Republican talking point whack-a-mole, yet again

by John Quiggin on September 29, 2008

The argument by talking point style that characterizes all sections of the political right in the US has been evident as usual in relation to the financial crisis, so I guess it’s time to play whack-a-mole yet again. The most prominent points I’ve seen are

  • It’s all the fault of the Community Reinvestment Act, which forced banks to lend to low-income borrowers. Quite a few people have pointed out that many of the subprime loans weren’t required under CRA. More to the point, given that the market structures in the bubble made mortgages a fungible asset, the CRA was a nonbinding constraint. It’s clear that many more subprime loans were given out in the bubble years than were required under the Act and that the excess was greatest in the areas where the bubble was worst. The CRA had no effect at all under these conditions.
  • If regulation were the problem, how come the hedge funds haven’t been affected? In fact, it was the failure of Bear Stearns hedge funds that signalled the spread of the crisis beyond the subprime mortgage market. And the main reason hedge funds haven’t yet been hit by the crisis of the past few weeks is that they don’t allow redemptions except at stated dates (for most of them it will be next Tuesday. Perhaps there won’t be a problem, but that’s not what the markets think. In any case, those making the claim seem to be unaware of the redemption restrictions.



P O'Neill 09.29.08 at 12:27 pm

The NYT’s Floyd Norris, who usually knows better, gives “it’s all the fault of teh poor” the some say/others say treatment.


DanH 09.29.08 at 12:35 pm

Sorry to immediately go (pretty much) off topic but, for whoever it is that asked in the comments on d2’s last post, here‘s a link to the latest Doug Henwood shows.


Ano 09.29.08 at 12:41 pm

In case anyone is interested in an example of a repulbican using the CRA talking point, here’s an email sent by a Michigan Republican, Jack Hoogendyk, who is running for senate against Carl Levin:

It All Started With the Community Reinvestment Act

Unless you just returned from a three-month fishing trip in Yellowknife where there are no radios, cell phones or Internet, you certainly know that the financial markets are in difficulty. It seems all these mortgages that so many folks obtained with little or no equity or credit rating, have suddenly crashed around all of us.

The genesis of this collapse is the Community Reinvestment Act (CRA) of 1977. This act which was championed by President Carter required lending institutions to offer credit and home ownership opportunities to “underserved populations.” This happened as a result of pressure from community organizers and groups like ACORN.

What it ultimately led to was a large number of no-money-down or poor-credit-rating mortgages. These mortgages were only moderately risky as long
as housing prices continued to escalate. In 1995 under Bill Clinton, the CRA was liberalized to “generate billions of dollars in new lending and extend basic banking to the inner cities and to distressed rural communities.”

Now that the housing market is in full collapse, the chickens are, as they say, coming home to roost. Could this have been foreseen? Could this have been prevented? Of course. If all of us had exercised a little common sense added to a strong dose of personal responsibility, this would not have happened. Short of that, some solid regulation would have helped.

In fact, regulatory reform was proposed in the U.S. Senate in 2005. The bill, S.190 was introduced by Republican Senator Chuck Hagel and co-sponsored by Sens. Dole (R), Sununu (R), and McCain (R). It would have put some good controls in place to largely prevent the meltdown that is occurring today. The bill was supported by four Republicans and no Democrats. Where was Senator Levin on this? I cannot find any evidence of his support for the bill and, in fact, it was Democrats that effectively killed the bill out of committee.

President Bush had proposed a significant regulatory overhaul of the housing finance industry in 2003. It even included reducing the power of the administration. The New York Times reported on it. Democrats opposed it. Again, Carl Levin does not appear to have supported it. Senator Barney Frank (D), said it was unnecessary. It never saw the light of day.

Going back a little further, a bill was introduced in 1999, S.900, which would have put some controls in place and, in effect, “weaken” the Community Reinvestment Act. Carl Levin opposed it saying this, “I oppose the provisions weakening the CRA included in S.900, a bill intended to modernize the financial sector of our economy.”

It certainly looks like Carl Levin and his Democrat (and some Republican) colleagues passed on numerous opportunities to address the crisis that was rising on the horizon as far back as 1994. Legislation was offered to reign in the problem. Senator Levin is certainly motivated to find answers now, but where was he in 1994, 1999, 2003, and 2005? It’s no wonder that in his interview with Paul W. Smith, he mentioned that we should not look back, but rather, look forward.


Kendall Justiniano 09.29.08 at 12:55 pm

It’s only “whack a mole” if one breaks up the argument into “straw-man” size bites. In fact, I’ve seen coherent arguments that use the CRA as one contributory factor, and as such it need not be a “non-binding constraint.”

For instance one need only ask in response to your response, what contributed to the “market structures” in the bubble. That is why does a market in mortgage backed securities exist in the size and quantity that it does in the first place? Given Fannie and Freddie’s mandate and the fact that they back almost 50% of the home mortgages today, one can still point at government interference in the market as the primary cause.

