Feel the Meme.....

It is bubbling up underneath the bailout analysis and discussion, and it will rear its ugly head in all of the dank corners of the rightwing blogosphere. The meme is that the credit crunch, the collapse of the ridiculously levered banks on Wall Street, and the severe decline in the value of your home is not due to rapacious bankers, lenders and brokers, but because of.....blacks!

The general thought process is that because Clinton (of course) and the Democrats insisted that home ownership should be available to those who had been traditionally left outside of the lending process, and often explicitly discriminated against, the banks were forced to begin reckless lending to lower income and lower credit borrowers, in particular, minorities and, gasp, blacks.



Here's a taste of the meme:

Clinton saw homeownership as a way to open the door for blacks and other minorities to enter the middle class.
Though well-intended, the problem was that Congress was about to change hands, from the Democrats to the Republicans. Rather than submit legislation that the GOP-led Congress was almost sure to reject, Clinton ordered Robert Rubin's Treasury Department to rewrite the rules in 1995.
The rewrite, as City Journal noted back in 2000, "made getting a satisfactory CRA rating harder." Banks were given strict new numerical quotas and measures for the level of "diversity" in their loan portfolios. Getting a good CRA rating was key for a bank that wanted to expand or merge with another.
Loans started being made on the basis of race, and often little else.

We can argue all that we want about the chicken and egg here, but the chicken and egg are the boom in securitization that Wall Street led and the artificially low interest rates that Chairman Greenspan left in place after 9/11, not the absurdly racist notion that black and minority home ownership are to blame. Keep an eye on this, it will enter the conversation over and over again, until it meanders towards conventional wisdom on the right.

UPDATE: Michelle Malkin gives it a little twist, and blames it on the other dark skinned culprits....

It’s no coincidence that most of the areas hardest hit by the foreclosure wave - Loudoun County, Va., California’s Inland Empire, Stockton and San Joaquin Valley, and Las Vegas and Phoenix, for starters - also happen to be some of the nation’s largest illegal-alien sanctuaries. Half of the mortgages to Hispanics are subprime (the accursed species of loan to borrowers with the shadiest credit histories). A quarter of all those subprime loans are in default and foreclosure.

Snark.

Finally, a coherent analysis of the bailout:

The Bailout Plan...

I'll give you two posts that point out the inanity of the bailout scheme that Hank Paulson, Helicopter Ben, and the Bush Administration have proposed. The first, from Glenzilla, analyzes the bailout from the higher level, noting that it is the most naked example of Republican hypocrisy that we'll see in our lifetimes, perhaps.

Second, whatever else is true, the events of the last week are the most momentous events of the Bush era in terms of defining what kind of country we are and how we function -- and before this week, the last eight years have been quite momentous, so that is saying a lot. Again, regardless of whether this nationalization/bailout scheme is "necessary" or makes utilitarian sense, it is a crime of the highest order -- not a "crime" in the legal sense but in a more meaningful sense.
What is more intrinsically corrupt than allowing people to engage in high-reward/no-risk capitalism -- where they reap tens of millions of dollars and more every year while their reckless gambles are paying off only to then have the Government shift their losses to the citizenry at large once their schemes collapse? We've retroactively created a win-only system where the wealthiest corporations and their shareholders are free to gamble for as long as they win and then force others who have no upside to pay for their losses. Watching Wall St. erupt with an orgy of celebration on Friday after it became clear the Government (i.e., you) would pay for their disaster was literally nauseating, as the very people who wreaked this havoc are now being rewarded.

The second is from Krugman, in this blogpost here, who points out, quite succinctly, why this thing just won't work.

Here’s the thing: historically, financial system rescues have involved seizing the troubled institutions and guaranteeing their debts; only after that did the government try to repackage and sell their assets. The feds took over S&Ls first, protecting their depositors, then transferred their bad assets to the RTC. The Swedes took over troubled banks, again protecting their depositors, before transferring their assets to their equivalent institutions.

The Treasury plan, by contrast, looks like an attempt to restore confidence in the financial system — that is, convince creditors of troubled institutions that everything’s OK — simply by buying assets off these institutions. This will only work if the prices Treasury pays are much higher than current market prices; that, in turn, can only be true either if this is mainly a liquidity problem — which seems doubtful — or if Treasury is going to be paying a huge premium, in effect throwing taxpayers’ money at the financial world.

And there’s no quid pro quo here — nothing that gives taxpayers a stake in the upside, nothing that ensures that the money is used to stabilize the system rather than reward the undeserving.

