How to Buy the Government You Want

Here is an IMF (International Monetary Fund) report on corruption in the United States (anybody out there remember the howls of 'culture of corruption' when East Asia had their meltdown in 1998?). Here's the American version of a culture of corruption. This is the abstract of the report:

Has lobbying by financial institutions contributed to the financial crisis? This paper uses detailed information on financial institutions’ lobbying and their mortgage lending activities to answer this question. We find that, during 2000-07, lenders lobbying more intensively on specific issues related to mortgage lending (such as consumer protection laws) and securitization (i) originated mortgages with higher loan-to-income ratios, (ii) securitized a faster growing proportion of their loans, and (iii) had faster growing loan portfolios. Ex-post, delinquency rates are higher in areas where lobbying lenders’ mortgage lending grew faster. These lenders also experienced negative abnormal stock returns during key events of the crisis. The findings are robust to (i) falsification tests using information on lobbying activities on financial sector issues unrelated to mortgage lending, (ii) instrumental variables strategies, and (iii) a difference-in-difference approach based on state-level lending laws. These results suggest that lobbying may be linked to lenders expecting special treatments from policymakers, allowing them to engage in riskier lending behavior.

All of the above is blank economists jargon for greed, corruption, and malfeasance at the highest levels.

For those who prefer pictures to words, here is a graphic showing rampant corruption under the Bush administration:



Did the economy grow by 30+% over these 7 years? Nope. But the bribes used to buy politicians sure grew! While the average worker slogged through another decade with no real rise in the standard of living, the fat cats were in a frenzy buying and selling politicians. At least that was a "growth economy"!