Ayn Rand Institute Director Yaron Brook has made this argument very succinctly:


David Kane 09.29.08 at 1:50 pm


This post would be more persuasive if you actually bothered to link to the moles that you are trying to whack. And, also, please seek out the strong arguments rather than the weak ones. Anyway, as a service to your readers, here is a mole:

The claim is not: There would have been no credit crisis and/or housing bubble if it were not for CRA or Fannie/Freddie or insert-your-favorite-government-program. Bubbles happen all the time, even if the government is not involved, e.g., the tech bubble.

The claim is: In a world without CRA or Fannie/Freddie the crisis/bubble would have been smaller. Now, reasonable people can argue about how much smaller it would have been, but surely you will admit that it would have been smaller? The CRA did force some banks to make loans that they would not have otherwise made. Some of those loans have gone bad. If there were no CRA, those loans would not have been made and the crisis/bubble would have been smaller.

Once we agree that there was an impact, we can argue about magnitude.

And, note that every smart conservative I read thinks that Fannie/Freddie was 1000 times more important to the bubble than CRA. How many prominent Democrats tried to rein in Fannie/Freddie?


Alex 09.29.08 at 1:53 pm

If it was my mission in life to be a right-wing hack, I think I’d try to sit out some of the stupider episodes of right-wing bullshit, so as to at least appear less of an egregious hack, and therefore give my opinions greater credibility.


Markup 09.29.08 at 2:11 pm

It’s probably unfair to revisit the past lest the revisionist hand comes out of the pocket, but sometimes it worth the stroll to look at goals and wonder how [well] they have been achieved.

# Make sound science, not ideological whim, the basis for regulation, with peer-reviewed risk assessments and full disclosure.
# Require periodic review of existing regulations, to strengthen where necessary and change where obsolete.
# Require agencies to disclose the cost to consumers and small businesses of any proposed regulations.
# Let the American people know the full price they pay for government regulations, through a new regulatory budget that explains the likely cost for meeting regulatory requirements.
# Use cost-benefit analyses of regulations to develop alternatives to the outdated command-and-control attitude of recent years.

# Implement the “American Dream Down Payment” program, which will allow a half million families who currently draw federal rental assistance to become homeowners, and allow families receiving federal rental payments to apply one year’s worth of their existing assistance money toward the purchase of their own first home, thus becoming independent of any further government housing assistance. This approach builds upon our long standing commitment to resident management of public housing and other initiatives.
# Increase the supply of affordable housing for low-income working families and rehabilitate abandoned housing that blights neighborhoods by establishing the Renewing the Dream tax credit. This investor-based tax credit will create or renovate more than 100,000 single-family housing units in distressed communities.
# Build savings and personal wealth through Individual Development Accounts, in partnership with banks, to accelerate the savings of low-income earners.


Homeownership is central to the American dream, and Republicans want to make it more accessible for everyone. That starts with access to capital for entrepreneurs and access to credit for consumers. Our proposals for helping millions of low-income families move from renting to owning are detailed elsewhere in this platform as major elements in Governor Bush’s program for a New Prosperity. For those families, and for all other potential homebuyers, low interest rates make mortgages affordable and open up more housing opportunities than any government program.

Affordable housing is in the national interest. That is why the mortgage interest deduction for primary residences was put into the federal tax code, and why tax reform of any kind should continue to encourage homeownership. At the same time, a balanced national housing policy must recognize that decent housing includes apartments, and addresses the needs of all citizens, including renters.

We will turn over to local communities foreclosed and abandoned HUD properties for urban homesteading, a citizen renovation effort that has been remarkably successful in revitalizing neighborhoods. We affirm our commitment to open housing, without quotas or controls, and we applaud the proactive efforts by the realty and housing industries to assure access for everyone.

In many areas, housing prices are higher than they need to be because of regulations that drive up building costs. Some regulation is of course necessary, and so is sensible zoning. But we urge states and localities to work with local builders and lenders to eliminate unnecessary burdens that price many families out of the market. We see no role for any federal regulation of homebuilding, but we do foresee a larger role for State and local governments in controlling the federally assisted housing that has been so poorly managed from Washington. We also encourage the modification of restrictions that inhibit the rehabilitation of existing distressed properties.


David in NY 09.29.08 at 2:29 pm

“The CRA did force some banks to make loans that they would not have otherwise made.” Um, were you alive the last eight years? My brother sold all his bank stocks when a young two-income, no-savings couple bought his fairly expensive house for ZERO down payment. The mortgage brokers and banks were throwing themselves at borrowers, worthy or not. Not only weren’t they forced to make bad loans, they were in love with doing it.

If you don’t believe me, see this.


Bill Gardner 09.29.08 at 2:48 pm

off your main point, John, but do you anticipate a massive run on the hedge funds on the Tuesday witching hour? And if so, what happens next?


