Blaming Republicans For the Economic Crisis is a Partisan Mistake

partisan-fighting-1I spend a fair amount of time on other blogs and news websites, reading comments and finding out what people are saying. I have noticed a pervasive falsehood that continues to be a mainstay in political discussions. It is that willingness to blame one party for the mess that we are in. Every time I read someone saying that, I want to scream at them for 1) being so stupid as to not realize the truth, and 2) falling into the strictly partisan game that the politicians are doing their best to make sure they fall into. Time for a little reality check you partisan children…

At the risk of sounding a bit irrational like some folks, the current state of our country cannot and should not be placed in the lap of one particular part. Both parties have taken advantage of us. I agree with one party slightly more than the other, but I am free to look at things and notice that it isn’t one party or the other that got us here. It is government in general that has gotten us here. Folks on both side of the aisle have taken a direct interest in taking advantage of the people in order to ensure that they remain in power. 

partisan-fightingI have touched on this before but I want to say it plainly here: The people that are currently in government positions have a vested interest in making sure that we remain divided in this country. In other words, Republicans desperately need you Republican voters to believe that you need them to save you from the socialist Democrats. Likewise, Democrats desperately need you Democratic voters to believe that you need them to save you from the God-crazy Republicans. In the short term these are correct statements. Republicans are the best protection for conservative minded people against liberal agendas. Democrats are the best protection for liberal minded people against conservative agendas. 

But the truth is that both parties have a silent agreement in place to make sure that the American public never realizes that we don’t need either of them. Sadly, many of the partisan commenters on today’s blogs have fallen into that trap and spend all their time hating the other side, throwing insults and blame around as though if it weren’t for that party, the United States would be a happy place free of problems. Is there hope for these folks? I don’t know but I will continue to try. But I digress…

The game these days seems to be that everyone but the diehard Republicans wants to blame President Bush and the Republican party for all that ails this country. I am going to hit just on the economic de-regulation issue here, but you will get the point. Blaming Bush and Republicans for all that is wrong is a big mistake and part of the partisan trap that must be avoided if we are ever going to get our country back. 

Congress DemocratsLet’s start with the liberal claim that Bush is the cause of the current financial crisis. The claim is that Bush’s policies of deregulation caused the crisis. To quote the biggest liar in Congress, Nancy Pelosi, “the Bush Administration’s eight long years of failed deregulation policies have resulted in our nation’s largest bailout ever, leaving the American taxpayers on the hook potentially for billions of dollars.” Just based on the fact that this came out of Nancy’s mouth should be enough to know it isn’t true. Similarly, President Barack Obama asserted in the second presidential debate that “the biggest problem in this whole process was the deregulation of the financial system.”

The problem is that the financial systems in America were never really deregulated. The most important restrictions were rules banning banks from operating in more than one state. Such rules were largely eliminated by 1994. This move has helped actually mitigate, rather than contribute to, the instability of the system, by allowing banks to diversify their risks. The Glass-Steagall Act of 1933 separated the activities of commercial banks, which take deposits, from investment banks, which invest money. The ban was formally ended by the 1999 Gramm-Leach-Bliley Act, which followed a series of decisions by regulators easing its impact. An interesting twist is that this repeal of Glass-Steagall was widely supported by Nancy Pelosi and signed into law by Bill Clinton. 

In 2000, Congress also passed legislation that, among other things, clarified that certain kinds of financial instruments were not regulated by the Commodity Futures Trading Commission (CFTC). Among these were “credit default swaps,” which have played a role in last year’s meltdown. It is not a given that CFTC regulation of their trading would have avoided the financial crisis. In fact, many policymakers, including Clinton Treasury Secretary Robert Rubin, argued that their regulation would do more harm than good. Again supported by Pelosi and signed into law by Clinton.

