[Peace-discuss] Fw: Guest Commentary Submission

[David Green]

This is what I submitted to the N-G a month ago, as yet unpublished.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."
 
http://www.nytimes.com/2011/12/24/opinion/nocera-the-big-lie.html?hp

 ----- Forwarded Message -----
>From: David Green <davegreen84 at yahoo.com>
>To: John Beck <jbeck at news-gazette.com> 
>Sent: Saturday, November 26, 2011 4:16 PM
>Subject: Guest Commentary Submission
> 
>
>The Big Lie of Wall
Street and the 1%: Fannie and Freddie are Responsible for the Economic Crisis
>David Green
>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.
>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.
>Barry Ritholtz recently summarized in “The Big Lie Goes
Viral” on the Washington Post’s website: “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.”
>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.
>Blogger Glenn
Greenwald writes: “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.”
>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.
>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. …  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.”
>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:
>“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.”
>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’ “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.”
>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 burning sensation of lies is more intolerable
than that of chemical agents.
>David Green (davidgreen50 at gmail.com) lives in
Urbana, and contributes to News from Neptune on UPTV.
>
>   
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