I have just about had it with conservatives who insist on blaming the poor and middle class for the economic crisis. For those of us that long suspected that their ideology of unfettered capitalism is little more than a respectable veneer for anti-social self-interest, their reaction/message during the crisis provides yet more evidence for that assumption. Day after day, I hear the same thing from GOP talking heads - "borrowers were irresponsible and borrowed too much; it's their fault they're in trouble," "no bailout for Detroit, they deserve to fail," and so on, ad nauseum. As always, but perhaps to an even greater extent this time, their rhetoric is vitriolic and vile, their contempt for anyone enduring any degree of hardship during this crisis, palpable.
Now they do make a few valid points, one of them being about American culture, which has very much become one centered around consumption. However, I don't think it's the culture that caused a consumption-driven, consumer debt-fueled economy to develop, but rather the manipulation of exchange rates by foreign governments - China and Japan being the two most important. They're wagging their fingers at us now, but during the boom, they (China especially) were happy to rake in the foreign exchange earnings, and in so doing were every bit as short-sighted and irresponsible as the speculators on Wall Street and Main Street.
The Asian countries' export-oriented get-rich-quick scheme - err, "development model" - with its reliance on forced savings and artificially cheap currency is, more than anything, what drove the savings rate in the US to nothing. In other words, it was the deliberate effort to create huge imbalances in the world economy that gave rise to the American consumer economy, NOT the other way around.
For instance, do you know what the average yield on an US dollar-denominated savings account during most of this time (2001-2005) was? Around 1-2%, while the inflation rate was ~3%. Why would anyone save when they're guaranteed to lose 2% of the value of their money every year? It's not rational, at least from a strictly analytical perspective, so it's no surprise that few did it. People could have put money in the stock market, which averages around a 7% annual return, but it had just taken a beating, and there wasn't much trust in corporate financial reporting after Enron and WorldCom.
However, the Asian savings glut made real estate especially attractive, and with Bush's lax non-existent financial regulations and Greenspan's cheap commercial paper, housing prices were going up. People piled in to real estate, egged on by elected officials and the unregulated debt industry. The increased demand for real estate meant rising home values for those who already owned, and consumers (again, with encouragement from political and business leaders) viewed this asset inflation not as an unsustainable bubble, but as a windfall, as the sudden, unanticipated appearance of value. And why would they not? Everyone from the President to CEOs to the news media repeated the mindless mantra that "home values never decline." This home equity "psuedo-savings" offset the real savings that would have occurred, but when the bubble burst, people were merely stuck with debt.
So, is this the fault of those who now find themselves underwater in their mortgages? I guess to some degree, many should have found the deals they were offered to good to be true; however, there was a concerted effort to deceive them by many different parties - including entire nations. I don't think there's a single country out there without forced saving policies that wouldn't have seen their savings rate plummet in exactly the same way had that massive pool of loanable capital been offered to them at virtually no interest. The rest is merely a matter of what asset class a bubble will form in; given these factors, a speculative bubble of some sort is assured.
On top of that, this is a highly diverse, highly sophisticated economy. It is totally unreasonable to expect average people to know what the technical details of their mortgage is; people expect to be told the truth. In an economy with such a high division of labor as the US, people don't even try to know the ins and outs of complex agreements like home mortgages and so forth. Rather, they consult experts on such matters - in this case, banks and lenders.
So when bankers - those who used to hold on to their capital with an iron grip - suddenly began telling people that they should buy MORE home, most took their advice. After all, they'd always been able to trust such people in the past, and they figured that their lender knew a lot more about this stuff than they did. And since real estate prices were rising, many felt a sense of urgency to buy now, because they might not be able to afford it if they waited a few more years. Besides, a lender isn't going to make you a loan you can't pay back, right?
Uh... not so much. As it happens, without some government oversight, Wall Street wizards actually did find a way to make a quick profit on bad loans through little more than financial alchemy. Scarcely a soul realized how drastically debt securitization changed the incentive structure of the financial sector, for most had grown accustomed to lenders being stingy and defensive. Honestly, how many consumers would have ever assumed that bankers were now making money on bad loans? Virtually none, because if the practices being utilized in the credit markets were ever discovered by people with common sense, their end would shortly follow.