In the nine years since that legislation, including the eight years of the Bush presidency, Congress has enacted no further legislation easing burdens financial services industry. So the question then becomes what about the regulatory agencies? In terms of rule making, the Securities and Exchange Commission (SEC) is by far the most active among agencies in the financial realm. Based on data from the Government Accountability Office, the SEC completed 23 proceedings since the beginning of the Bush Administration that resulted in a substantive and major change in regulatory burdens. Of those, only eight lessened burdens. Bush’s record is actually less active than the Clinton administration, which during its second term lessened burdens in nine out of 20 such rulemaking proceedings.

bill-clinton-smugAffordable home ownership, especially for African-American and Hispanic borrowers, who had traditionally found it difficult and expensive to get a mortgage, was a key policy goal of the Clinton administration and one enthusiastically carried forward by President Bush. The mortgage finance company Fannie Mae was also being urged to fulfil its mission of helping low income homeowners by buying up more and more risky loans. This political pressure, as well as rock-bottom interest rates and unscrupulous lending practices, helped to inflate the sub-prime housing bubble.

The point to all this? We cannot blame our current situation on “the deregulation of the financial services industry overseen by Bush”. In fact he really didn’t do any deregulating of the financial service industry. It could be argued that he didn’t do a good enough job enforcing the regulations in place, but he didn’t de-regulate. And the key here is that whether you believe that deregulation was the cause of the economic crisis or not, BOTH parties share responsibility for that deregulation over the last 40 years. 

And just so I am a bit more clear on the stance that I take. I support deregulation. I support any move that takes government’s hands out of the free market. I like oversight, but that is not the same as regulation. I want government to pay attention to what companies are doing and cal them out for bad behavior. But aside from that, I want them to keep their paws out of the free market.

You will see this as a common theme in my blog in the coming weeks. We have to get past all of this partisan blaming and bickering if we are going to change America. They are doing their best to keep us apart. Doing so is the only way to ensure they stay in power. Stop listening to the VERY biased media folks. They are leading you astray because they are in on the deal. Their agenda is power and they keep it as long as we keep fighting with one another instead of coming together and fighting them. So knock off the partisan name calling and insults. If there is someone to really blame for the economic crisis it is the American public. We have not done our civic duty and held our politicians accountable to us.

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Comments

  1. Couldn’t agree more. The vitriol expressed on so many forums is completely unacceptable and only hardens people in their views. We should all be open minded and at least listen to the opposing viewpoint, if only to gain a different perspective. That different perspective can either soften one’s stance on an issue, or provide more information to bolster one’s own argument. The Bush bashing is an outright disease, and every day I am amazed at the lack of general knowledge of many people whom I consider to be intelligent about the causes of the economic crisis. It was a failure of many people, many institutions, and many government policies on the left and right, spanning many decades. This perfect storm has been brewing for some time, not just the past 8 years. In fact, it can be argued that Bush is one of the least culpable, as besides enacting tax cuts after 9/11, he tinkered very little with fiscal and monetary policy during his tenure. I would like certain government officials held accountable, but that will never happen. And I am heartened by the fact that the American people have taken it upon themselves to speak loudly against the Stimulus Plan as currently written, and demand a product which will actually stimulate the economy.

  2. You are right. There is plenty of blame to go around.

    Of course, I am one of those who doesn’t buy the claim that there are “two parties”, but only see one authoritarian monolith pretending to be two parties in order to manipulate the tribal instincts of people to seek a “them”. It isn’t “right vs. left” or “conservative vs. liberal”; it is those who think they own you vs. those who will not be controlled as long as they are harming no innocent person.

  3. Black Flag says:

    I want government to pay attention to what companies are doing and cal them out for bad behavior. But aside from that, I want them to keep their paws out of the free market.

    There is no need of a ‘government’ to do this at all.

    The free market is ruthless in its policing of the market.

    In fact, it is the government that gets in the way of free market policing – indeed, the reason government gets involved in this ‘policing’ is not to protect the people, but to legalize the abusing of the market and its customers. The best government does is act after the market has exposed some failure – and then confounds the process with legal contradictions so to confuse and delay the public compensation.

    There is simply no place where government helps.

  4. I have just grown so sick of top Executives getting billions paid out in bonuses for helping their company suck? Who wants to hold these people accountable? No one with power… at least not from what I see.

  5. Black Flag says:

    DNice,

    Why does it matter to you what someone is paid? It’s not your money.

    The only one’s who should complain is the shareholders, and they have all the power to change things if they want.

