What caused the financial crisis? The Big Lie goes viral.

[mookiemookie]

Why are people trying to rewrite the history of the crisis? Some are simply trying to save face. Interest groups who advocate for deregulation of the finance sector would prefer that deregulation not receive any blame for the crisis.

Some stand to profit from the status quo: Banks present a systemic risk to the economy, and reducing that risk by lowering their leverage and increasing capital requirements also lowers profitability. Others are hired guns, doing the bidding of bosses on Wall Street.

It's funny to watch people not only trying to rewrite history, but trying to rewrite such recent history. It's so brazen. And sadly, it seems to be working on some level.

http://www.washingtonpost.com/business/what-caused-the-financial-crisis-the-big-lie-goes-viral/2011/10/31/gIQAXlSOqM_story.html

[Ducimus]

http://www.youtube.com/watch?v=S3AXHQcXYMk&NR=1

[JU_88]

@mookie, so they blame their government, wow their arrogance is just incredible, they blame those that allowed them the freedom to carry out there crimes in the first place.
Cant these people be locked up under the anti terrorism act? - because thats what it is, financial terrorism.
Many People love there lies, so I'm sure they'll swallow this lastest lie whole and wash it down with a glass of ignorance - then scratch their heads when everything collapes around them and those responisble walk free.
Bon apetite!

@Ducimus, good video.. so much info like this is avaliable, yet many still cry "its not the co-operations or bankers" - idiots.

"If a nation expects to be ignorant and free, in a state of civilization, it expects what never was and never will be". Thomas Jefferson

[Hottentot]

It's funny to watch people not only trying to rewrite history, but trying to rewrite such recent history.

Offtopic sidenote: history is supposed to be rewritten. History is being rewritten all the time. History being rewritten is history being a science. "Past" and "history" are not synonyms.

Sorry. Carry on, please.

[sidslotm]

Does anybody anywhere know what their doing :yep:

[Skybird]

By the end of the day, when all intellectuality and arguments is done, it comes down to this simply fact: an economy that runs by making debts, but never paying them back but instead increasing them in a bid on future generatons cleaning up the growing mess, is a snowball system and necessarily must fail. The details of that failure may differ in the cosmetic display, but the failure is not any less real.

Our economic theories to me are very much messed, FUBAR, and hopelessly designed to party on the present at the cost of the future. And after us - the great flood. Not our business, isn't it?

We must not seek to try curing the symptoms and saving the old system that has brought us to where we are. We need a new system that focusses on real valure instead of abstract, fictional value, and where "Nachthaltigkeit" (=sustainability?) and stability overrule short-termed profit interest and the insane hallucination that there could be something like endless growth. We need a stability that fluctuates around a certain treshhold that guarantees sustainability but does no longer aim at a system of boosted growth and "always more".

Truthz is this philosophy would be needed in almost all fields of conflictg today: ressources, fertile ground and farming, sweet water, population sizes - and finances and economy as well.

But I fear this is just calling in the desert.

[Sailor Steve]

By the end of the day, when all intellectuality and arguments is done, it comes down to this simply fact: an economy that runs by making debts, but never paying them back but instead increasing them in a bit oin future generatons cleaning up the growing mess, is a snowball system and necessarily must fail. The details of that failure may differ in the cosmetic display, but the failure is not any more real.
Which brings a question to my mind, in all of the "Left-Right" accusations. How much can we expect a government to regulate industries that function that way when that is the exact same way the government operates? The government bails corporations out with borrowed money, and never actually pays off the interest, much less the principal.

[JU_88]

Which brings a question to my mind, in all of the "Left-Right" accusations. How much can we expect a government to regulate industries that function that way when that is the exact same way the government operates?.