Kendall Justiniano 09.29.08 at 3:16 pm

David in NY wrote:

“The mortgage brokers and banks were throwing themselves at borrowers, worthy or not. Not only weren’t they forced to make bad loans, they were in love with doing it.”

Yes, and the pivotal question to ask is why? Why would one do this? The answer is because they could turn around and sell the mortgage on the secondary market. One might ask then, why was the secondary market growing and so liquid? Could it be because govt-created institutions were specifically out there with the mandate to guarantee and/or buy risky debt so it could be sold on the open market?

In the name of the nobility of social engineering, our government was laundering risky debt on the behalf of these bankers.

Great article by officials at the FED (right wing institution there) explaining how govt incentives created this, and showing with hard data the build up to this crisis.


Lex 09.29.08 at 3:31 pm

The CRA…. THIRTY-ONE YEARS AGO… And they only just found out… Lying schmucks.


Righteous Bubba 09.29.08 at 4:01 pm

Being dense market-wise, can someone give me a reason why supporting the bad mortgages themselves wouldn’t be a better fix? Is there a way for government support to substitute for mortgage payments for a short time so that the more magical assets can be somehow revalued as opposed to vaporized?

Are there reasonable alternatives to what’s being proposed? What’s the fantasy cure?


Sebastian 09.29.08 at 4:23 pm

I don’t think it is a right-wing talking point, but isn’t a fair amount of evidence that the mandated change to mark-to-market accounting played a big part?

The interesting thing about that as a problem is that it is exactly the type of regulation that most people (including conservatives) are ok with–transparency regulations. If you had asked me 1 year ago if switching to mark-to-market was a good idea, I would have almost certainly said yes. From the right, it allows for market efficiency in identifying companies with bad assets (think Ford with too many cars that they aren’t ever going to sell once the model year is over).

What was unexpected is the extent to which it made normal long term holding investment strategies very difficult to pull off even by the biggest public companies.

This was an area of fairly broad agreement on the right and the left. But it seems to have turned out really poorly.


Colin Danby 09.29.08 at 4:36 pm

David Kane: If “Fannie/Freddie was 1000 times more important to the bubble than CRA” then what *exactly* is CRA doing in the discussion?

More to the point, emphasis on F/F is calculated to avoid discussion of the Gramm-Leach-Bliley Act of 1999, the obvious regulatory antecedent to our current difficulties.


Colin Danby 09.29.08 at 4:43 pm


racist troll 09.29.08 at 4:44 pm

n bg prblm hr s tht ppl r gnrng tht bd mny tnds t drv t gd. nc mrkt gts fw bd plyrs mkng bv-mrkt rtrns thr s n nxrbl psh ndstry-wd, bcs vryn wh pts t f ths dstrctv bhvr lss t n th mmntry wndflls. N, th sltn s t hv strng, nfrcbl stndrds t bgn wth.

Scndly, t’s t bd tht th CR s bng trgtd by Rpblcns, s th psh t ncrs mnrty hm-wnrshp gs wll bynd th CR:

“Wll, prbbly th sngl brrr t frst-tm hmwnrshp s hgh dwn pymnts. ” – Grg W. Bsh

“Lst yr st gl t dd 5.5 mlln nw mnrty hmwnrs n mrc by th nd f th dcd. Tht s n ttnbl gl; tht s n ssntl gl. nd w’r mkng prgrss twrd tht gl. n th pst 18 mnths, mr thn 1 mlln mnrty fmls hv bcm hmwnrs. (ppls.) nd thr’s mr tht w cn d t chv th gl. Th lw sgn tdy wll hlp s bld n ths prgrss n vry prctcl wy.” – Grg W. Bsh (2003)


Th Rpblcns r crrct tht ths bbbl s lrgly th rslt f ttmpts t gt blcks nd hspncs nt hm-wnrshp. Thy cnvnntly frgt tht thy r t lst s mch t blm s r th Dmcrts. n wld lmst thnk tht th Dms nd GP r n ths tgthr t bfsct th gnss f th sttn:

) Blm th CR (whch s nly pc f th pzzl)
B) Dmnstrt tht th CR cnnt whlly xpln th crss
C) Cncld tht “grdy” brkrs xhbtd sm srt f xstntl vl
D) Cntn lndng t ppl wh lck th hmn cptl t cnmclly jstfy hm wnrshp n mdrn pst-ndstrl scty.

f wrn’t dmntly ppsd t ny cnsprcy thrzng ‘d lmst b tmptd t clm w’r lkng t n.


Righteous Bubba 09.29.08 at 4:52 pm

D) Continue lending to people who lack the human capital to economically justify home ownership in a modern post-industrial society.

What might “human capital” mean?


racist troll 09.29.08 at 5:05 pm

<>Wht mght “hmn cptl” mn?