  6. Blaming Bush is silly. As is blaming Clinton, as many Republicans do (“Hey, he’s the one who deregulated Wall Street!”). The true blame (don’t shoot me) belongs to Ronald Reagan. He’s the one who instilled the “government isn’t the solution, it’s the problem” mentality into our collective consciousness. Clinton more than Bush was the ultimate reflection of this; it was Clinton, after all, who declared, in 1996, that “the era of big government is over.” Well, the era of big government is back, with a vengeance. Americans woke up after Katrina and said, “Where the government?” They woke up after the collapse of Wall Street and asked, “Where was the government?” Americans want an activist government. They want government to regulate business (especially banks) more closely. They want government to lead the way in providing universal health care coverage, in finding alternative energy sources, in rebuilding our tattered infrastructure. Reagan tried to stop the forward march of the New Deal in its tracks, but he succeeded only in pausing it. The march is on again.

    Contempt for government is dangerous. Just ask the people who survived (barely) Katrina, or who lost their money in the collapse of Wall Street. I wrote a novel, TAKEOVER, about a Wall Street tital who sees Wall Street as “New York’s back office.” Remember when Reagan promised to staff his team with men so accomplished they would view service in the cabinet as a step down? How can serving your country, even in Washington, be a step down from anything?

  7. Black Flag says:

    Evan Adamson The true blame (don’t shoot me) belongs to Ronald Reagan.

    Bang!

    Why does government win in the race of ‘ignorance’?

    Because the people’s memory is merely a half-generation old!

    So what ever administration of the past 300 years, with its evil infection, is beyond the eye-scope of the citizens today.

    This is why we are roasted like a toad – small changes in the temp. = we are eventually boiled

  8. “Americans want an activist government.”

    I don’t. I guess it is a good thing such a government is illegal under the Constitution. Not that government will ever admit it, but it does go to show us that the government is no longer legitimate (if it ever was).

  9. Black Flag says:

    [audio src="http://thinkfree.freedomblogging.com/files/2009/01/johnkenexcerpt.mp3" /]

    Freedom fighter vs. stupid politician.

    Listen. Learn. React. Act.

    Therefore, Government MUST BE ABOLISHED

  10. Kent,

    I also don’t. At least not as active as the one I think Evan is talking about. But I do want to point out that the government is restricted by the constitution only as far as the people restrict it. They can legally be an activist government should the people decide they should be. Unfortunately they have decided to be no matter what the people say.

  11. Black Flag says:

    USWep,

    Only a child can claim the government has any restrictions.

    By what power do YOU have to stop it?

  12. BF,

    Plenty as soon as I can get people like you to stop with the “I’m taking my ball and going home” mentality. The power to control government lies with the people. So long as we stay divided we don’t have the power. Stop whining and start doing something and perhaps change can happen. I do realize that I just wasted an entire minute responding to someone who isn’t interested in actually performing the civic duties of an American, so I will stop there.

  13. Voting doesn’t work. Petitioning doesn’t work. Calling and writing “our” congresscritters doesn’t work. Until enough of us are willing to start “shoot(ing) the bastards” there is nothing we can do to rein in the government. Only a clear message of “if you violate my rights, there will be serious consequences” will get through to people with a royal attitude problem. At least, that is the message that their reaction to my lifetime of caring deeply has communicated to me. That was their choice.

  14. Black Flag says:

    #
    USWeapon said
    February 3, 2009 at 3:14 am

    Plenty as soon as I can get people like you to stop with the “I’m taking my ball and going home” mentality.

    10,000 years of government, and it has never happened (except in violent overthrow – but that merely replaces one tyranny with another tyranny)

    The power to control government lies with the people.

    No, it does not! That is the sickening myth of it.

    Power to control government lies with those that have guns and the will to use them against anyone.

    So long as we stay divided we don’t have the power.

    Again, another myth – the myth of unity.

    As much as Ken and I see ‘eye to eye’, I can guarantee we are different in so many other ways.

    To believe what is ‘good’ for me would be ‘good’ for you or Ken or anyone else is a complete mental collapse.

