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Leonce Gaiter

Leonce Gaiter

Posted: September 22, 2008 09:27 AM

Every Man For Himself, Said The Elephant Among The Chickens


Andrew Sullivan, squawking the name "Milton Friedman" as if it magically disappeared the ridiculous, sat on Bill Maher's show blaming the financial crisis on American consumers who bought houses they couldn't afford. He was arguing against Naomi Klein's thesis that the crisis belonged squarely at the doorstep of an ideology-obsessed political class and its Wall Street allies.

Secretary of Treasury Henry Paulson made the same argument to George Stephanopulous when pooh-poohing the inclusion of struggling homeowners in his bailout scheme. He said struggling homeowners needed to take responsibility for their obligations.... unlike financial institutions, their executives and CEOs, or the shareholders who gorged on their malfeasance.

Let's take a trip in the way-back machine: On February 23, 2004, a Wall Street Journal article stated of then-Federal Reserve Chairman Alan Greenspan:

The Fed chairman didn't advise households to choose adjustable-rate over fixed-rate mortgages. It is almost unheard of for an official of the U.S. central bank to offer advice on interest rates, over which it has enormous influence. But his remarks did represent a rare discussion of interest-rate options for American households, and he implicitly questioned whether homeowners' preference for fixed-rate mortgages makes financial sense


Meanwhile, a Jim Jubak article posted on MSN Money bore the headline "Why there is no housing bubble." The subhead? "The sky is not falling. Yes, home prices are sky-high, but we really don't have a housing bubble that is anywhere near bursting."

On October 27, 2005, The New York Times quoted Ben Bernanke as stating that a "cooling" of the housing market was the worst we should expect.

In fact, the blog "Economics of Contempt" compiled a list of pundits/experts who were catastrophically wrong on the housing bubble. They include: Alan Reynolds of the Cato Institute; Kevin Hassett of the American Enterprise Institute; Jim Cramer of CNBC's "Mad Money"; Nocolas P. Restinas, director of the Harvard Joint Center for Housing Studies, and 20 more.

So the American home-buying public was told again and again by this administration, its economic minions, TV pundits and very popular right-wing talking heads that they should go out and buy all the house they could because Happy Days Were Here Again and there was no bubble and everything would be just fine.

When the bottom falls out, these same conservatives blame the homebuyers for failing to earn their advanced degrees in economics and understand what a great many with such degrees failed to--that this was not just a bubble, but a shit-filled bubble, a la Dennis the Menace as filmed by John Waters, and it was going to burst in our faces.

Sullivan said that he believed in "personal responsibility." But like most conservatives, he only believes in it for proles. According to the U.S. Census Bureau, the Northeast has the highest percentage of college graduates-- just shy of 31%. An overwhelming majority of Americans have high school educations. Yet, per Sullivan, Bernanke and their conservative class, they're supposed to know that the current administration and its two Fed Chairmen were full of economic crap. They were supposed to know to ignore that Ivy League professor on their TV.

It reminds me of the old depression-era cartoon that showed a gigantic celebratory elephant cavorting in a chicken coop. The caption paraphrased Dickens: "'Every man for himself,' said the elephant as he danced among the chickens."

Another example is the sudden conservative contempt for the idea of "moral hazard," or setting poor examples. According to most sane economists like Paul Krugman, financial institutions are in this mess partly because they refuse to acknowledge the relative valuelessness of their mortgage assets. In short, they're asking too much money for what they've got. What the Bush administration proposes to do is to pay them the exorbitant prices they're asking. It's a gift, pure and simple; but Bush-era conservatives see nothing morally wrong with it. Major financial institutions run financially amok and make billions. Taxpayers bail them out. No moral hazard of poor example here.

They do see something morally wrong with providing every American with health care. They do see something wrong with providing non-violent addicts with treatment instead of jail. They do see something wrong with providing rape victims with a morning after pill. They do see something wrong with providing addicts with clean needles so they don't spread HIV. They do see the moral wrong in giving teens condoms so they don't contract STDs or die of AIDS. All of these, they insist, would set bad moral examples. All would encourage bad behavior. But providing expensively tailored con artists with get-out-of-debt-and-jail free cards after costing the American taxpayers tens if not hundreds of billions of dollars? No problem.

Every man for himself said the elephant as he danced among the chickens. I guess money buys morality in today's America--just like it buys administrations.