Lw Q; nslr cmmnty, lrgly rltd t nt spkng nglsh; vl-systm tht hs shrt-tm hrzn; prfrnc fr lsr-tm vr wrkng 60-hr wks (lk wrk).

bsrvtns f hmn cptl r sttmnts bt mprcl rlty nd nt mrl cndmntns. Cmll Pgl nc ntd tht, blv t r nt, thr r ppl lvng n wht w wld cnsdr ntlrbl cndtns wrld-wd wh r prfctly hppy wth thr lvs.


Michael 09.29.08 at 5:12 pm

Both those who think that the problem is CRA and those who think mark to market rules were the problem are incorrect. The problem is leverage. More specifically, cheap leverage. Without 30:1 leverage mark to market rules make not a bit of difference. Let’s call this “Balance Sheet 101”.

Without CRA you still get a massive flow of investment into the housing market because credit was cheap, mortgage initiation was deregulated, and the productive sectors of the economy were not generating profits. On CRA Quiggin is correct. CRA is designed to keep loans in areas where deposits are taken, not help the poor with subprime loans. PS CRA was passed in 1977. If all the “CRA sucks” people were correct then the bubble would have happened in 1986 or something. The only reason CRA comes under attack is because Phil Gramm hates it and his policies and ideology have sped us to this point. It is simple buck-passing. Maybe the people who believe this will get lucky and have this crank as a Treasury Secretary and celebrate when he really screws up the economy!

This is not to say that liberals are not complicit in the problem. The general celebration of homeownership as a path to wealth rather than a source of shelter was bipartisan, which is why our housing policy is ridiculously skewed in that direction.


David 09.29.08 at 5:16 pm

Re Asher

This post basically suggests that if African-Americans and Latinos had only never wanted to own property, there would have been no crisis. And the “greedy” brokers are the innocent victims. Thanks for clearing that up.

I’m by no means an expert in economics, but an argument that claims it’s all the fault of X minority group owning property doesn’t exactly demand specialist knowledge to be received a little skeptically. Re those innocent brokers, you might want to look into that whole Ameriquest case, where they were showing their mortgage officers the Vin Diesel stock market scam movie ‘Boiler Room’ to get them psyched up about going out to screw the poor with adjustable rate mortgages. Just a thought.


Asher 09.29.08 at 5:17 pm

Phil Gramm is responsible for the bubble???? Some of your commentary is spot-on: the problem is completely bi-partisan. The CRA *does* suck, but it is not sufficient to explain the phenomena we are now seeing.

Knock off the infantile partisan hackery.


ehj2 09.29.08 at 5:18 pm

Fannie & Freddie were very tough quasi-govt organizations that seized enough rope to hang themselves; neither party could reign them in.

But without the unregulated Credit Default Swaps, and bogus blue-chip ratings (for which the SEC found them “accessories”), the damage might have been essentially limited to the mortgage sector, the way the tech bubble was focused on the tech stocks.


MQ 09.29.08 at 5:21 pm

Anyone who retails the idiotic “hedge funds are fine!” point has instantly demonstrated they know nothing about the financial markets.

note that every smart conservative I read thinks that Fannie/Freddie was 1000 times more important to the bubble than CRA.

1000 times almost totally unimportant still means not very important, right? If you want anyone to take you seriously make an actual argument.

How many prominent Democrats tried to rein in Fannie/Freddie?

How many Republicans tried in the 12 year period they controlled Congress and the 6 year period they controlled Congress and the Presidency? You’d think if they were so fired up about it, something would have happened in that period. Bush didn’t get anything through Congress in 2001-2006, when he at certain points had 70%+ approval ratings and pushed through massive pieces of economic legislation.


Walt 09.29.08 at 5:23 pm

Look, Asher is here to provide some of the many high-quality comments Crooked Timber attracts from right-wingers. Yes, black people are too stupid to own a house. This is the right-of-center point-of-view that Crooked Timber’s comment policy allows us all to hear.

Yes, I am being sarcastic.


Michael 09.29.08 at 5:24 pm

No where did I say Phil Gramm was “responsible”. I said cheap credit was responsible. I said Phil Gramm “hates CRA” and his policies “sped us” to this point, which they did. I know reading can be a challenge…


sg 09.29.08 at 5:30 pm

Alex, I like your suggestions on how to not seem like too egregious a right-wing hack. But what do I do if I want to be a right-wing hack, so I made a big fuss about a serious issue like the death toll in Iraq, but nobody noticed and even though I sent my (completely shoddy) paper straight to Michelle Malkin, I still couldn’t get a gig at a Think Tank?

Wouldn’t I have to set the bar lower then? Like, maybe, by trying to blame black people for the financial crisis?


racist troll 09.29.08 at 5:39 pm


<>N whr dd sy Phl Grmm ws “rspnsbl” … hs plcs “spd s” t ths pnt, whch thy dd.

Hlrs. m, f hs plcs spd s t whr w r tdy tht s smply nthr wy f syng tht h’s rspnsbl. Prclss tht y mng t sy cmpltly cntrdctry thngs n th spc f tw sntncs. h, nd “chp crdt” s nly n lnk n th chn; pls spcfy hw w rrvd t chp crdt. Hnt: r-rd my qts f GWB whr h ssrts th nd fr chp crdt t prvd hm-wnrshp t mnrts.