The answer is, We cant, :woot:
Talk of tougher regulation, dealing our defecits and stimulating growth... all of that is just re-arranging the deck chairs on the Titanic.
Its too late, we are screwed. :nope:

[Sea Demon]

Wow. This thread is pure comedy. We certainly have a number of Hugo Chavez wanna-be's here. In speaking about the financial mess, I notice that people who rail against "Big" capitalism and "Big" business tend to forget government's role in Fannie and Freddie. Take a look here and note the date:

http://www.nytimes.com/1999/09/30/business/fannie-mae-eases-credit-to-aid-mortgage-lending.html

For the few of you who support OWS, I'll post a very important part for you:

"In a move that could help increase home ownership rates among minorities and low-income consumers, the Fannie Mae Corporation is easing the credit requirements on loans that it will purchase from banks and other lenders.
The action, which will begin as a pilot program involving 24 banks in 15 markets -- including the New York metropolitan region -- will encourage those banks to extend home mortgages to individuals whose credit is generally not good enough to qualify for conventional loans. Fannie Mae officials say they hope to make it a nationwide program by next spring."

Fannie is called a GSE ... a Government Sponsored Entity. Both Fannie Mae and Freddie Mac were doing all they could to back up the banks and lending institutions who were making these subprime, almost worthless loans. No lender is going to make a loan that they feel is a mistake unless there is someone out there to back them up. The entities backing them up were Fannie and Freddie. Who in government was giving them directives to do this stuff? And the Bush administration proposed to alter the regulation of GSE's like Fannie and Freddie, and the Democrats fought those efforts. Look what Barney Frank (Democrat) had to say about it:



http://www.taxfoundation.org/blog/show/23617.html


I hate to bring this guy up as well, but John McCain tried in 2005 to enact a bill that would bring some oversight to Fannie and Freddie.

http://hotair.com/archives/2008/09/17/mccains-attempt-to-fix-fannie-mae-freddie-mac-in-2005/

This causes disbelief in liberals, but that bill was stopped cold by a Democrat solid party line vote. But here we have leftist dolts blaming the free market for our current problems. And completely ignoring the governments role in enabling the bad mortgages and blocking reform. All these "revisions" of history, including Mookie's revisionists at the Washington Post, can't deny the role played here, the impacts, and the snowball effect across other sectors of the economy. Well, unless they themselves have an agenda to push.

Here's another tidbit:

http://www.youtube.com/watch?v=1RZVw3no2A4

And let me be clear about one more thing. Those of you who rail against capitalism, free markets, and financial institutions.....I invite you to live in areas of the world that don't have these things. I think these ignorant types (with no knowledge of finance whatsoever) need to live in places without financial institutions, banks, and private enterprise. Let's see what you think about your standard of living in those places. There are a number of places in the world without them. You are free to move there. I'm certain that Kim Jong Il has room for you.:yeah::O:

This is why OWS is useless in the first place. They're targeting the wrong bunch if they hold any sense of intellectual honesty. But these people as we've seen are full of crap.

[JU_88]

Wow. This thread is pure comedy. We certainly have a number of Hugo Chavez wanna-be's here. In speaking about the financial mess, I notice that people who rail against "Big" capitalism and "Big" business tend to forget government's role in Fannie and Freddie. Take a look here and note the date:

http://www.nytimes.com/1999/09/30/business/fannie-mae-eases-credit-to-aid-mortgage-lending.html

For the few of you who support OWS, I'll post a very important part for you:



Fannie is called a GSE ... a Government Sponsored Entity. Both Fannie Mae and Freddie Mac were doing all they could to back up the banks and lending institutions who were making these subprime, almost worthless loans. No lender is going to make a loan that they feel is a mistake unless there is someone out there to back them up. The entities backing them up were Fannie and Freddie. Who in government was giving them directives to do this stuff? And the Bush administration proposed to alter the regulation of GSE's like Fannie and Freddie, and the Democrats fought those efforts. Look what Barney Frank (Democrat) had to say about it:



http://www.taxfoundation.org/blog/show/23617.html


I hate to bring this guy up as well, but John McCain tried in 2005 to enact a bill that would bring some oversight to Fannie and Freddie.

http://hotair.com/archives/2008/09/17/mccains-attempt-to-fix-fannie-mae-freddie-mac-in-2005/

This causes disbelief in liberals, but that bill was stopped cold by a Democrat solid party line vote. But here we have leftist dolts blaming the free market for our current problems. And completely ignoring the governments role in enabling the bad mortgages and blocking reform. All these "revisions" of history, including Mookie's revisionists at the Washington Post, can't deny the role played here, the impacts, and the snowball effect across other sectors of the economy. Well, unless they themselves have an agenda to push.