    The only thing that can be equal between all people is freedom – and in that freedom comes the ability to act in the interests that benefit each of us – without any need to benefit each other.

    Stop whining and start doing something and perhaps change can happen.

    Energizing the beast will not stop the beast.

    You assume ‘change’ will always be a ‘good’ thing – when, in fact, all the energy you invest into the beast will actually change it – for the worse.

    I do realize that I just wasted an entire minute responding to someone who isn’t interested in actually performing the civic duties of an American, so I will stop there.

    As usual, you confuse submission to government as an act of civil duty.

    One day, you will come to see that government is not the country, duty is not submission, and then you will be one step closer to being free.

  15. “And just so I am a bit more clear on the stance that I take. I support deregulation. I support any move that takes government’s hands out of the free market. I like oversight, but that is not the same as regulation. I want government to pay attention to what companies are doing and cal them out for bad behavior. But aside from that, I want them to keep their paws out of the free market.”

    US – allow me to offer a tale from my life as I try to wrap my head around this stance / approach. I have worked for years in the fields of information security, audit, governance, compliance and control. I think you work in retail if I am not mistaken so you are likely familiar with Payment Card Industry compliance – aka – PCI. While not pure Government regulation it is very similar to other government led efforts in this space including elements of GLBA, HIPAA, FFIEC Regulations, SOX, FISMA, NERC, and so on. I will offer unequivocally, that left to its own devices, those who drive the market, those who drive large businesses, those who decide how much you and your data are worth generally don’t give a shit what you think relative to how you value you own data, information or money.

    Your company is likely required to comply with PCI requirements to safeguard customers who want to use plastic to buy good and services. I will guarantee to you that at some level in your company a risk decision was made as to how far they will go in order to ‘comply’. Let me be clear, you can comply but still not be very secure. You can comply by hiring the known dopes in the industry eager to line their pockets that send some dipshit 22 year old to your corporate HQ and certify you days later as PCI compliant without knowing what the hell they looked at. Recently I spoke with the Chief Legal Officer for a major international credit card issuer – I asked the question of what they were doing to ensure they safeguard customer data (and employee data). He simply reply was that from a risk perspective, for them, it is not a matter of “if” but “when” they will have some major data breach, lose a shitload of credit card numbers (maybe yours and mine), go through the hand slapping and then on they go – happy as pigs in shit that the market has no stronger reactive processes to make sure it doesn’t happen again.

    What’s the point here? The point is any control that is akin to oversight is a joke. IT IS A JOKE and doesn’t work. Most healthcare companies blew off HIPAA when it came out because there was no enforcement mechanism. I had many companies tell me it would cost more money to be compliant than it would to actually protect the very people they are there to serve. SAY WHAT! WTF? They are telling you, to your face, how in the big picture of things each one of us is a pimple on the ass of a flea. Ever had your ID stolen? I have – I stopped counting how much it cost me a long time ago – it is a painful horrible ordeal. So – we know oversight doesn’t work and we know that no regulation doesn’t work either – the globalization of markets places way too much at stake to simply say “ah screw it – those running the companies know best, government will only make it worse”. That is true in many cases, but when you can have an asshole like Bernie Madoff cause as much damage as he has, the comes a need for more automated, transparent governance and control. Before everyone bitch slaps me here with screams of “Liberal” and “Socialist” – the very same systems and technologies that catch assholes like Eliot Spitzer or ID terrorists moving money around are the same conceptual controls that should be in place in every goddamn market in this country. It is possible to implement pragmatic control that doesn’t stifle competition and helps protect not just the little guy, but the whole enchilada. You just don’t hear about it because the Merrill Lynch’s of the world love to fuck with oil prices as much as the AIG’s of the world love to sell insurance on phantom unregulated financial instruments.

    Otherwise your message is on the money – Bush didn’t deregulate – all have dirty hands in this stinker

    “I have met the enemy, and he is us”

  16. So, because government is unable to prevent theft and fraud, we need more government?

    I wonder how easy it would be to steal identities if we were not buried under an avalanche of government-mandated tracking numbers and required to fill out so many official forms exposed to so many eyes.

