The Story of Christmas as Told by the Grinch

The Republican version of Christmas as related by Paul Krugman via his NY Times op-ed column:

The bipartisan Financial Crisis Inquiry Commission was established by law to “examine the causes, domestic and global, of the current financial and economic crisis in the United States.” The hope was that it would be a modern version of the Pecora investigation of the 1930s, which documented Wall Street abuses and helped pave the way for financial reform.

Instead, however, the commission has broken down along partisan lines, unable to agree on even the most basic points.

It’s not as if the story of the crisis is particularly obscure. First, there was a widely spread housing bubble, not just in the United States, but in Ireland, Spain, and other countries as well. This bubble was inflated by irresponsible lending, made possible both by bank deregulation and the failure to extend regulation to “shadow banks,” which weren’t covered by traditional regulation but nonetheless engaged in banking activities and created bank-type risks.

Then the bubble burst, with hugely disruptive consequences. It turned out that Wall Street had created a web of interconnection nobody understood, so that the failure of Lehman Brothers, a medium-size investment bank, could threaten to take down the whole world financial system.

It’s a straightforward story, but a story that the Republican members of the commission don’t want told. Literally.

Last week, reports Shahien Nasiripour of The Huffington Post, all four Republicans on the commission voted to exclude the following terms from the report: “deregulation,” “shadow banking,” “interconnection,” and, yes, “Wall Street.”

When Democratic members refused to go along with this insistence that the story of Hamlet be told without the prince, the Republicans went ahead and issued their own report, which did, indeed, avoid using any of the banned terms.

That report is all of nine pages long, with few facts and hardly any numbers. Beyond that, it tells a story that has been widely and repeatedly debunked — without responding at all to the debunkers.

In the world according to the G.O.P. commissioners, it’s all the fault of government do-gooders, who used various levers — especially Fannie Mae and Freddie Mac, the government-sponsored loan-guarantee agencies — to promote loans to low-income borrowers. Wall Street — I mean, the private sector — erred only to the extent that it got suckered into going along with this government-created bubble.

Go read the whole article.

The Republicans are eagle-eyed. Only they can see how Fannie Mae and Freddie Mac were able to connive to create real estate bubbles in Ireland, Spain, Latvia, UK, and elsewhere. I suspect that the Republicans can also vouch that the moon is made of green cheese and that the Apollo landings were a fraud perpetrated on the American people by Democrats as part of a vast government conspiracy to waste taxpayers dollars that would have better been spent giving tax breaks to billionaires like Howard Hughes, you know, the guy who lounged naked in his bed 24x7 afraid of cooties and using his Mormon mafia to keep the world at bay.

I'm shocked by how the Republicans held back in their analysis. They really should have ripped the covers off the fraud perpetrated on the American people by government. All good Republicans know that no good can come of government. Having government regulate the banks simply prevents us from instantly becoming billionaires as the economy goes into hyper-drive under the freedom of a no-holds-barred economic system. The financial crisis was not a banking problem. It was an oppressive regulatory environment problem. To put it simply: this problem was caused by having laws that restrict banks to only lawful behaviour.

The Republicans should demand complete deregulation of the banks. If banks could simply print money -- like in the good old days of the Continental Congress and before -- then there would have been no crisis. When the sub-prime loans went bad because indigent people couldn't afford the NINJA mortgages on their million dollar homes, the banks could have simply printed money to cover the loss! Problem solved.

In fact, if government would just get off our backs and let all of us print our own money, we could all be billionaires. No... even better... we could all be zillionaires!

OK... so we aren't going to get the Christmas we deserve, but the Republicans are trying. Here's more from Krugman:

Last week, Spencer Bachus, the incoming G.O.P. chairman of the House Financial Services Committee, told The Birmingham News that “in Washington, the view is that the banks are to be regulated, and my view is that Washington and the regulators are there to serve the banks.”

Forget Obama, this is "hope you can believe in". The Republicans are promising us that they will step back, remove the onerous regulations, put on their livery, and then busy themselves serving mint julips to the Wall Street bankers. The hopes and dreams of bankers bloom in glorious technicolour. This is the proper role of government. Serve the banks!

And the Grinch has so much to teach and tell us...

In the end, those of us who expected the crisis to provide a teachable moment were right, but not in the way we expected. Never mind relearning the case for bank regulation; what we learned, instead, is what happens when an ideology backed by vast wealth and immense power confronts inconvenient facts. And the answer is, the facts lose.

Forget the kiddies in bed asleep with dreams of sugar plums dancing in their heads. Bankers have bedded down for a long winter snooze with Congress busy serving up tax cuts and deregulation and the promise of even greater bubbles and busts for everyone this coming Christmas!