Thr s nthng wrng wth prtsnshp. Bt y, sr, r vlgr hck.


<>Ys, blck ppl r t stpd t wn hs.

) dn’t s vlgr trms lk “stpd”
B) Pl Krgmn rcntly wrt clmn qstnng whthr r nt vr-ncrsng rts f hm wnshp s n ntrnsclly gd thng.
C) Fcts r stbbrn thngs. f thr s n nnt vrg dffrnc btwn dffrnt thncts n trms f hmn cptl thn wshng t wy ds lttl gd.

My prfrnc s fr fndng wys whr w cn mk lf lvbl fr tht strt nd trn thm nt cntrbtng ctzns. Prtndng rlty dsn’t xst mks fr pr plcy dcsns.


Michael 09.29.08 at 5:41 pm

Righteous Bubba, I have no idea why that proposal is not on the table (buy the mortgages themselves, though the Bill does allow the Treasury to do so, but the question is: why not only buy those?). The problem is solvency, not liquidity. And the root of the problem is the solvency of the American people. All of the bad leverage in the financial sector is built on top of that. Ultimately, if you don’t deal with the debts of American households you are simply going to be dealing with serial financial implosions until the credit markets lock up for good anyway. All you have accomplished in the interim is throw away a few trillion dollars. The only policy positive that I see that this bailout does is that it possibly protects the financial assets of non-financial companies.


Michael 09.29.08 at 5:42 pm

Asher, the fact that you see those two things as contradictory is much more of an indictment of your capacity to reason than my capacity to write (admittedly weak).


Righteous Bubba 09.29.08 at 5:46 pm

Look, Asher is here to provide some of the many high-quality comments Crooked Timber attracts from right-wingers.

Partially my fault Walt: I asked him the “human capital” question because I knew he would supply a nutty answer. Apologies.


sg 09.29.08 at 5:49 pm

Asher, you don’t have to use vulgar terms for your comments to be completely vulgar. You, sir, are a self-righteous, pompous, racist hack.


Hogan 09.29.08 at 5:52 pm

Um, if his policies speed us to where we are today that is simply another way of saying that he’s responsible.

Do you use the accelerator to steer your car?


Slocum 09.29.08 at 5:55 pm

More to the point, emphasis on F/F is calculated to avoid discussion of the Gramm-Leach-Bliley Act of 1999, the obvious regulatory antecedent to our current difficulties.

Damn Bush — so he managed to sign bills ‘shredding regulations’ two years before he took office. And it’s certainly worth noting that Gramm-Leach-Bliley is what has enabled part of the clean-up of this mess (that is, the merger of commercial and investment banks) — but, how, precisely, did Gramm-Leach-Bliley contribute to the problem?

Fannie & Freddie were very tough quasi-govt organizations that seized enough rope to hang themselves; neither party could reign them in.

I think ‘would’ is more appropriate than ‘could’ in that sentence. And it seems pretty clear that Democrats were the principal patron/protectors/beneficiaries of Freddie and Fannie. The Republicans were more likely to try to bring pressure on the GSEs, not out of ‘good government’ public-spirit, but because the GSEs were seen as more friendly to Democrats.

But without the unregulated Credit Default Swaps, and bogus blue-chip ratings (for which the SEC found them “accessories”), the damage might have been essentially limited to the mortgage sector, the way the tech bubble was focused on the tech stocks.

Like Gramm-Leach-Bliley, the use of credit default swaps got started under the Clinton administration. Where is the evidence they were under good regulation until January 2001? Where is the evidence Democrats fought valiantly to reign them in, only to be thwarted by the Bush administration? Warren Buffett gets full credit for prescience on CDSs, but what is the evidence that Democrats deserve the same?


Stuart 09.29.08 at 5:56 pm

Without 30:1 leverage mark to market rules make not a bit of difference.

What is better:

30:1 leveraged in US government bonds
10:1 leveraged on junk bonds

The level of leveraging of an organisation is a very limited part of the puzzle. The risk profile and liquidity of any assets are often far more important, and of course much harder to measure accurately.

Limiting an organisation to a specific leveraging cap generally encourages them to rely more on risky and low liquidity (and hence higher return) assets, which can actually be more dangerous to the organisations financial security than high leveraging.


racist troll 09.29.08 at 6:04 pm


n rfrnc t hmn ctn t sy tht smn s “rspnsbl fr” nd t sy tht thr plcs r th “cs f” s t sy th sm thng. t’s ttrly hlrs tht y d nt cmprhnd tht. (nd, n, Phl Grmm’s plcs r nt rspnsbl fr ths, lthgh mny thr Rpblcn’s r).