I hope I’m wrong about this. But let me say it again: Treasury needs to explain why this is supposed to work — not try to panic Congress into giving it a blank check. Otherwise, no deal.

What Krugman is correctly noting is that we are at cross purposes here. It is in the interests of the taxpayers to pay the least amount possible for the shitty loans on the books of the banks (broadly defined). If we overpay, we receive no potential upside and simply own a trillion dollars of garbage. It is in the interests of the banks (and the bailout, by the way) for the taxpayers to grossly overpay for those loans. If the government (ie, us) doesn't overpay for the loans, the bailout itself does no good.

And thirdly, a question that cuts to the heart of the flailing about that has defined the past two weeks...namely, what do we do if the bailout doesn't work? Again, what is plan B here? I hate to draw specious parallels to our misadventures along the Tigris and the Euphrates, but didn't we all agree that we needed to do a bit of "postwar planning" next time?

Jackson

Goin down to the Tower to see JB tonight. Betcha he doesn't look like this anymore...

The Challenge Ahead

Russ Feingold nails it right on the head in his special comment for Constitution Day. You can read the entire statement here.


The money graph is here:

Our next president will face a difficult challenge. He must repair the wreckage the current administration has left, which means renouncing some of the powers the current President tried to amass as he turned a blind eye to the rule of law and separation of powers. No president will want to limit his own power. But if we are to be the nation our founders envisioned when they gathered in Philadelphia more than two centuries ago, we must work together — across party lines and at all levels of government — to protect and defend our Constitution and restore the rule of law.

The assault on the Constitution by Cheney, Addington and Bush (through his general disinterest and disdain for the concept of government itself) is perhaps the most corrosive legacy of this failed administration. (That said, the havoc we see in the financial world is not far behind, as it represents the logical conclusion of the Bush Presidency's incompetent fiscal policy).

Another one that doesn't do nuance....

As Wall Street lurches through the painful de-leveraging that is necessary to deflate the bubble that has provided 60% of the revenue and 40% of the pre-tax profit for investment banks over the past five years, the big question is exactly how the GOP will spin this, particularly the mouth breathing right. It seems a meme has emerged, namely, that this is all Congresses fault. I'm not quite sure how this squares with the reality of the last eight years of disdain for any sort of government regulation or oversight, but clearly a theme is emerging that someone, perhaps Chris Dodd, should be arrested.

John McCain added this to the conversation:

"We're going to need a '9/11 Commission' to find out what happened and what needs to be fixed," he said. "I warned two years ago that this situation was deteriorating and unacceptable. And the old-boy network and the corruption in Washington is directly involved, and one of the causes of this financial crisis that we're in today. And I know how to fix it, and I know how to get things done."

McCain has made no secret of the fact that he doesn't understand the economy, doesn't particularly care about it, and doesn't have the predilection to spend the time to look into it, as it is complicated business. As Digby notes, this is the man that intends to solve the centuries old conflicts in Western Asia this way:

“One of the things I would do if I were President would be to sit the Shiites and the Sunnis down and say, ‘Stop the bullshit,’” said Mr. McCain.

So, we probably shouldn't expect too much from Grampy McCranky when it comes to an enlightened or nuanced examination of the current tectonic shift in business models that is occurring on the Street. In my own personal opinion, we are reaping the result of eight years of unfettered capitalism, which grew out of the utter disdain that the right has for the notion of government itself. Movement conservatives hold as religion the thought that any regulation, any bureaucracy, any oversight, or any safety net that government would put in the way of the free hand of the markets is anathema, and that any discussion of the appropriate role of our government in checking the excesses of our systems is tantamount to treason.

And where have we ended up? The litany of Bush failures are underpinned by this broken calculation. Katrina, Freddie and Fannie, the subprime debacle, AIG, Lehman and Bear, the misery of the bankruptcy bill, all of these are part and parcel of the anti-government bent that drives their worldview. Along the way, they've been forced to bail out the very markets they swear by, ironically. So you and I will take on the mortgage responsibilities of Freddie and Frannie, we'll lend $50b to AIG, and we'll backstop Bear's losses on behalf of JP Morgan. If GM comes hat in hand to the Fed next week, how can we say no?

Thank goodness he's got Palin on his ticket to work through the complexities.

Ahh, whatever....Ronnie Drew Passed in August...

Passed without comment....

McCain criticized Democratic contenders for offering what he called costly universal health care proposals that require too much government regulation. While he said he had not studied Democratic candidate Hillary Clinton's health-care plan, he said it was "eerily reminiscent" of the failed plan she offered as first lady in the early 1990s.

