Addressing Issues at a Level His Audience Can Understand
In order to shift blame from the Bush Administration for the crisis in banking and financial institution that was a significant cause of The Great Recession, Conservatives have had to fabricate and invent many things. Now a columnist for the Wall Street Journal has gone all the way, citing a movie as representing some of what really happened.
Consider the recent thriller "Margin Call," depicting the frantic response at an investment bank during the mortgage-backed securities crisis of 2008:
See what the Conservatives have to do is crate the fiction that it was Rep. Barney Frank (D, Ma) who was the cause of all of the problems, even though when he was a minority member of the House of Representatives he had no, absolutely no authority or power. But that does not stop Mr. Crovitz.
The same was true for the lawmakers and regulators who created the problem. Rep. Barney Frank, who last week announced his intention to retire from Congress, will be remembered for his comment in 2003: "I want to roll the dice a little bit more in this situation towards subsidized housing." He got what he wanted: By 2008, half of the 54 million mortgages in the
were subprime and other low-quality loans. U.S.
Mr. Crovitz then goes on to blame regulation for the problems, yes regulation that was trying to rein in the abuses. That is what caused the abuses.
rules" governing big banks call for a significant amount of bank capital to be held in supposedly low-risk investments such as mortgages and mortgage-backed securities. When these blew up, it took down many banks. Basel
rules were implemented to try and force banks to be adequately capitalized. But that fact doesn’t fit the story, so it has to be altered. Basel
Likewise, the losses at MF Global were facilitated by
rules based on the assumption that sovereign debt has no risk. But the debt of Basel Greece is not as sound as the debt of . Mr. Corzine and his colleagues should have done better homework, but the Switzerland regulators made their investments seem reasonable. Basel
Now The Dismal Political Economist is about as harsh a critic of Mr. Corzine as anyone, but the man was not stupid. He knew there was risk in the debt of the weaker European countries, in fact that is what was integral to his investment strategy (which it turns out, would have worked very nicely had he had sufficient capital).
But for the WSJ editorial and column writers, there is no grater source of knowledge than the movies. And so they have to return to that source, after all, it’s something they can see with their own eyes.
The New Yorker's David Denby says "Margin Call" is "easily the best Wall Street movie ever made." It portrays a real Wall Street of people trying to make a killing, or at least a living. They operate in a highly complex, highly regulated environment that can spin out of anyone's control.
So the next time your son or daughter feels they need financial education, save the cost of paying for their MBA or Ph. D. and just give them $10 for a ticket to the local multiplex. Then they will know as much as the people who write for the Wall Street Journal.