@Rghts Bbb, sg

Th hmn spcs bgn splttng ff smwhr btwn 100 nd 200 thsnd yrs g nt dstnct ppltn grps. Ths grps spnt th ntrvnng prd dptng t fr dffrnt scl, sxl nd physcl nvrnmnts. Th thry tht bst xplns th vdnc s tht dffrnt grps dvlpd dffrnt gntc lndscps tht r std fr th nvrnmnt n whn thy spnt th lst fw thsnd yrs. Mst f th vdnc crrntly s crcmstntl, bt th mnt s vrwhlmng.

t’s ppl lk y fr whm th trm “lft-crtnst” ws cnd, bcs y ll r n bttr thn th thr srt f crtnst.


<>D y s th cclrtr t str yr cr?

Ths s grt xmpl f hw t sm pnt ll mtphrs brkdwn.


Michael 09.29.08 at 6:19 pm


“responsible for x” = “cause of x”. Fine, but that is not what you are saying. You are saying:
responsible for x = cause of y. If you want to defend that, go ahead, but I don’t think you will convince many among the sentient.

Hogan’s analogy is correct.


racist troll 09.29.08 at 6:28 pm


Y r lrnng th fndmntl prncpl, th prm drctv s t wr, f th lbrl nd sp. lbrl cdmc wrld. ll dntfbl grps r xctly ql n vry trt.* T llw slghtst dbt bt tht t crss yr lps s t nvt hystrcl gbbrng whch, thgh t sms t rsmbl hmn spch, whn nlyzd s mr kn t smthng Jn Gdll mght hv rcrdd n th Srngt .

* Thr s pssbl xcptn** fr pl flk whs ncstrs hld frm rp, th jry s stll t whthr thy r nbrn rcsts r jst cndtnd nt thr rcsm by ‘fls cnscsnss’.

** Thr s n xcptn t th xcptn. Ths r flks wh cn b fnd n sch shrs s xfrd, bth Cmbrdgs, nd Mdsn. Whl lvng srrndd fr th mst prt by thr pl ppl, thy dn’t rlly lk t nd mk vcl prtsttns f th grtnss f dvrsty t vry trn.


Marc 09.29.08 at 6:37 pm

Asher – it appears pretty clear that you are seriously claiming that black people are not as smart as white people. Take your hijack elsewhere. There is copious scientific evidence against your hypothesis, measured in a lot of different ways. For example, defining who is “black” vs. who is “white” is cultural rather than biological. The fact that mean scores have been rising dramatically indicates a strong correlation of outcomes with environment, which means that genetic explanations are clearly not solely at play. (Yes, I know you’ll come back and pretend that genetics is just one factor among many…) More to the point, this is a discussion which has been beaten to death – at this very site, in fact – many many times, and no light will be shed in raising that particular zombie.

I can also look through your responses and posts here, and I see a certain pattern. Your #16 post had the following paragraph:
What might “human capital” mean?

Low IQ; insular community, largely related to not speaking English; a value-system that has a short-time horizon; a preference for leisure-time over working 60-hour weeks (like I work).
This is a mish-mosh of bigoted stereotypes – apparently some ethnic groups are full of lazy, stupid, impulsive people. Pray tell, I wonder which ethnic group that might be? And why is it that the ant-Mexican slurs (English was good enough for Jesus, right?) get mixed together with the anti-black ones? All-purpose scapegoating? I’d ask what you mean about different *sexual* selection pressures among different ethnic groups, but I’m pretty sure that I don’t want to know the answer…


Asher 09.29.08 at 7:01 pm


You are confusing metaphors and analogies.


your love is the sun dawning on my heart


your love is to my heart as the sun is to a flower

its not at all clear where the various references are going

The initial problem iswith your wild insinuation of Gramm as a major contributing factor to the situation. in the future I would suggeat a more sober and rigorous approach to things.


Michael 09.29.08 at 7:04 pm


Ohh. That’s a winner. Good job Asher!


ptarmigan 09.29.08 at 7:10 pm

I live in Yellowknife. We have radio, TV, and internet.


mega 09.30.08 at 6:00 am

Asher, your complete absence of self-awareness about the depths of your stupidity is a spectacle.

I… just… can’t… look… away.


sg 09.30.08 at 6:04 am

This is textbook Nasty Authoritarian White Guy here.

He says that black people don’t plan for the future, but accuses his critic of raising a “cliched objection” when this is described as “impulsive”.

Ditto when his claim black people aren’t willing to work 60 hours a week is restated as “laziness”.

Then he continues to deny that his claims about IQ have anything to do with black people being stupid.

And now, to improve it all, we have black people being “more polygynous” than white people, who are more polygynous than “asians”.

So those lazy stupid impulsive black men have destroyed your civilised banking system with their lazy, impulsive, stupid mortgage-taking, and now they’re coming for your women.

This is certainly a novel thought, Asher, did you come up with it yourself. Now, instead of talking in silly generalities, can you share with us all your knowledge on the current banking crisis? What is the relative risk of mortgage default for blacks compared to whites? How about the distribution of race among the different classes of loans? Do you even know what it is?


goatchowder 09.30.08 at 6:10 am

I’m not an economist, just an ordinary Merkin and partisan hack, trying to actually understand WTF is going on here.

