A publisher I knew once proposed a picture book, "They Must Know What They're Doing or They Wouldn't Be Where They Are," to show the captain of the Titanic, the designers of the Edsel, LBJ running the War in Viet Nam and other overseers of spectacular 20th century blunders.
The Bush Administration now rates a sequel all its own for being in charge of two cataclysms, in the Middle East and here at home.
As Bear Stearns, the poster boy for Wall Street greed, gets gobbled up with the help of taxpayer money, Paul Krugman today asks, "When the feds do bail out the financial system, what will they do to ensure that they aren’t also bailing out the people who got us into this mess?"
Not much is the answer, he points out, citing "false beliefs in the private sector" that "led to an epidemic of bad lending" and how "false beliefs in the political arena --the belief of Alan Greenspan and his friends in the Bush administration that the market is always right and regulation always a bad thing--led Washington to ignore the warning signs."
Now even the temple of free enterprise, Rupert Murdoch's Wall Street Journal, is yelling "Uncle," editorially calling for a "more aggressive, and pre-emptive, regulatory role for the Fed...to restore its monetary credibility, or today's panic could become tomorrow's crash."
In assessing the cost of Iraq and the financial meltdown here, Washington is going to have update Everett Dirksen's old maxim, "A billion here, a billion there, and pretty soon you're talking about real money." Just add the zeroes and pray for some real brains and leadership in the White House next year.
Showing posts with label sub-prime credit crisis. Show all posts
Showing posts with label sub-prime credit crisis. Show all posts
Monday, March 17, 2008
Saturday, December 22, 2007
A Backward Presidency
George W. Bush started out to be Ronald Reagan, morphed into Richard Nixon and, toward the end, is starting to resemble Herbert Hoover.
The shanties, shacks and cardboard shelters in communities spawned by the Great Depression and known as Hoovervilles are showing up in 21st century America as a result of the sub-prime mortgage crisis that has doubled foreclosures of homes in the past year.
"Between railroad tracks and beneath the roar of departing planes," Reuters reports, "sits 'tent city,' a terminus for homeless people. It is not, as might be expected, in a blighted city center, but in the once-booming suburbia of Southern California.
"The noisy, dusty camp sprang up in July with 20 residents and now numbers 200 people, including several children, growing as this region east of Los Angeles has been hit by the U.S. housing crisis."
Not only are homeowners being dispossessed, but tenants are, too. A California realty firm estimates 20 percent of foreclosures are on homes bought as investment properties. Even after paying their rent, tenants are getting little notice before being evicted.
As former Federal Reserve Chairman Alan Greenspan takes most of the heat for not foreseeing the crisis, Paul Krugman points out the Bush Administration's share of the blame:
"Consider the press conference held on June 3, 2003--just about the time subprime lending was starting to go wild--to announce a new initiative aimed at reducing the regulatory burden on banks. Representatives of four of the five government agencies responsible for financial supervision used tree shears to attack a stack of paper representing bank regulations. The fifth representative, James Gilleran of the Office of Thrift Supervision, wielded a chainsaw...
"Two months after that event the Office of the Comptroller of the Currency, one of the tree-shears-wielding agencies, moved to exempt national banks from state regulations that protect consumers against predatory lending."
After weakening the patchwork of federal agencies to let banks run wild with loose loans, Bush, like Hoover, is responding with government action that is too little and too late. A Treasury Department plan to freeze mortgage rates has been deemed a failure even before it is in place.
It's a little like watching a lowlight reel of the 20th century being played backward at warp speed.
The shanties, shacks and cardboard shelters in communities spawned by the Great Depression and known as Hoovervilles are showing up in 21st century America as a result of the sub-prime mortgage crisis that has doubled foreclosures of homes in the past year.
"Between railroad tracks and beneath the roar of departing planes," Reuters reports, "sits 'tent city,' a terminus for homeless people. It is not, as might be expected, in a blighted city center, but in the once-booming suburbia of Southern California.
"The noisy, dusty camp sprang up in July with 20 residents and now numbers 200 people, including several children, growing as this region east of Los Angeles has been hit by the U.S. housing crisis."
Not only are homeowners being dispossessed, but tenants are, too. A California realty firm estimates 20 percent of foreclosures are on homes bought as investment properties. Even after paying their rent, tenants are getting little notice before being evicted.
As former Federal Reserve Chairman Alan Greenspan takes most of the heat for not foreseeing the crisis, Paul Krugman points out the Bush Administration's share of the blame:
"Consider the press conference held on June 3, 2003--just about the time subprime lending was starting to go wild--to announce a new initiative aimed at reducing the regulatory burden on banks. Representatives of four of the five government agencies responsible for financial supervision used tree shears to attack a stack of paper representing bank regulations. The fifth representative, James Gilleran of the Office of Thrift Supervision, wielded a chainsaw...
"Two months after that event the Office of the Comptroller of the Currency, one of the tree-shears-wielding agencies, moved to exempt national banks from state regulations that protect consumers against predatory lending."
After weakening the patchwork of federal agencies to let banks run wild with loose loans, Bush, like Hoover, is responding with government action that is too little and too late. A Treasury Department plan to freeze mortgage rates has been deemed a failure even before it is in place.
It's a little like watching a lowlight reel of the 20th century being played backward at warp speed.
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