  17. Kent – I’ll work my way backwards here:

    There are efforts from a research perspective to develop two factor identification models that would remove the current step of sharing your personal data with so many people and so many entities – it is no wonder it so easy to steal IDs because your data is everywhere. The problem is, and you’re actually making my point for me – no one will ever pay for this. Until it is mandated the market isn’t likely to support and then adopt it – as I stated before – they don’t give a shit about your personal data and you don’t want the government to tell them they have to care.

    The prevention of theft and fraud – this is not solely a government problem. Congress spent the last several years vehemently fighting a Federal level breach notification law (that would also require certain technology based controls to be in place) – so what we have now is close to forty States with laws that are not uniform and have resulted in many companies saying ‘the hell with it’ – and as I said before – they do a risk/reward assessment. It costs too much money to protect your data/information versus just paying the goddamn fines – and since they rarely are required to do anything (as in the threat of jail for CFO/CEO under SOX) they end up doing little to nothing. Its cheaper to send you a letter telling you they lost your shit and then listen to you bitch about why nothing was done than it is to protect in the first place. There is your free market at play. Government, in effort to placate rather than protect has passed laws that at times lack teeth because you want them to gum the situation rather than chew and swallow it. We don’t need more government – just better government with some transparency. De-regging, in my example, just guarantees that they will never do anything. Which is better?

  18. Why would you not pay for such a service? I certainly would if it was important to me.

    I would also prefer to patronize a company that I knew, through “feedback” of some type, was careful with my information. If a company doesn’t care about my info, I wouldn’t give it to them. Period. And without government edicts “requiring” us to, why would anyone?

    In a free market, I would also be able to sue such a careless company if my finances or reputation were harmed. There would be no “corporation” favoritism that protects businesses that get in bed with the state.

    Why not allow me to decide “who gets what” with regard to my personal information, rather than mandating that I accept a “SSN” or other easily compromised number? Deregulation would give me options without forcing me to run afoul of government “laws”. That is always preferable to me.

  19. Black Flag says:

    The cost of President Barack Obama’s economic recovery plan is now above $900 billion after the Senate added money for medical research and tax breaks for car purchases.

    Zimbabwe reached another landmark low today (16 Jan) as the central bank introduced a new Z$100 trillion note, worth about £20 on the black market.

    Z$400bn = US$1.

    Soon, the Zimbabwe dollar may be worth more then the US$ 🙂

  20. Black Flag says:

    Ray,

    Your point is accurate, but the blame misses the mark.

    It is because government PREVENTS you from suing institutions that misuse or fail to secure your identity/money/etc.

    Banks didn’t care whether their customers had their money stolen off of credit cards or out of the bank accounts – the pain was borne by the customer, not the bank. There was no recourse – due to government law – for the customer to sue the bank for failure of fiduciary duty.

    Finally, the law was changed – and viola! Suddenly security of financial transactions became #1 priority for the bank – because they, not their customers, were on the hook.

    As long as government by law prevents recourse, there will be abuse. As soon as government gets out of the way, the market instantly responds.

    Again, in the financial markets – because government actively prevents competition makes it impossible for a competitive service that would offer higher security, access, etc. to exist. With this real monopoly on service, why would Visa/MC/Discover, etc. – all owned by banks – make themselves liable for your loss? Where can you go to find competition?

  21. BF & Kent – thanks for the comments / feedback. BF you are absolutely correct in that there is little to no reasonable recourse for the little guy that gets screwed here. After the TJX debacle there were several class action law suits but I am no more a fan of extensive litigation that I am toothless regulation. I vote jail time – strengthen the laws, make them consistent, leverage technology we already have, and make the penalties for non-compliance so severe there is no chance for these jerkoffs to blow it off as a risk/reward argument.

    BF you are also almost right with regards to the positioning of Visa et al. – they operate like a cartel and license to the banks. The whole PCI ‘regulation’ is a damn joke because while it tries to enforce tighter security standards the underlying accountability element becomes a massive risk transference that ends up with all parties involved (the card brands, banks, retailers, PCI auditors, service providers and other assorted middlemen) covering their asses to armageddon with iron-clad contracts that prevents anyone from really getting in trouble. The same asshole who developed the security strategy at Choicepoint then presided over, at the time, the largest data breach in history, is now lauded as a goddamn expert and paid sick amounts of money to speak at industry events.