Even those on Wall Street, The City, and other financial centers throughout the world were fooled by mortgage securitization practices. If the heads of Citi, Lehman Brothers, and Goldman Sachs didn't see this storm brewing, how on earth am I supposed to take someone reprimanding the average auto mechanic or computer programmer for their spendthrift ways at all seriously? Please. This "it's the little guy's fault" attitude of laissez-faire ideologues is as abhorrent as it is laughably absurd.
It's also simple psychological projection - virtually all of them supported Bush in 2000 and 2004, and the fact that his administration's non-existent oversight of financial markets was a major contributing factor is now manifest. So, do they then admit they were catastrophically wrong, both ideologically and politically, and that their candidate's ineptitude and naivety helped cause the most severe financial crisis since at least the Great Depression? Of course not!
No, instead they scream "those damn irresponsible working-class people! They were so irresponsible! It's their fault for taking the advice of their bankers and not knowing more than the people that run the world's largest financial institutions!" Note: aforesaid diatribes may or may not include various racial epithets, ethnic slurs, unsubstantiated assertions and/or incoherent ranting directed against Fannie Mae, Freddie Mac, Barack Obama, Barney Frank, and the Democratic party.
Yet, do those supporters of a party that fancies itself as one of personal responsibility ever acknowledge the lack of leadership and the systemic failure that resulted from it, and even more importantly, the ideology which led them to implement such insane, radical deregulation? Do they ever acknowledge or apologize for their role in bringing about this turn of events? Of course not - that would dilute the GOP brand after all, and you don't dilute the brand. Occasionally you'll hear one conservative attacking another, but I think the last time I heard any prominent GOPer take responsibility for their own failure was when Rep. Mark Foley got busted trying to get teenage boys to send him nude pictures, and at that point, the gig is basically up.
Anyways, in widely-broadcast spectacles that range from the absurd to the pathetic to the downright disgusting, the right relentlessly projects blame on to the people currently being foreclosed on and others in financial distress! How contemptible. Really, I mean - how do these people sleep at night? It takes a special type of asshole to accuse (formerly) working families facing foreclosure of living extravagantly as they're trying to find a place to stay and figure out how they're going to afford such luxuries as food and their kid's asthma medication. Incidentally, these are exactly the same douche-nozzles who opposed the 2007 expansion of the State Children's Health Insurance Program (SCHIP), largely because they thought kids with leukemia would take advantage of government largess in the oncology ward. Stupid lazy cancer kids, why don't they just go out a job with benefits already? I pay enough taxes.
Regardless of whether it's a psychological defense mechanism or if they're truly just greedy, self-righteous, hate-filled, anti-social dipshits, the right's attacks on those suffering the most in this crisis are absolutely disgraceful and an embarrassment to the nation. I can't believe more people aren't talking about it and holding them to account. Just once I'd like to hear a real journalist stand up to these loud-mouthed blowhards and ask something like: "Have you no sense of decency, sir? Have you no compassion? Have you no empathy for your fellow man? Is your lust for power so intense that you'll engage in such scorched-earth politics, demonizing those who've had their lives turned upside down, even in our moment of crisis?" Not holding my breath on that one though.
I don't know... I wish I could say I was shocked at such outrageous behavior, but this is, sadly, par for the course. While I don't exempt the "little guy" from my criticism entirely, it is obscene to accuse those already enduring great hardship of misconduct or irresponsibility while those bearing the most responsibility are not only exempted from blame, but are having their failure subsidized by the Fed and the Treasury.
Like most of the right wing's rhetoric these days, the accusations being leveled at those with no platform to defend themselves evaporate with only the slightest scrutiny. Yet, that doesn't matter to true believers in conservative ideology; their philosophy of Social Darwinism teaches them that those who fall on hard times or were victims of fraud are morally inferior beings deserving of their fate, and they'll be damned if they're going to let facts get in the way of such shameless social and economic elitism. Grinding the working class into the dirt a little bit more is what many in the right-wing punditocracy live for, and this gives them the perfect opportunity to do so unapologetically.
In closing, I'd like to give one piece of advice to my friends on the right: I know living in the alternate reality of Fox News and Rush Limbaugh makes everything seem somewhat fake, but this is a real crisis, real people are really suffering, and it may not be long before pain and despair morphs into outrage and resolve. Now is probably not the time to be heedlessly declaring "let them eat cake!"
Cross-posted at my new blog, The Daily Elitist.