printLAWRENCE SUMMERS, director of the White House’s National Economic Politburo, says “[m]istakes on Wall Street in the mortgage area led to the subprime bubble that led to houses appreciating, that led to the situation where millions of people got loans that they were no longer able to service and faced foreclosure.”
Credit errors made on Wall Street brought financial institutions to the brink of insolvency that left no choice but to commit taxpayer funds.
Summers has the podium and the power. He does not have to be honest about the exuberance on Wall Street being part of a creative response to crippling legislation. He could come clean, but he does not have to.
And if he wishes to remain in office, he dare not admit to the force that propels the banks and the bandits in office. In the words of Bob Higgs:
“[T]he American people have little interest in liberty. Instead, they want the impossible: home ownership for those who cannot afford homes, credit for those who are not creditworthy, old-age pensions for those who have not saved, health care for those who make no attempt to keep themselves healthy, and college educations for those who lack the wit to finish high school. Moreover, they want it now, and they want somebody else to pay for it.” …
The nerve of Higgs to speak the truth! What would Sean Hannity or some other Republican mouthpiece say – all our current economic problems are the result of (eeek eeek) Democrats/Liberals, gay marriage, or what have you (Nothing wrong with Bush’s “ownership society”). Or, like McCain, blame it on some trivial wart like the earmarked
Bridge to Nowhere.
I have never understood why ANY sound lender would ever loan money for a house without a down payment of at least 20% to cover fluctuations in cost. As for these hedged, derivitized CDO’s or other hooey Fannie-ized financial instruments, I never understood what sense they ever made in the first place. This was all a Fed-pumped Fantasy Island that could only be sustained provided housing prices rose forever. Ron Paul and other non-existent people [Establishment line: “NO ONE KNEW!”] talked about the “bubble” as early as 2002. The next “no one knew” will be inflation!
Unfortunately, Higgs is dead right. FDR perverted capitalism and turned America (and I do not exempt myself) into a nation of statist-addicted moochers. Pogo: “We have met the enemy and IT IS US” – meanwhile, we bomb Neolithic Pushtun warlords who “endanger our freedoms”!
The words of Mr. Higgs are certainly true. However, to rail against human frailty is to rant about the ocean being too salty. Our current disaster was triggered and still continues to be triggered by government interference with banks and sound banking practices.It was and is still being done on purpose. To fly in the face of fiscal fundamentals is so foolish even the knuckleheads we have running the government can’t be dumb enough not to realize the disaster they have caused and will cause in the future.
I can answer at least one of the questions in your excellent column, Quick-fix Quacks, “So is America ever going to fire its failed philosopher kings when they fail to predict anything?”
Nope. The failed philosopher kings will abdicate and hunker down in their gated communities when their welfare clients begin burning all of our larger cities simultaneously. This will be the immediate consequence of the foreigners who supply most of our petroleum and manufactured goods having recognized the worthless of our Monopoly money. Eventually, the philosopher kings will suffer the fate of the Merovingian dynasty, the men employed as their security guards having become their rulers. Of course, this event will be of little comfort to the rest of us.
Larry Summers is a self-serving, incompetent buffoon. http://www.boston.com/news/local/massachusetts/articles/2009/11/29/harvard_ignored_warnings_about_investments/
As for his crack about “mistakes on Wall Street…,” this too is a Big Lie. He should have listened to money manager Marc Faber. http://cij.inspiriting.com/?p=120
In agreement with Higgs: The collective gets what it wants, and gets told what it wants to hear. It is the collective itself which can’t bear to hear the truth, and which will never abide by any measure that seeks to deny them the fruits of their neighbor’s labor.