"I think they put some lipstick on a pig, but it's still a pig," he said of her proposal.

link

WSJ on Palin's lies...

What's with these two radical liberals who've invaded the hallowed spaces of the WSJ?

Despite significant evidence to the contrary, the McCain campaign continues to assert that Alaska Gov. Sarah Palin told the federal government "thanks but no thanks" to the now-famous bridge to an island in her home state.....

But Gov. Palin's claim comes with a serious caveat. She endorsed the multimillion dollar project during her gubernatorial race in 2006. And while she did take part in stopping the project after it became a national scandal, she did not return the federal money. She just allocated it elsewhere....

Why is this one issue such a big deal? Sen. McCain's anti-earmarks stance has been paramount to his campaign. The Arizona senator has blamed everything from the Minneapolis bridge collapse to Hurricane Katrina on Congress's willingness to stuff bills full of pork barrel spending.

As such, Gov. Palin's image as a "reformer" is part of the storyline the McCain campaign needs to complement the top of its ticket. Her quip about passing on the bridge and "building it ourselves" has been a staple of her stump...

At a rally today, Sen. McCain again asserted that Sen. Obama has requested nearly a billion in earmarks. In fact, the Illinois senator requested $311 million last year, according to the Associated Press, and none this year. In comparison, Gov. Palin has requested $750 million in her two years as governor -- which the AP says is the largest per-capita request in the nation.

Another word for what Gov. Palin is doing is, of course, lying.

Once again, her comical performance isn't the issue; of course she's a travesty as a national candidate, and the next six weeks will be filled with one gaffe after another, at least as far as the GOP allows her to speak openly. The issue, as it has always been, is McCain's decision to include her on the ticket. He vowed that the person he ultimately chose as his running mate would be the person best able to fulfill his responsibilities should something happen to him. He had months and months to find that person, and when the time came, he picked Palin. This is about judgment. This is about temperament, and this is about erratic behavior on the part of the man the GOP has chosen as their standard bearer.

UPDATE: Careful, some on the right are already wishing and hoping that the 72 year old four time cancer survivor doesn't even make it that long..

Hockey Guy, You're Famous!

Apparently, Grampy McSame is a big fan of reality television. I suppose he has his pudding on a TV table watching the latest version of Biggest Loser or Wife Swap. Appropriately, he's now got a supporting role in the latest hit, Baby Daddy, in which a 17 year old boy from Alaska is whisked off to the Twin Cities to meet the man who in six weeks could be the President of the United States! And what great feat did he pull off to win this great honor? He knocked up his high school girlfriend...



The cameras were rolling, the world was watching. Fox News complains non-stop about the MSM's shameless attacks on the Palin family, the gross invasion of privacy that has taken place because the liberal media has pried into the sanctity of this family matter. In other words, keep the family out of it, and never mind the fact that we leaked the story and have shamelessly used the family as props all week. Oh, and who's turn is it to hold the little special kid?

Ten days ago, he was a high school dropout, drinking beer and smoking weed in Alaska, and today, he's being lauded by the fundamentalist right wing as a symbol of strong "culture of life" family values.

What a strange world.

This....

Beyond the Palin

The Palin nomination is a complete fiasco, of course. McCain's judgment has proven once again to be shaky and erratic, and it will take months to figure out just who called the shots on this one. Bill Kristol has been banging the table for Palin for months on Fox News, so this hardly came out of the blue. James Dobson and the religious fundamentalists clearly vetted the choice (just as McCain's lawyers seemed not to have). If Rove and the fundies sank Lieberman as possibility, which is being reported, what exactly does that say about Maverick McCain? So many unanswered questions.

Barring the possibility that she will be dropped from the ticket quickly, a possibility that I find highly likely at this point, it will be interesting to see how our opinion of Sarah Palin changes between now and November. The reaction that I got from various conversations over the weekend was that the choice was puzzling, desperate, insulting and a bit creepy. All of the information that has emerged in the past two days has done nothing but reinforce the idea that this is perhaps the greatest gaffe that a Presidential candidate has ever committed. We've learned that her bold declaration of opposing the 'bridge to nowhere' is complete bunk, we've learned that she's lawyered up for her own "troopergate" scandal which calls into question abuse of executive power, and we've learned that she has links to a bizarre secessionist movement in Alaskan politics. The timing of the revelation of Bristol Palin's pregnancy will trickle out over the next few days, and my guess is that it will lead to many more questions than answers about who knew what and when.

Whether or not the mainstream press, the spinmeisters and the talking heads on Fox, MSNBC and CNN will be able to transform that impression will be fascinating to watch.

Can they convince us that this is a wise choice?