Here's another tidbit:

http://www.youtube.com/watch?v=1RZVw3no2A4

And let me be clear about one more thing. Those of you who rail against capitalism, free markets, and financial institutions.....I invite you to live in areas of the world that don't have these things. I think these ignorant types (with no knowledge of finance whatsoever) need to live in places without financial institutions, banks, and private enterprise. Let's see what you think about your standard of living in those places. There are a number of places in the world without them. You are free to move there. I'm certain that Kim Jong Il has room for you.:yeah::O:

This is why OWS is useless in the first place. They're targeting the wrong bunch if they hold any sense of intellectual honesty. But these people as we've seen are full of crap.

Who said we are pro OWS leftists and anti-capitalist against big businesses? Where did you get that from?? :hmmm: Capitalism alone is not why we in such a mess, it is only contributing factor.
Once again you are missing the big picture, go and do some proper research in to current affairs, learn to stop making stupid assumptions, leave your phoney partisan baggage at door -then come back and maybe we can talk.

[Skybird]

Which brings a question to my mind, in all of the "Left-Right" accusations. How much can we expect a government to regulate industries that function that way when that is the exact same way the government operates?
You cannot expect that at all. It'S essentially just two of the several heads of one and the same hydra, when seeing "industry" as the big economic players, and "government" as "parties".

We do not get robbed by states or the institution of "the government". We do get robbed by political parties and economic lobby groups. We do get robbed by individual human people who have clearly defined interests in the current constellation that are directed against the longterm interests of the people, the nations. For the politician, it is party's power, his individual career, and ideology. For the lobbyist, it is the maximising of financial profit in the shortest ammount of time, and after that avoiding to get hold responsible. Both the economic lobbyist and the politician in this understanding are acting absolutely asocial.

In my understanding,
- Mafia-like organisations of crime,
- religious institutions like lobby groups, churches, clerical unions,
- banks and big corporations,
- and political parties,
all count as different manifestations of what we call "the organised crime", again, they all are heads of the same hydra. That's why they work hand in hand so wonderfully. It'S not four different problems. It's one big problem, smiling and biting with four different faces. The venom the bites inject, is "control".

[Sea Demon]

Who said we are pro OWS leftists and anti-capitalist against big businesses? Where did you get that from?? :hmmm: Capitalism alone is not why we in such a mess, it is only contributing factor.
Once again you are missing the big picture, go and do some proper research in to current affairs, learn to stop making stupid assumptions, leave your phoney partisan baggage at door -then come back and maybe we can talk.

Your words give you away. You ain't foolin' anybody. ;)

[mookiemookie]

Wow. This thread is pure comedy. We certainly have a number of Hugo Chavez wanna-be's here. In speaking about the financial mess, I notice that people who rail against "Big" capitalism and "Big" business tend to forget government's role in Fannie and Freddie. Take a look here and note the date:

http://www.nytimes.com/1999/09/30/business/fannie-mae-eases-credit-to-aid-mortgage-lending.html

For the few of you who support OWS, I'll post a very important part for you:



Fannie is called a GSE ... a Government Sponsored Entity. Both Fannie Mae and Freddie Mac were doing all they could to back up the banks and lending institutions who were making these subprime, almost worthless loans. No lender is going to make a loan that they feel is a mistake unless there is someone out there to back them up. The entities backing them up were Fannie and Freddie. Who in government was giving them directives to do this stuff? And the Bush administration proposed to alter the regulation of GSE's like Fannie and Freddie, and the Democrats fought those efforts. Look what Barney Frank (Democrat) had to say about it:



http://www.taxfoundation.org/blog/show/23617.html


I hate to bring this guy up as well, but John McCain tried in 2005 to enact a bill that would bring some oversight to Fannie and Freddie.

http://hotair.com/archives/2008/09/17/mccains-attempt-to-fix-fannie-mae-freddie-mac-in-2005/

This causes disbelief in liberals, but that bill was stopped cold by a Democrat solid party line vote. But here we have leftist dolts blaming the free market for our current problems. And completely ignoring the governments role in enabling the bad mortgages and blocking reform. All these "revisions" of history, including Mookie's revisionists at the Washington Post, can't deny the role played here, the impacts, and the snowball effect across other sectors of the economy. Well, unless they themselves have an agenda to push.


