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David, this is such an excellent piece!<br>
<br>
Shame on the N-G for not publishing it already.<br>
<br>
Would you be inclined to try to get it posted elsewhere - on
commondreams, maybe, or truthout?<br>
<br>
On 12/24/11 9:19 AM, David Green wrote:
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<div><span>This is what I subm<var id="yui-ie-cursor"></var>itted
to the N-G a month ago, as yet unpublished. They're very
committed to the Big Lie, but I'm glad to see Nocera on the
case. Ritholtz was the first to apply the phrase. Wallison
is the primary advocate, but it was also the publication of
the Morgenson-Rosner book six months ago that fueled broader
publicity. Nocera doesn't mention that, probably due to the
usual NYT "collegiality."</span></div>
<div><span></span> </div>
<div><span><a moz-do-not-send="true"
href="http://www.nytimes.com/2011/12/24/opinion/nocera-the-big-lie.html?hp">http://www.nytimes.com/2011/12/24/opinion/nocera-the-big-lie.html?hp</a></span></div>
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<div style="font-family: times new roman, new york, times,
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----- Forwarded Message -----<br>
<b><span style="font-weight: bold;">From:</span></b>
David Green <a class="moz-txt-link-rfc2396E" href="mailto:davegreen84@yahoo.com"><davegreen84@yahoo.com></a><br>
<b><span style="font-weight: bold;">To:</span></b> John
Beck <a class="moz-txt-link-rfc2396E" href="mailto:jbeck@news-gazette.com"><jbeck@news-gazette.com></a> <br>
<b><span style="font-weight: bold;">Sent:</span></b>
Saturday, November 26, 2011 4:16 PM<br>
<b><span style="font-weight: bold;">Subject:</span></b>
Guest Commentary Submission<br>
</font> <br>
<div id="yiv862432488">
<div>
<div style="color: rgb(0, 0, 0); font-family: times
new roman, new york, times, serif; font-size: 12pt;
background-color: rgb(255, 255, 255);">
<div>
<b><font face="Calibri">The Big Lie of Wall
Street and the 1%: Fannie and Freddie are
Responsible for the Economic Crisis</font></b></div>
<div>
</div>
<div style="margin: 0in 0in 10pt;"
class="yiv862432488MsoNormal"><font face="Calibri">David
Green</font></div>
<div>
</div>
<div style="margin: 0in 0in 10pt;"
class="yiv862432488MsoNormal"><font face="Calibri">The
mantra of the neoliberal era of the past three
decades is
that government fails, while the free market
succeeds. When events and facts
shatter this dogma even more obviously than
usual—as in 2008—reality must be
not only denied, but replaced with a boldly
fabricated scenario.</font></div>
<div>
</div>
<div style="margin: 0in 0in 10pt;"
class="yiv862432488MsoNormal"><font face="Calibri">Such
is the case regarding the assertion that the
practices
of government-supported mortgage securitization
agencies Fannie Mae and Freddie
Mac—rather than mortgage lenders and Wall Street
bankers—were responsible for
the practices that resulted in the housing
bubble, the financial meltdown, the bailout
of the 1%, and the outrage of the 99%. An
attentive reader of this newspaper
could not have failed to notice this trend in
columns, editorials, and letters.
This trend reflects a conscious propaganda
campaign.</font></div>
<div>
</div>
<div style="margin: 0in 0in 10pt;"
class="yiv862432488MsoNormal"><font face="Calibri">Barry
Ritholtz recently summarized in “The Big Lie
Goes
Viral” on the Washington Post’s website: “<span>Wall
Street’s Big Lie is that banks and investment
houses are merely
victims of the crash. It was not irresponsible
lending or derivative or excess
leverage or misguided compensation packages,
but rather long-standing housing
policies that were at fault. Indeed, the
arguments these folks make fail to
withstand even casual scrutiny. But that has
not stopped people who should know
better from repeating them.”</span></font></div>
<div>
</div>
<div style="margin: 0in 0in 10pt;"
class="yiv862432488MsoNormal"><span><font
face="Calibri">The Big Lie serves
not only to obscure the gross culpability of
Wall Street, but the genuine
culpability of (corporate-driven) government.
