I'm no great fan of The New York Times columnist Tom Friedman but he had an excellent point today about America's rot capitalism and the global meltdown it triggered. Friedman brilliantly captures what really went wrong as "I'll Be Gone" capitalism:
I have no sympathy for [disgraced investment banker Bernie] Madoff. But the fact is, his alleged Ponzi scheme was only slightly more outrageous than the “legal” scheme that Wall Street was running, fueled by cheap credit, low standards and high greed. What do you call giving a worker who makes only $14,000 a year a nothing-down and nothing-to-pay-for-two-years mortgage to buy a $750,000 home, and then bundling that mortgage with 100 others into bonds — which Moody’s or Standard & Poors rate AAA — and then selling them to banks and pension funds the world over? That is what our financial industry was doing. If that isn’t a pyramid scheme, what is?
Far from being built on best practices, this legal Ponzi scheme was built on the mortgage brokers, bond bundlers, rating agencies, bond sellers and homeowners all working on the I.B.G. principle: “I’ll be gone” when the payments come due or the mortgage has to be renegotiated.
The narrative of the rightwing is true to form - duck the blame and pin it on somebody else. Their target has been visible minorities who got a lot of subprime mortgages. That, in turn, allows them to place the blame on Carter and Clinton. But, from the top right on down, they're liars and they're racists who use visible minorities for whipping boys.
There were bad subprime mortgage loans but there were relatively few when the system worked as it was intended - when mortgage lenders held their mortgage securities, when those lenders actually had to retain the risk. When that happened they didn't make reckless subprime loans because who is going to loan money on a sure loser?
It was the far right that perverted the mortgage lending system by allowing mortgages to become a trading commodity and greasing that trade with credit default swaps. That lies squarely at the feet of the Bush administration and prominent Republicans like former senator Phil Gramm. They alone ushered in "I'll be gone" capitalism and they are responsible for the havoc it wrought on America and just about every other nation on the planet. But, true to rightwing form, they don't have any intention of owning up to what they've done, of taking "responsibility" - that wonderful quality they're so quick to find lacking in others. Why should they when they can stick the blame on visible minorities?
If America is ever to restore its former greatness, it will have to purge itself of this rightwing malignancy.