So far, the simplest I can boil it down to is: side bets gone berserk.

It seems to have less to do with homes or loans than with the layers of derivatives and securitizations and credit swaps made upon those home loans. It could have been anything, tech stocks, tulips, whatever, but the problem appears to be not the original asset but all the side bets that were made on it.


mega 09.30.08 at 6:37 am

Right sg, his textbookness is banal. Nothing worth paying attention to. That’s conventionally craptastic. No, its the mix of confidence and and a highly cultivated moronitude that I find captivating.


dsquared 09.30.08 at 7:02 am

A couple of warnings:

Asher: I really would advise against writing long posts which require a lot of effort, because it means you’re going to be all the more angry when I delete them.

Everybody else – I would advise against responding to Asher at length, because you will look like a loony talking to yourself when I delete him.


Lex 09.30.08 at 7:03 am

Hey, Asher, it’d be nice if you started with something resembling evidence, instead of unfounded assertions, then maybe we’d have room for discussion. But right now you’re just coming over as bitter.

Take this for example: “Coincidentally, the percentage of sub-prime loans as a percentage of recent loans to each ethnic group almost mirrors the percentage of each group’s percentage of the population under 87 IQ: 17 percent for whites, 46 percent for hispanics, 55 percent for blacks.”

Pulled out of your ass? Or do you actually have a reputable source for that data?


bad Jim 09.30.08 at 8:02 am

Oy. I thought I was visiting Crooked Timber’s comments for some tendentious but informed insight on the major topic of the day, but it appears that I’ve stumbled into a cockroach infestation instead.


Frank 09.30.08 at 9:38 am

““Coincidentally, the percentage of sub-prime loans as a percentage of recent loans to each ethnic group almost mirrors the percentage of each group’s percentage of the population .”

Coincidently, yesterday’s fall in the Dow was 777–a magick number too! EP ers & ESP ers are brothers under the stats.


Lex 09.30.08 at 10:01 am

OK, I’m looking at USA Today, but I don’t see any IQ data. Still POOYA?


Daniel 09.30.08 at 10:21 am

I don’t know how to edit or disenvowel posts and don’t have the time or inclination to learn – if any other CT editors disagree with my decision to delete Asher’s contributions to this thread, then I “unapproved” them to the moderation queue so you can do what you like with them.


arthur 09.30.08 at 10:23 am


Stop attempting to reason with him. We don’t reason with the David Irvings of the world, because they are not interested in reason. His link does not contain the information he said it contains, the percentage thing is wholly made up. Why should you waste time dealing with a known liar?


arthur 09.30.08 at 10:24 am

Oh and dsquared, don’t just disemvowel, delete.


Ray 09.30.08 at 10:30 am

There’s a disemvowelling tool here
There was something strangely mesmerising about Asher. I did love his response to your 46 – “don’t worry about me, I can write this without engaging my brain at all! yippee!”


MarkUp 09.30.08 at 1:38 pm

I once saw a horse do something that was in hindsight real stupid. The horse had acted somewhat instinctively but it’s environment was ‘poor’. The ranched had but one option which involved a firearm. Sad. The second shot was easy to understand and comprehend. The 6th thru 15th shots however would have mystified [had they in reality occurred].

Did Cheney’s redundant repetition of “WMD” make them appear in Iraq?
Repetition works and not always in a good manner. It would be one thing if whoever had made use of substance and or even coherence. Calling in Hazmat for a dirty diaper pail, while tempting at times, may reflect more on the caller than the soiler of cloth.


Donald Johnson 09.30.08 at 2:48 pm


Slocum, I’m mostly ignorant on this topic, but I think I can answer your strictly partisan point. Partisan Democrats will not want to say that the Clinton Administration may have supported policies that helped cause the current disaster, but not all lefties are partisan Democrats. One of the standard gripes among lefties about the Clinton Administration was that it was too close to Wall Street.


MQ 09.30.08 at 2:53 pm

Slocum at 33: I actually agree that it’s hard to assign completely clear political blame for this, in the sense of Republican / Democratic. But I think it *is* pretty easy to assign clear ideological blame. And the Republican party is the party most profoundly influenced by the ideology of market worship / deregulation we’ve seen take hold in the U.S. since 1980 or so. It affected the Democratic party a lot as well, but they are a better place to start in rolling it back.


MQ 09.30.08 at 2:54 pm

Hadn’t seen Don’s point when I posted, but it accords well with mine.


Sebastian 09.30.08 at 3:47 pm

If the change to mark-to-market accounting is responsible for as much of the immediacy of the crisis (making it impossible to have a longer wind-up as the housing market wound-down) as it seems to, that wasn’t the fault of deregulation.

