quote:Have you genuinely not seen any conservative arguments that the fault of the financial collapse lies in great part with government intervention into the mortgage market (freddie, fannie, etc), that the banks shouldn't have been bailed out, and generally that while some Wall Street firms engaged in bad practices the fundamental flaw lies with the government?
The conversation seemed to move past this, but I think it is a very important point.
I, personally, haven't seen a legitimate argument in this vein. The only thing I have seen is statements that this is the case, but, in the instances where I've seen them, these statements haven't been expanded on or supported.
If they do exist, I would like to see and discuss them, as the reading and analysis that I've seen on this hasn't supported this interpretation.
posted
Most people's answers to the question of blame is nothing more than a function of what answer they ideologically desire. The core conservatives want to see government as the main culprit, so they will. The core liberals want to see capitalist institutions as the main culprit, so they will. You'll get a lot of regurgitation of doctrine, and a few worthwhile and analyzable discussions.
Of course, we do have something of a pretty clear picture when it comes to looking at why we had the financial collapse, and this necessarily involves looking at systems which allowed it to happen. Then we see that those systems have largely been allowed to continue unabated, protected from any real reform. When we look at the groups that have worked the hardest to prevent that reform actively, patterns emerge.
But, first things first: we have to get down to the lame equivalence arguments and the people who will tirelessly claim that 'both sides are just as bad.' A perennial favorite which must be spit up at every opportunity.
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posted
Everyone is equally to blame because failing to stop something and actively causing it are equal values. For some reason. There!
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The American people are to blame-- those in positions of political power and financial power, and those citizens who borrowed more than was sensible.
We're all in this together; we all are responsible for this mess.
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posted
My bad. I should have used a more specific title. I'm changing it from "Who's to blame for the 2008 financial collapse".
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Are you looking for an argument along that vein because you doubt it exists? Or are you looking for a somewhat legitimate argument along those lines so you can argue against it?
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quote:Originally posted by Scott R: The American people are to blame-- those in positions of political power and financial power, and those citizens who borrowed more than was sensible.
We're all in this together; we all are responsible for this mess.
You are painting with too broad a brush. There are many Americans who did not borrow more than was sensible. Some of us have no debts. Some of us pay off our mortgages quickly. Some of us don't carry a balance on our credit cards. Some of us drive older cars that we purchased with cash. Some of us voted against those politicians who deregulated banking. Some of us foresaw the collapse and spoke out for intervention early on when it would have made a difference. Some of us have no real financial power or political power. We are not all to blame and even among those, who are partly to blame, there is not equal culpability.
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Neither and both. As I said, I haven't seen it as an actual expanded and supported argument. It's possible that this is because it doesn't really exist. Or I could just not have come across it. If, as it seemed to me from the part of the exchange I quoted, that posters at Hatrack have access to a fleshed out argument towards this, I'd like a chance to evaluate it.
Not having seen it, I can't say that I'm looking to argue against it, either. Maybe I will, as, right now, my understanding contradicts it. But I may find it exposes information or perspectives that I haven't considered.
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quote:Originally posted by MrSquicky: On another thread, a poster said:
quote:Have you genuinely not seen any conservative arguments that the fault of the financial collapse lies in great part with government intervention into the mortgage market (freddie, fannie, etc), that the banks shouldn't have been bailed out, and generally that while some Wall Street firms engaged in bad practices the fundamental flaw lies with the government?
The conversation seemed to move past this, but I think it is a very important point.
I, personally, haven't seen a legitimate argument in this vein. The only thing I have seen is statements that this is the case, but, in the instances where I've seen them, these statements haven't been expanded on or supported.
If they do exist, I would like to see and discuss them, as the reading and analysis that I've seen on this hasn't supported this interpretation.
The only argument I'm familiar with that seems similar to the one depicted in Dan Frank's quote is that by encouraging banks to loan to low-income buyers, the Federal Government was complicit in getting buyers into loans they couldn't afford. This seems to be a good summary of the issue. There's significant dispute about the validity of the argument, but based on the superficial evidence summarized in the above linked Wikipedia article I'd say the argument is 1) fairly weak, but 2) put forward by fairly serious people (i.e. not just people looking for a convenient scapegoat).