Yes, the entire GLOBAL housing bubble was all due to Fannie and Freddie.

http://www.ritholtz.com/blog/wp-content/uploads/2011/11/Sept09_CF1.jpg

:roll:

Not to mention private labels securitized more subprime loans than Fannie or Freddie ever held in their investment portfolios (as they could only securitize conforming loans) but you wouldn't know anything about that because you have your facts so wrong that it's pointless to even begin to explain to you how the process actually worked. You're closed off to fact and data, and that's your loss.

[Sea Demon]

Yes, the entire GLOBAL housing bubble was all due to Fannie and Freddie.

http://www.ritholtz.com/blog/wp-content/uploads/2011/11/Sept09_CF1.jpg

:roll:

Never said it was. But it is a prime cause of the meltdown in the USA...which of course affected the rest of the world (which happens to buy our treasuries).

[mookiemookie]

Never said it was. But it is a prime cause of the meltdown in the USA...which of course affected the rest of the world (which happens to buy our treasuries).

Or maybe the global meltdown had its roots in the same causes of the U.S. crisis - historic low Fed rates, 40-1 leverage, demand for junk AAA-rated paper, too many derivatives?

Nah, easier to toe the party line and blame Fannie, Freddie, Barney Frank and the Democrats.

[Sea Demon]

:roll:

Not to mention private labels securitized more subprime loans than Fannie or Freddie ever held in their investment portfolios (as they could only securitize conforming loans)

Who writes the rules, mookie? Who gets their backing and support straight from the taxpayer? Where did the directives from lending sub-prime come from? And who tried to fix it? What people blocked it for ideological reasons? The facts vs. your facts are two different things.

[JU_88]

Your words give you away. You ain't foolin' anybody. ;)

So I guess you know me better than I know myself then?
Grow up.

[Sea Demon]

So I guess you know me better than I know myself then?
Grow up.

Right back at ya'. :up: (as you assume what my understanding is of how economics works in in my country).

[JU_88]

Right back at ya'. :up: (as you assume what my understanding is of how economics works in in my country).


Actually I genuinely asked you if you could explain your understanding of it in the OWS thread, but you refused and simply assumed that i must be 'unteachable' :dead:
Your country?, when the economics of a country as largely determines the economics of the entire planet, its no longer 'club members only' where opinions are concerned.

[flatsixes]

I'll let all you economics majors argue over who shot John (the butler did it). But I'm more than a bit appalled at the license that the author of the opinion piece took with Mayor Bloomberg's statement. I don't necessarily disagree with the author's facts (once they're stripped of the author's unnecessary hyperbole). But the author tees-off on Bloomberg by opening with this:

The Big Lie made a surprise appearance Tuesday when New York Mayor Michael Bloomberg, responding to a question about Occupy Wall Street, stunned observers by exonerating Wall Street: ***8220;It was not the banks that created the mortgage crisis. It was, plain and simple, Congress who forced everybody to go and give mortgages to people who were on the cusp.***8221;

That's "The Big Lie?" that supports the author's accusations of a rewrite of history by "Wall Street" (whoever that is). Then why is this "rewrite" buried in the last few lines of the piece?

Bloomberg was partially correct: Congress did radically deregulate the financial sector, doing away with many of the protections that had worked for decades. Congress allowed Wall Street to self-regulate, and the Fed the turned a blind eye to bank abuses.

Oh! So Bloomberg was not lying? Well then, never mind.

If you can't make you points (and good ones) without resorting to the lamest form of fallacy (straw man), then I've got no more time to waste on you, Mr. Ritholtz. Get an adult to help you with your next column.

[mookiemookie]

I'll let all you economics majors argue over who shot John (the butler did it). But I'm more than a bit appalled at the license that the author of the opinion piece took with Mayor Bloomberg's statement. I don't necessarily disagree with the author's facts (once they're stripped of the author's unnecessary hyperbole). But the author tees-off on Bloomberg by opening with this:

The Big Lie made a surprise appearance Tuesday when New York Mayor Michael Bloomberg, responding to a question about Occupy Wall Street, stunned observers by exonerating Wall Street: ***8220;It was not the banks that created the mortgage crisis. It was, plain and simple, Congress who forced everybody to go and give mortgages to people who were on the cusp.***8221;

That's "The Big Lie?" that supports the author's accusations of a rewrite of history by "Wall Street" (whoever that is). Then why is this "rewrite" buried in the last few lines of the piece?