Now mark-to-market is exactly the type of ‘transparency’ regulation that even most conservatives or libertarians would support. I certainly would have supported it if asked a year ago. So this isn’t really a neat ideological point. Just saying that unforseen consequences can be a bitch.


Righteous Bubba 09.30.08 at 3:49 pm

I would have been so much more productive to have had Business Wars instead of Science Wars.


Righteous Bubba 09.30.08 at 3:50 pm



MarkUp 09.30.08 at 7:57 pm

#33 “Where is the evidence Democrats fought valiantly to reign them in, only to be thwarted by the Bush administration? Warren Buffett gets full credit for prescience on CDSs, but what is the evidence that Democrats deserve the same?”

The evidence is weak. There is plenty of ‘blame’ that can be levied. Of course in ’96 when the big swing in CDS’s began we were enjoying the new under sheriff’s ‘revolution’. The Sheriff was having a growing and difficult time using his badge’s authority. In Y2k we got a new Sheriff supported by the under sheriff and deputies who were vocally well homogenized in the ‘less is more’ approach to regulation. None of this is to say that if Clinto did not have the issues of many forbidding -gates he’d of done any more than he did. Removing the feline scent from a maze will alter the results of the mice placed within.


Slocum 09.30.08 at 9:00 pm

But I think it is pretty easy to assign clear ideological blame. And the Republican party is the party most profoundly influenced by the ideology of market worship / deregulation we’ve seen take hold in the U.S. since 1980 or so. It affected the Democratic party a lot as well, but they are a better place to start in rolling it back.

No — this is ridiculously weak. The atmosphere of deregulation is responsible? With no proposed mechanism or details or proposed regulations that were — fatally — rejected. C’mon, that’s B.S. It may turn out to be effective politics this season, but intellectually, that’s pure snake oil.

One reason not to think that the unique ‘deregulation mania’ in the U.S. was the underlying cause (even in some undefined, atmospheric sense) is that EU markets seem to be in the early stages of coming unglued due to housing bubbles bursting over there. Can you tell me where are the finger prints of Republican laissez faire-ism in those markets?


Lindsay 09.30.08 at 9:15 pm

Can someone teach racist troll to type or get him a new keyboard!


J Thomas 10.01.08 at 12:05 am

Let’s see. Since 2000 US GDP has risen about 25%.

It’s now about $14T. Of that, housing is about $1.7T and finance/insurance is about $1.1T.

What if it were to turn out that our housing is not nearly as valuable as estimated, and our finance/insurance instruments are not worth very much? All those weird derivative things that nobody understands, and their value is what somebody will pay for them….

It might turn out that GDP hasn’t actually increased at all. It might have gone down, if you readjust the values to what they’re worth today.

If GDP hadn’t increased then all the calculations we make against GDP would be off. Like, people say that our military spending isn’t really important, it’s only 4% of GDP. We used to spend a lot more than that, why during WWII it was a whopping part of GDP. If we could afford 6% of GDP all through the war surely we can afford 4% now. But if GDP is only 80% of what we thought, then it’s 5% of GDP, not 4%.

Similarly people argue that the national debt is really not out of line, it’s only $10T while GDP is $13T. But that doesn’t look as good if GDP is actually only $10T.

And they argue that US external debt of $13T isn’t so bad when US GDP is also $13T. Etc.

If you want to estimate the part of GDP from automobiles, the methods are reasonably clear. You can count the cars produced, and what they sold for. You can count the auto workers paid etc. Hard to get it far wrong without some fraud.

But if you want to estimate the value of the stock of housing, it’s murkier. It’s worth what somebody would pay for it if it was for sale. And the value of a house’s mortgage depends on the chance of default. And the value of derivative instruments that insure against the chance of default depends heavily on the rate of default. Etc.

The atmosphere of deregulation is responsible? With no proposed mechanism or details or proposed regulations that were—fatally—rejected. C’mon, that’s B.S.

If you’re going to estimate the value, shouldn’t it be by some standard way? That’s what government regulation was supposed to do. But it didn’t. New kinds of fraud that didn’t get stopped.

It seems plausible to me that the policy of not regulating bad practice had a lot to do with the tremendous increase in claimed value for things that at the moment have no buyers. I personally am not ready to prove it, but it doesn’t sound like BS to me.


NPOV 10.01.08 at 2:30 am

Not just an “atmosphere of deregulation” – the WSJ documented the history of lending companies successfully lobbying for less regulation over the last few years here:


Alex 10.01.08 at 11:39 am

How is housing accounted for in GDP? The standard methods are income, output or sales.


MarkUp 10.01.08 at 12:56 pm

“How is housing accounted for in GDP?”

Through private residential investment and consumption spending on housing services. Residential investment includes construction of new single family and multifamily structures, residential remodeling, production of manufactured homes, and brokers’ fees.

Consumption spending on housing services includes the amount of rent paid by tenants, the imputed value of housing services to home owners, and the amount paid to hotels by households for housing services.

Combined, in 2007 it was about 15%.

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