<edit>Here's a House Oversight Committee report from 2010 that further details the argument that government intervention, primarily through the CRA's encouragement of unqualified buyers, contributed significantly to the financial crisis.</edit>
posted
I think a lot of companies made a lot of bad decisions. Look at any detailed analysis, and there were myriad of contributing factors -- not even our best economists have been able to point out any one individual catalyst. Yes, there were some risky financial packages (especially regarding debt), and risky home loans were involved. But I'd reckon that oil was also a contributing factor. Overall, my opinion is (unlike some financial crises) consumers were critically smashed by inflation in several areas at once -- oil, food, housing, investments. Consumer confidence took a massive hit, people pulled out of the market.
The problem is that a lot of companies made the wrong decisions at the wrong time. My worry is that people will feel that the government can regulate companies into NOT making risky decisions. First off, from a micro economic perspective, government involvement degrades market efficiency -- ultimately devaluing our currency. Secondly, the most successful companies TAKE risks, and the payoff is split by extra value to the consumer and through job creation. To add regulation and remove risk is the wrong answer. And for the government to save companies that can't remain solvent on their own (I'm looking at you, GM!) also degrades the market and devalues the dollar. Sure, jobs are important, but an efficient market will create jobs -- that really isn't the government's place.
I'm on board for building transcontinental high speed rail, though. It would be a great, cost-effective alternative to the airline industry. Too bad Obama's trying to push it -- I have a feeling that the republicans might be "on board", had the idea not been proposed by a democrat.
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MrSquicky, If you a genuinely interested. I'd recommend that you look at the report of the Financial Inquiry Commission link along with the two dissenting reports.
The commission concludes that Fannie and Freddy contributed to the crisis but were not a primary cause. They followed lead set by the private banking industry.
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posted
The argument that CRA played a central role in the financial crisis is made in the dissenting opinion by Peter Wallison in Rabbit's link above.
The other dissenting opinion (by Hennesey, Holz-Eakins, and Thomas) mainly sees Fannie & Freddie as culpable in that they recklessly accepted high-risk investments with the implicit assumption that if the investments went bad they'd be bailed out (which, of course, they were). In this opinion the relaxed lending standards encouraged by the Clinton and Bush "ownership" society policies played a relatively minor role (although the idea is called out as a small part of the overall cause).
The commission's report mentions the argument over CRAs, but dismisses it since "[m]any subprime lenders were not subject to the CRA. Research indicates only 6% of high-cost loans—a proxy for subprime loans—had any connection to the law. Loans made by CRA-regulated lenders in the neighborhoods in which they were required to lend were half as likely to default as similar loans made in the same neighborhoods by independent mortgage originators not subject to the law." The idea that the changes to CRA in the 1990s was the stone which started the avalanche of subprime lending (essentially the theory of the Issa report I linked above, as well as the Wallison dissent Rabbit linked to) doesn't appear to be addressed by the Commission's report, which chooses to focus on the overall portion of subprime debt generated by CRA-regulated banks.
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quote:The argument that CRA played a central role in the financial crisis is made in the dissenting opinion by Peter Wallison in Rabbit's link above.
That's actually one of the things I was thinking about when I characterized what I have seen as statements and not arguments. He states in several places that he believes that government policy, especially with respect to Freddie and Fannie, caused the crisis, but he never actually makes an argument to this effect. Especially lacking is any sort of actual data.
I'm reading through the House Oversight report and it seems that they are saying that it's not the loans mandated by the changes in the CRA themselves, but rather that this led to a general relaxation of lending standards. But again, they state this, they do not actually show any reason (especially any based in data) to believe that this was the case.
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quote: I'm reading through the House Oversight report and it seems that they are saying that it's not the loans mandated by the changes in the CRA themselves, but rather that this led to a general relaxation of lending standards. But again, they state this, they do not actually show any reason (especially any based in data) to believe that this was the case.
Most arguments I've seen for the CRA-did-it thesis draw heavily on the following order of events: 1. Things were fine. 2. CRA happened 3. Subprime crisis with a lot of hand-waving to imply causation. Apparently the CRA-induced atmospherics were at fault rather than the profit motive induced by the lucrative market for mortgage-backed securities.
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quote:You are painting with too broad a brush. There are many Americans who did not borrow more than was sensible.
Sure; and lots of those whose homes were foreclosed on lost them because of a weak job market.
Nonetheless. Our general poor fiscal responsibility is part of the problem, and discounting the public's role in the crash is setting it up to occur again and again.
