Robert Scheer: Clinton Bubble: Clinton's Actions Led to Housing Collapse that Devastated Homeowners

[amborin]

This is the story of how Clinton Democrats laid the groundwork for the collapse of the U.S. economy in 2008—a catastrophe from which working blacks in particular still have not recovered.

the roots of this disaster go back much further, to the free-market propaganda of the Reagan years and, most damagingly, to the bipartisan deregulation of the banking industry undertaken with the full support of “liberal” President Clinton. Yes, Clinton. And if this debacle needs a name, it should most properly be called “the Clinton bubble,” as difficult as it may be to accept for those of us who voted for him.

His were the words of technocrats, arguing that modern technology, globalization, and the increased sophistication of traders meant the old concerns and restrictions were outdated. By “modernizing” the economy, so the promise went, we would free powerful creative energies and create new wealth for a broad spectrum of Americans—not to mention boosting the Democratic Party enormously, both politically and financially.

And it worked: Traditional banks freed by the dissolution of New Deal regulations became much more aggressive in investing deposits, snapping up financial services companies in a binge of acquisitions. These giant conglomerates then bet long on a broad and limitless expansion of the economy, making credit easy and driving up the stock and real estate markets to unseen heights.

snip

http://www.truthdig.com/arts_culture/item/the_great_american_stickup_is_bush_really_20100916

At the bottom, a plethora of aggressive lenders was only too happy to sign up folks for mortgages and other loans they could not afford because those loans could be bundled and sold in the market as collateralized debt obligations (CDOs). The investment banks were thrilled to have those new CDOs to sell, their clients liked the absurdly high returns being paid—even if they really had no clear idea what they were buying—and the “swap” sellers figured they were taking no risk at all, since the economy seemed to have entered a phase in which it had only one direction: up.

(critics) never had a chance, though; they were facing a juggernaut: The combined power of the Wall Street lobbyists allied with popular President Clinton, who staked his legacy on reassuring the titans of finance a Democrat could serve their interests better than any Republican.


Clinton’s role was decisive in turning Ronald Reagan’s obsession with an unfettered free market into law. Reagan, that fading actor recast so effectively as great propagandist for the unregulated market—“get government off our backs” was his patented rallying cry—was far more successful at deregulating smokestack industries than the financial markets.

[olddots]

1. read it and weep

the cards have been shown .

[dreamnightwind]

2. This is what makes DLC Democrats so dangerous

We'd fight Republicans to the death to stop things like this, but if a Democrat pushes it, we won't. The powers that be are well aware of this and it's a major piece of how they get what they want.

Bernie for an alternative to the distopian corporate future.

[amborin]

3. yes, same goes for so many policy disasters; the DLC is typically the advocate

for them, as in the case of NAFTA

[Kip Humphrey]

4. have you ever wondered where all these 3rd-Way Democrats came from? Most escaped the RNC

in the late 80's, 90's, and 00's, recruited by conservative Democrats as the RNC slid to the far right. These refugees fleeing to the Democratic party are former republicons (most are moderates and corporatists), and they brought their penchant for authoritarianism with them.

[dreamnightwind]

5. I think of them as beasts of no party

They represent profits, not people.

Some are former Republicans, most though are just the kind of people that rise up in the pipeline that is controlled by the corporate controlled DNC.

They're allowed to appear liberal on social issues (since it costs corporations nothing if their candidates give lip service to caring about racism, for example), but not allowed to get anywhere near economic populism or getting in the way of the upward redistribution of wealth.

MadFloridian has a long history of many informative posts on the nuts and bolts of how this all came about, well worth the time if you have it, or maybe you've already done this reading. There are a number of books on the subject, too.

[immoderate]

6. We must stop electing Reaganite presidents.

The problem with modern presidents is that they subscribe to some form of supply-side economics, because of some delusion that money comes from corporations.

Electing Bernie would be a departure from that.

--imm

[Festivito]

7. W* should be relieved it wasn't his 2004 SEC letting top 5 banks treat CDOs as cash....

No, it had to be a Democrat.

Even if it starts with Regan and there were a few glitches -- small recessions, did I remember to say small -- until we get to a ... a ... Democrat, Clinton, who had 8 years of constant up in market. The eventual fall after he left office due to Republican recalculations and putting their immediate bad months mixed with Clinton's last months was certainly not the fault of the Republican re-calculators.

No, it had to be a Democrat.

Even though the stock market took a dive the day of the election and people started putting their Clinton era earnings into housing instead. Even though the economy needed government help of borrowing over a thousand dollars per person and giving them 600 dollars to boost the economy. Even though as 2004 re-election loomed and 6 months prior the SEC decided to free the banks from that pesky old 10% rule. (CDOs are as good as cash anyway!) Even though we had changed from a trade surplus under Clinton to a trade deficit under W* that put cash into the hands of the Chinese who then put that cash into the housing bubble inflating it further and letting bankers give cash interest up front. (Oops, the Chinese didn't like that investment and we had to give them part of our national debt instead.) It couldn't be called a problem made by a Republican like W*.

No, it had to be a Democrat.

Not that anyone would benefit from re-writing history.

WARNING: There may be a lot of sarcasm here.

[MisterP]

9. even Carter got the deregulation ball rolling 1979-80 (but wised up after the primaries)

Reagan, the Bushes, the Clintons, Obama, they share the same neoliberal broker/rentier/corporate raider policies that have been failing since Eli Black went out that window

[Festivito]

10. So what! It had to be a democrat. eom

[MisterP]

11. I don't get your point

[TTUBatfan2008]

8. This is like...

President during the Roaring Twenties bragging about the boom times while ignoring that the boom set up an enormous bust.