Bloomberg was partially correct: Congress did radically deregulate the financial sector, doing away with many of the protections that had worked for decades. Congress allowed Wall Street to self-regulate, and the Fed the turned a blind eye to bank abuses.

Oh! So Bloomberg was not lying? Well then, never mind.

If you can't make you points (and good ones) without resorting to the lamest form of fallacy (straw man), then I've got no more time to waste on you, Mr. Ritholtz. Get an adult to help you with your next column.

Respectfully, I think you've misunderstood his point completely. "The Big Lie" that he mentions is defined as "that banks and investment houses are merely victims of the crash." Bloomberg did repeat that, and it is a lie that the crisis could be blamed in whole or large part on excessive government regulation - i.e. forcing banks to make loans.

When he said Bloomberg was partially right, he meant that it's correct to blame Congress. Blame them not for "forcing banks to make loans" (the motivation to make poor loans was being able to turn around and immediately sell them to securitizers, not any heavy handed federal mandate to make loans that would drive a bank out of business) and excessive regulation, but blame them for radical deregulation and ignoring the ticking timebomb of imprudent lending and allowing the things mentioned in the bullet points - repealing Glass Steagall, allowing excessive leverage, no regulation of derivatives, little to no oversight of the methodology of the ratings agencies, etc.

I see no "straw mans" there.

[flatsixes]

And with equal respect, Mookie, I don't think that I misunderstood his "point" at all. It was hammered home with tenpenny nails throughout the piece. "The Big Lie" (which, amusingly, includes any disagreement with the infallible gospels of man-made climate change or Keynesian economics) also has a Wall Street version - namely the banks are the victims, not the cause, of the financial meltdown." Got it.

Perhaps you missed my point, however. The author claims that "one group" (aka:"these people," "they" and "those whose bad judgment and failed philosophy helped cause the crisis") are exonerating themselves by "rewriting history." Ritholtz then sets up as the only example of "these people" one Michael Bloomberg, whose only apparent connection to "bad judgment and failed philosophy helped cause the crisis" is the fact that his business supplied Wall Street with the tools of its trade - namely data access and terminals.

Having thus conclusively established Mr. Bloomberg's bona fides as one of "those people," Ritholtz then bases his entire argument that a "Wall Street version of the Big Lie" exists upon a quote taken from Mayor Bloomberg stating that "It was not the banks that created the mortgage crisis. It was, plain and simple, Congress who forced everybody to go and give mortgages to people who were on the cusp.***8221; (emphasis added). (And here's (http://www.capitalnewyork.com/article/culture/2011/11/3971362/bloomberg-plain-and-simple-congress-caused-mortgage-crisis-not-banks) the rest of Mayor Bloomberg's quote:

"Now, I'm not saying I'm sure that was terrible policy, because a lot of those people who got homes still have them and they wouldn't have gotten them without that.

"But they were the ones who pushed Fannie and Freddie to make a bunch of loans that were imprudent, if you will. They were the ones that pushed the banks to loan to everybody. And now we want to go vilify the banks because it's one target, it's easy to blame them and congress certainly isn't going to blame themselves. At the same time, Congress is trying to pressure banks to loosen their lending standards to make more loans. This is exactly the same speech they criticized them for."

Note that Mayor Bloomberg is referring to the "mortgage crisis, " and not "the financial crisis" to which nearly all of Mr. Ritholtz's article concerns itself. Granted, the two disasters are of a pair - the mortgage crisis triggering the financial collapse - but Bloomberg never said that the banks were "victims" of the financial collapse, did he? Nope.

And that's why Mr. Ritholz has to retract (a bit) from his claim to Bloomberg's contribution to the author's "Big Lie" conspiracy at the end of his piece. That's his straw man, Mook. And that's what turned me off. Using a half-truth to argue a bigger truth is no truth at all.