AMERICAN CONSERVATISM IN 2008 AND BEYOND

Or, that black people are interested in truth and news and not in distortion!

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America's Ruling Class -- And the Perils of Revolution
By Angelo M. Codevilla from the July 2010 - August 2010 issue

As over-leveraged investment houses began to fail in September 2008, the leaders of the Republican and Democratic parties, of major corporations, and opinion leaders stretching from the National Review magazine (and the Wall Street Journal) on the right to the Nation magazine on the left, agreed that spending some $700 billion to buy the investors' "toxic assets" was the only alternative to the U.S. economy's "systemic collapse." In this, President George W. Bush and his would-be Republican successor John McCain agreed with the Democratic candidate, Barack Obama. Many, if not most, people around them also agreed upon the eventual commitment of some 10 trillion nonexistent dollars in ways unprecedented in America. They explained neither the difference between the assets' nominal and real values, nor precisely why letting the market find the latter would collapse America. The public objected immediately, by margins of three or four to one.

When this majority discovered that virtually no one in a position of power in either party or with a national voice would take their objections seriously, that decisions about their money were being made in bipartisan backroom deals with interested parties, and that the laws on these matters were being voted by people who had not read them, the term "political class" came into use. Then, after those in power changed their plans from buying toxic assets to buying up equity in banks and major industries but refused to explain why, when they reasserted their right to decide ad hoc on these and so many other matters, supposing them to be beyond the general public's understanding, the American people started referring to those in and around government as the "ruling class." And in fact Republican and Democratic office holders and their retinues show a similar presumption to dominate and fewer differences in tastes, habits, opinions, and sources of income among one another than between both and the rest of the country. They think, look, and act as a class.

...

Today's ruling class, from Boston to San Diego, was formed by an educational system that exposed them to the same ideas and gave them remarkably uniform guidance, as well as tastes and habits. These amount to a social canon of judgments about good and evil, complete with secular sacred history, sins (against minorities and the environment), and saints. Using the right words and avoiding the wrong ones when referring to such matters -- speaking the "in" language -- serves as a badge of identity. Regardless of what business or profession they are in, their road up included government channels and government money because, as government has grown, its boundary with the rest of American life has become indistinct. Many began their careers in government and leveraged their way into the private sector. Some, e.g., Secretary of the Treasury Timothy Geithner, never held a non-government job. Hence whether formally in government, out of it, or halfway, America's ruling class speaks the language and has the tastes, habits, and tools of bureaucrats. It rules uneasily over the majority of Americans not oriented to government.

...

the most prominent factor in the financial crisis had nothing to do with home prices, and everything to do with massively leveraged financial products for which there was no regulation.

Without those unregulated financial products, there would have been no financial crisis, period. This is an inescapable fact that cannot be explained away by right-wingers looking to rewrite history.

That such bad bets did happen on a scale massive enough to endanger the entire economy was not caused by dangerous financial products being legal, but by government distorting market decisions.

But the absence of such regulation was not the problem.

Certainly, if government had banned the particular financial products that caused the crisis there would have been no crisis.

Certainly, if government had banned the particular financial products that caused the crisis there would have been no crisis. But that's sort off like saying "if there had been a policeman in this street yesterday evening, the mugging that occurred there would not have happened. Ergo muggings are caused by the absence of policemen".

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That such bad bets did happen on a scale massive enough to endanger the entire economy was not caused by dangerous financial products being legal, but by government distorting market decisions.

Unsourced assertion. You have no evidence showing that this is true; it is only a theory of yours.

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Certainly, if government had banned the particular financial products that caused the crisis there would have been no crisis.

You should have just stopped there. Your attempts at equivocation after that are pathetic,

because I blame not only the lack of regulations, but the greed on the part of investors and the companies who knew these products were bullshit, and just didn't care.

it would be more accurate if you had said that the police had decided that muggings were LEGAL, so that's why one happened.