Economists like Dean Baker, who
debunks the Big Lie on his blog, never fail to
emphasize the flaws in Fannie
and Freddie—as “government supported
enterprises” operating in a for-profit
context—that led to their collapse. More
important, the Big Lie distracts us
from the deregulatory financial policies of
administrations of both parties, the
willful negligence of the Federal Reserve in
failing to prevent speculative
bubbles, and the revolving door between Wall
Street and the White House.</font></span></div>
<div>
</div>
<div style="margin: 0in 0in 10pt;"
class="yiv862432488MsoNormal"><font face="Calibri"><span>Blogger
Glenn
Greenwald writes: </span>“People like
(Robert) Rubin and (Lawrence) Summers shuffle
back and forth from the public to the private
sector and back again, repeatedly
switching places with their GOP counterparts in
this endless public/private
sector looting.”</font></div>
<div>
</div>
<div style="margin: 0in 0in 10pt;"
class="yiv862432488MsoNormal"><font face="Calibri">The
Big Liars not only assert Wall Street’s
innocence, but exploit
the privileges of the 1% to manipulate
government policies—deregulatory and/or
interventionist—to enhance their profits. Recent
revelations regarding Newt
Gingrich’s lucrative services to Freddie Mac
provide a timely example of such
corruption, and the “free market” hypocrisy that
goes with it.</font></div>
<div>
</div>
<div style="margin: 0in 0in 10pt;"
class="yiv862432488MsoNormal"><font face="Calibri">A
balanced assessment of Fannie and Freddie can be
found
online in the Financial Crisis Inquiry Report
(FCIC) of the National Commission
on the Causes of the Financial and Economic
Crisis in the United States: “These
government-sponsored enterprises had a deeply
flawed business model as publicly
traded corporations with the implicit backing of
and subsidies from the federal
government and with a public mission. … <span> </span>We
conclude
that these two entities contributed to the
crisis, but were not a
primary cause. Importantly, GSE (government
supported enterprise) mortgage
securities essentially maintained their value
throughout the crisis and did not
contribute to the significant financial firm
losses that were central to the
financial crisis.”</font></div>
<div>
</div>
<div style="margin: 0in 0in 10pt;"
class="yiv862432488MsoNormal"><font face="Calibri">The
lone Commission dissenter from this report,
Peter
Wallison of the American Enterprise Institute,
with research support from AEI economist
Edward Pinto, has been a major proponent of the
Big Lie. David Min of the
Center for American Progress has responded:</font></div>
<div>
</div>
<div style="margin: 0in 0in 10pt;"
class="yiv862432488MsoNormal"><font face="Calibri">“Did
Fannie and Freddie buy high-risk mortgage-backed
securities? Yes. But they did not buy enough of
them to be blamed for the
mortgage crisis. Highly respected analysts who
have looked at these data in
much greater detail than Wallison, Pinto, or
myself, including the nonpartisan
Government Accountability Office, the Harvard
Joint Center for Housing Studies,
the Financial Crisis Inquiry Commission
majority, the Federal Housing Finance
Agency, and virtually all academics, have all
rejected the Wallison/Pinto
argument that federal affordable housing
policies were responsible for the
proliferation of actual high-risk mortgages over
the past decade.”</font></div>
<div>
</div>
<div style="margin: 0in 0in 10pt;"
class="yiv862432488MsoNormal"><font face="Calibri">Finally,
promoters of the Big Lie have relied on the
much-discussed book “Reckless Endangerment” by
Gretchen Morgenson and Joshua
Rosner. I would refer readers to a thorough
critique by Jeff Madrick and Frank
Partnoy at the New York Review of Books website.
They write that the authors’ “<span>bold claim
is not substantiated by persuasive
analysis or by any hard evidence in the book.
The GSEs did generate large
losses, but their bad investments in housing
loans followed rather than led the
crisis; most of those investments involved
purchases or guarantees made well
after the subprime and housing bubbles had
been expanded by private loans and
were almost about to burst.”</span></font></div>
<div>
</div>
<div style="margin: 0in 0in 10pt;"
class="yiv862432488MsoNormal"><span><font
face="Calibri">The Big Liars have big
guns in their arsenal. They control wealth,
power, the mainstream media, and
much of academia—all without threatening the
use of pepper spray. But it’s up
to the 99% to decide whether the burni<var
id="yiv862432488yui-ie-cursor"></var>ng
sensation of lies is more intolerable
than that of chemical agents.</font></span></div>
<div>
</div>
<div style="margin: 0in 0in 10pt;"
class="yiv862432488MsoNormal"><span><font
face="Calibri">David Green (</font><a
moz-do-not-send="true"
href="mailto:davidgreen50@gmail.com"
rel="nofollow" target="_blank"
ymailto="mailto:davidgreen50@gmail.com"><font
face="Calibri">davidgreen50@gmail.com</font></a><font
face="Calibri">) lives in
Urbana, and contributes to News from Neptune
on UPTV.</font></span></div>
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