Unconcerned with what talking heads are calling "the mess we're in," GOP (grand old pussycat) leader Baby Cakes shares the platform with the Republican base ("Ivory" elephant memento of our Kenyan Holiday last century).
"To paraphrase John Maynard Keynes, it is much easier for a man to fail conventionally than to stand against the crowd and speak the truth," writes the WSJs Jeremy J. Siegel, explaining how "bad risk management, and a failure to understand the high risks of an overheated real-estate market [are] the root cause of our current problems":
We can argue about who was responsible for the overleveraging of the financial industry and the poor-to-nonexistent credit standards that prevailed in real estate. Certainly the regulatory agencies, including the Federal Reserve, should have sounded a warning. But the lion's share of the blame must go to the heads of the financial firms that issued and held these flawed credit instruments and then, in many cases, "doubled down" by buying more when their price was falling.
It is shocking that firms that withstood the Great Depression are now failing in what economists might not even call a recession. But their failure was not caused by lack of demand for their services. It was caused by management's unwillingness to understand and face the risks of the investments they made. The names of the players will change, but the future growth of the financial services industry is assured.
But don't confuse John McCain or Barack Obama with the facts. They've got some people out there that need to be fooled all of the time.
Forget about Government bail outs. Just keep rubbing behind that ear.
And what to make of the Fed's $85 billion rescue last night of American International Group? Another one of those entities "too big to fail"? Don't ask us. We're with Fox fox Martha MacCallum, who tells viewers "I don't know exactly what to make of these developments, but I do expect the people who are running for president to know more than I do." No such luck. As we blogged last winter, Senator McCain revealed his "contempt for the business of America in a schoolboyish attempt to cut his better, Mitt Romney, down to size" with his supercilious "He bought and sold, and sometimes people lost their jobs." Mitt's doing his best to shore up McCain's econo creds, but it's an uphill battle. Moving on to Obama, we agree with fellow Pajamas Media Network Blogger Webutante, who asks rhetorically "Who and What are really to blame for the current banking and mortgage crisis? Candidate Obama hasn't got the faintest clue." Both candidates could learn something from her personal insight into what talking heads are now calling "the mess we're in" that, in her words, "all began in Washington back in the 90s":
Several years after [my father] retired as chairman [of a small-town bank that for 120 years had had "a reputation as good as gold" with a record of making good loans at about the rate of +90% or more], the Feds in the Clinton Administration came in and started dictating to this bank as well as banks across America: they had to start making a certain percentage of bad loans even if management knew the loans would never be repaid. In essence the bank was told to start a policy that in effect was the same as giving a portion of its money away. If my hometown bank failed to comply with this insane new banking policy, it would face stiff penalties from the Feds.
Then, the Feds came in and strongly urged another insane policy: my hometown bank and over 8,000 other banks across this nation were strongly urged to buy millions of dollars of Fannie Mae preferred stock.
I and my fellow stockholders in this small, conservatively run bank are going to eat the excesses of $5,000,000 of the Fannie Mae preferred. We'll do our part to take the hit from others' gross mismanagement far away in D.C. and in the investment banks that are falling.
To hear Nancy Pelosi tell it, of course, the who, me? Democrats' hands are clean:
Pelosi (D-Calif.) ripped President Bush's "mismanagement" of the economy and a lack of regulation that led to the current situation.
"I think the American people have had it with this situation where the middle-income people in our country are not protected from the ramifications of the risk-taking and the greed of these financial institutions," Pelosi told MSNBC.
"John McCain said that this is a result of overregulation by the Democrats in Congress," she added. "Either he doesn't know what he's talking about or he's misrepresenting the facts as he knows them. But it's simply not true."
Projecting again, Mrs. Pelosi?
Update: Looking for something that's REALLY too big to fail? Modulator's Friday Ark #209 is fully stocked with all things bright and beautiful.