    So – back to point – these slimebags will never police themselves. Never. And I do agree that so long as these are treated as administrative law issues then jack squat is going to change.

    Kent – the technology is moving us to a point where your personal data, should it need to be shared, can be encrypted essentially unto itself. No more of this shit where even if I want to buy a bag of dog food I’ll have someone asking for my blood type (ok – I’m exaggerating). Here is my fear though – buried in the stimulus is money “EARMARKED” for electronic health/medical records programs. Electronic records are great in concept – lord knows how many doctors over my lifetime have copies of my records – however, the technology is not there yet to provide close to 100% assurance that they cannot be breached (it can never be 100%). And back to my original points – the Inspector General of the Center for Medicare and Medicaid Services (CMS which is under HHS) absolutely lambasted them in a report three months ago for their complete lack of enforcement processes for the good old HIPAA rule (you know – that ‘annoying’ paperwork you blindly sign when you go to a new doctor – its all a bunch of shit I hope you realize) – I’m not ok with people like this, all good intentions aside, that are left handcuffed to ensure we don’t create a monster with the electronic health records initiatives.

  22. Black Flag says:

    Ray said
    I vote jail time – strengthen the laws, make them consistent, leverage technology we already have, and make the penalties for non-compliance so severe there is no chance for these jerkoffs to blow it off as a risk/reward argument.

    Whereas I say, ‘grow up – stop pretending someone else is protecting your interests, and guard yourself’.

    I will tell you I made a mint shorting the stock of Global Crossing – and they were one of my suppliers. I didn’t beg for some government lackey to tell me whether these guys knew their business or not. I used my own eyes and judgment. And if you were not learned or able to make good judgments regarding these guys, then why the hell did you put your money into them!

    I suggest that people need to grow up and take responsibility for themselves.

    Government makes it so worse by pretending that they protect you – the falsity of this promise makes people make horrible mistakes.

    So – back to point – these slimebags will never police themselves. Never. And I do agree that so long as these are treated as administrative law issues then jack squat is going to change.

    They do not police themselves because the risk to them has been absolved.

    It is easy to act reckless when you are not subject to the consequences.

    The law allows them to be reckless without consequence.

    Get the government OUT OF THE WAY, and watch these guys scramble to protect your business.

    But as long as they, and the people, believe government is the answer, horror stories will continue in larger and greater numbers and events.

  23. Yeah, who wants an activist government? As the Republicans like to say, “We trust the people to spend their own money.” Would those be the “people” who sunk trillions into internet stocks in the 1990s? Then took out sub-prime mortages they couldn’t afford? Or are we talking about the “people” who run the banks, car companies and all the retailers going out of business? Great. Let’s get the economy going by cutting taxes some more so “the people” and “private enterprise” can spend it wisely. Just because they screwed up in the past doesn’t mean they won’t be wiser in the future. Right? Right?

    Evan Adamson
    readtakeover.com

    • Evan,

      I see where you are going there, but I have to challenge you on the wisdom of the alternative. Would you then say that we are better off if we don’t let the people decide where to spend their own money? As the Democrats like to say, “We must take your money and re-distribute it for you because you aren’t smart enough to manage it yourself.” Would that be the same “government” that hasn’t managed to balance a budget in decades? Then ran 44 out of 50 states, social security, and medicare into states of near bankruptcy? Or are we talking about the “government” that gives money to the banks and car companies and has no idea what they did with it? Great let’s get the economy going by raising taxes and taking more of the fruits of people’s labor so the “government” and “Nancy Pelosi” can spend it wisely. Just because they have stolen it and screwed up managing our money in the past doesn’t mean they won’t be wiser in the future. Right? Right?

      • As for retailers going out of business. There are thousands of retailers who are running their business wisely and weathering the storm and NOT going out of business. How many US governments can we say the same about? ZERO.

      • Sorry I couldn’t help but mimic your post. Too easy to simply turn the tables on each statement. lol.

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