If these products were bullshit, why would anyone buy them? Either they were defrauded, that is not legal in a free market, or they were perfectly fine and there is need for government to ban stuff.

http://newstrust.net/stories/2527198/toolbar?ref=sp
America's Ruling Class -- And the Perils of Revolution
By Angelo M. Codevilla from the July 2010 - August 2010 issue

...

Today's ruling class, from Boston to San Diego, was formed by an educational system that exposed them to the same ideas and gave them remarkably uniform guidance, as well as tastes and habits. These amount to a social canon of judgments about good and evil, complete with secular sacred history, sins (against minorities and the environment), and saints. Using the right words and avoiding the wrong ones when referring to such matters -- speaking the "in" language -- serves as a badge of identity. Regardless of what business or profession they are in, their road up included government channels and government money because, as government has grown, its boundary with the rest of American life has become indistinct. Many began their careers in government and leveraged their way into the private sector. Some, e.g., Secretary of the Treasury Timothy Geithner, never held a non-government job. Hence whether formally in government, out of it, or halfway, America's ruling class speaks the language and has the tastes, habits, and tools of bureaucrats. It rules uneasily over the majority of Americans not oriented to government.

...

Quote:

If these products were bullshit, why would anyone buy them? Either they were defrauded, that is not legal in a free market, or they were perfectly fine and there is need for government to ban stuff.

Do you really believe that the world is so black-and-white? It is not.

The people who knew they were bullshit bought them, because they didn't care if they failed - they were making money hand over fist and would be able to retire as multimillionaires no matter what happened to their investment firm. There was no incentive for them not to buy them, when every other company is making giant returns off of them...

Cycloptichorn wrote:

Quote:

If these products were bullshit, why would anyone buy them? Either they were defrauded, that is not legal in a free market, or they were perfectly fine and there is need for government to ban stuff.

Do you really believe that the world is so black-and-white? It is not.

The people who knew they were bullshit bought them, because they didn't care if they failed - they were making money hand over fist and would be able to retire as multimillionaires no matter what happened to their investment firm. There was no incentive for them not to buy them, when every other company is making giant returns off of them...

They didn't care if bullshit mortgages failed because they resold them. It was not their problem. Yes?

Well, who would buy worthless assets, unless they are being lied to?
And fraud is not legal in a free market.

They didn't give a **** what happened to the mortgages, because of the Credit Default Swaps. Once they purchased those, they were ostensibly insured by AIG and others from any losses on those MBS'.

Cycloptichorn wrote:

They didn't give a **** what happened to the mortgages, because of the Credit Default Swaps. Once they purchased those, they were ostensibly insured by AIG and others from any losses on those MBS'.

So they bought crap mortgages, but they also insured themselves against those mortgages defaulting, so they win no matter what?

But what would we regulate to stop that, the mortgages, the securities? What does regulation even mean?

EmperorNero wrote:

Cycloptichorn wrote:

They didn't give a **** what happened to the mortgages, because of the Credit Default Swaps. Once they purchased those, they were ostensibly insured by AIG and others from any losses on those MBS'.

So they bought crap mortgages, but they also insured themselves against those mortgages defaulting, so they win no matter what?

Yes, as long as the insurers don't go under - and they weren't regulated, so the companies had know way of knowing how many policies the insurers had written. In this case, AIG wrote something like 10 times the value of their company in policies and had ZERO cash to back them. But nobody knew that, because there were no regulations and no watchdogs.

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But what would we regulate to stop that, the mortgages, the securities? What does regulation even mean?

An open CDS market - which is what the Bush SEC specifically said they weren't interested in - would let everyone know how much insurance is being written by companies and for what products. It would be exceedingly easy for regulators and investors to figure out that a company has way over-leveraged itself. As things stand now, there's no way of knowing this - though the executives and traders for many of these companies MUST have known that AIG couldn't cover the losses, it's fair to say that they didn't know just how deep the rabbit hole went.

The point that is most central to this? Drops in the values of the mortgages were NOT the problem. Not at all. Which is why the 'Fannie! Freddie! Baaaad government aargh!' line, peddled by Conservative Ideologues, was and is total bullshit.

Cycloptichorn