf is a fashion model without checking to see if they're lying. That wasn't regulatory interference, it was avarice. And not a little fraud.
The decisions to lessen and lessen and lessen the requirements for loans weren't made because of the CRA, they were made to sell more loans. To bundle into these 'investments' and shunt out the back door to feed a market clamoring for more of them under the apparent delusion that this was a party that couldn't end.
Greed got us here. Greedy home-buyers looking to flip houses and retire, credit-addicted consumers living beyond their means fed by realtors, bankers and appraisers. People buying second and third homes over the phone sight-unseen in the height of the frenzy and on margin in hopes that the excalating 'values' would outpace their interest payments. And it's on every politician, every banker, every real estate agent, and especially the bankers like WaMu who inflated home values by colluding with appraisers.
It's on all of us. It wasn't CRA, it wasn't the deregulation. It was a combination of all those rolled up in an enchilada of greed and blind consumerism. It only remains to see what we do about it... if anything.
For the record, I posted the video only because I found it interesting, not because I necessarily agree. I should have probably made that more clear in the post itself.
Also, I completely agree with Scott's conclusion. This is all of our faults in one way or another.
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