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Ignoring the relative culpability of certain actors over others is setting it up to happen over and over. Papering over your experiences with a classically American Calvinist appeal to the inherent sinfulness of all people as the root of our real problems is a good way of never learning anything. The "we are all to blame" motif is just that- rating some inherent flaw in human nature over very real and very addressable flaws in human institutions. It's what you do when you don't want to address the problem- you blame yourself for not being good enough, and abdicate your real responsibility for acting to correct problems, by identifying the problem as inherent and unfixable. Weak.
When your reflexive base assumption about the root of any particular problem is that people are just not good enough in sone particular way, I think your taking the easy road. It's harder to look at a mistake as a mistake than to look at it as an inevitable result of being human. What view can you have of the future if you don't believe people are inherently good enough to inhabit it. And no, that is not what you said- its only what your line of thinking suggests very loudly.
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quote:Nonetheless. Our general poor fiscal responsibility is part of the problem, and discounting the public's role in the crash is setting it up to occur again and again.
I agree with this. The mess we're in isn't something that 'just happened' to American society as a whole. We're culpable for some hefty chunk of it, and I think a big part of that is our style of spending more than we should on things we shouldn't before the things we should have paid off and secure are tidied up. (Did that make sense?)
quote:Ignoring the relative culpability of certain actors over others is setting it up to happen over and over. Papering over your experiences with a classically American Calvinist appeal to the inherent sinfulness of all people as the root of our real problems is a good way of never learning anything. The "we are all to blame" motif is just that- rating some inherent flaw in human nature over very real and very addressable flaws in human institutions. It's what you do when you don't want to address the problem- you blame yourself for not being good enough, and abdicate your real responsibility for acting to correct problems, by identifying the problem as inherent and unfixable. Weak.
It sounds like you're speaking to Scott here, which is very strange, because he said, and I quote, "Our general poor fiscal responsibility is part of the problem, and discounting the public's role in the crash is setting it up to occur again and again." Part. And he mentions a role, pretty clearly implying that there were multiple players in this farce. He doesn't even suggest the public was primarily to blame.
The implications you're reading into this have to be really reached for. His very first post in the thread mentioned three groups of people he feels are responsible for this. Inflating his remarks and tying him to a point of view he didn't express, but that he 'suggests' loudly, now that's weak. You could just ask him approximately how much blame he thinks who ought to shoulder. I mean, he's right here.
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quote:Originally posted by Orincoro: When your reflexive base assumption about the root of any particular problem is that people are just not good enough in sone particular way, I think your taking the easy road. It's harder to look at a mistake as a mistake than to look at it as an inevitable result of being human. What view can you have of the future if you don't believe people are inherently good enough to inhabit it.
I just wanted to pop in and say that I think that was beautifully stated, Orin. Not commenting on it in the context of the argument here, but more in a general sense. I just think it was fantastic, and absolutely true, and I wanted to let you know. Posts: 3580 | Registered: Aug 2005
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quote:Nonetheless. Our general poor fiscal responsibility is part of the problem, and discounting the public's role in the crash is setting it up to occur again and again.
I agree with this. The mess we're in isn't something that 'just happened' to American society as a whole. We're culpable for some hefty chunk of it, and I think a big part of that is our style of spending more than we should on things we shouldn't before the things we should have paid off and secure are tidied up. (Did that make sense?)
]It sounds like you're speaking to Scott here, which is very strange, because he said, and I quote, "Our general poor fiscal responsibility is part of the problem, and discounting the public's role in the crash is setting it up to occur again and again." Part. And he mentions a role, pretty clearly implying that there were multiple players in this farce. He doesn't even suggest the public was primarily to blame.
The implications you're reading into this have to be really reached for. His very first post in the thread mentioned three groups of people he feels are responsible for this. Inflating his remarks and tying him to a point of view he didn't express, but that he 'suggests' loudly, now that's weak. You could just ask him approximately how much blame he thinks who ought to shoulder. I mean, he's right here.
The implication that we would be better to draw our focus towards public and shared culpability, I thought, suggested that, in a more ultimate sense, the majority or even sole blame would ultimately rest with everyone. The implication is: people did bad things, but remember that you let them, because ultimately, you and everyone else was too morally inadequate to stop it.
That was what it evoked for me. I do make leaps, but I don't mind sharing why I thnk the leap is reasonable or ultimately correct.
By the way, I was also probably responding to what Scott had said earlier,which was more emphatic:
posted November 08, 2011 07:31 AM The American people are to blame-- those in positions of political power and financial power, and those citizens who borrowed more than was sensible.
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