Squaring the Culture




"...and I will make justice the plumb line, and righteousness the level;
then hail will sweep away the refuge of lies,
and the waters will overflow the secret place."
Isaiah 28:17

10/10/2011 (10:08 am)

Occupy Washington

An acquaintance of mine made the observation that no mention of Occupy Wall Street should fail to mention the collusion and corruption that they are protesting. This guy thinks that Wall Street is responsible for the woeful economic condition of the US. He’s an idealist, and also, in my estimation, a dupe. The real cause of the meltdown is in Washington — and so is the real cause of Occupy Wall Street.

I have some expertise in finance, and did a fair amount of digging during the meltdown in 2008 and 2009 to be sure that I understood the underlying causes. There was collusion, and Wall Street was complicit with it at the end. Suffice to say, it’s mostly the result of ill-formed government policy aimed at noble-sounding goals, with some criminal profit-taking in the mix — from politically-connected financiers in Washington.

The important thing to remember is that buying politicians does not benefit anybody so long as government is not involved in the market. If Washington was not overreaching into financial markets, there could be no collusion between government and finance. That’s one of the main reasons why some of us are so adamant about reducing the size and reach of government — and why any protest about it should take place in Washington.

Occupy Wall St. will not focus on Washington, though, because Washington organized it. My acquaintance is idealizing the protesters, but I’m pretty sure they’re astroturfed — that is, they’re organized and orchestrated by a political machine with political goals.

The Tea Party, a genuine grass-roots movement, rose in clear opposition to the bailouts; that was the real grass-roots reaction to the collusion and corruption. It threatens to remove power from entrenched interests in Washington, and in early elections seems to be having an enormous effect that Washington cannot control. The President and his party cannot retain power in the 2012 election without neutralizing the Tea Party, and all of their efforts to demonize and marginalize it — and there have been several — have failed.

So the President did the one thing at which he seems genuinely competent: he organized a protest. The goal is to seize the news cycle, steal the sincere initiative from the Tea Party, and give the Democrats a chance to retain power in the 2012 election. Occupy Wall Street is, in brief, the Democrats’ Anti-Tea-Party.

The protesters don’t realize it; they hold debates in the street discussing what they’re there for, which means that they don’t have a clue. But Progressive street activists do what they’re told. If political activists suggest a demonstration on Wall Street, Progressives demonstrate on Wall Street. They don’t know why; they just do it. Listen to their words, and you’ll hear lots of references to 1968 and the Vietnam war. They’re idealizing themselves. They do it on the fly, ad hoc, because they genuinely don’t know why they’re protesting.

But their organizers do know why they’re there; they’re there to neutralize the Tea Party. The Left has always known how to manipulate the crowd. It’s how they obtain and keep power. They sow the seeds of the protest in the right places, the echo chamber starts, the people move, and voila! A movement.

The real demonstrations not only belong in Washington, they have already taken place; that’s what the Tea Party was, and is. Occupy Wall Street is the response to the Tea Party by the entrenched, political interests who stand to lose if the Tea Party succeeds.

With that in mind, let’s take a moment to review why the meltdown occurred in the first place.

The Meltdown: Let’s Remind Ourselves

There are almost a dozen separate causes of the financial collapse of 2006. Yes, 2006. FNMA artificially postponed the most direct effects for 2 years by acting as the entire secondary market for mortgage loans, doubling its holdings in that brief, 2 years. They amplified the worst effects by doing so.

The Community Reinvestment Act, during the Carter administration, began as a limited initiative affecting only inner city banks. It was the first direct cause of the rise in housing prices, but it was small.

The CRA became national policy under the Clinton administration, when FHA was instructed to loosen their loan criteria and $1 trillion was dumped into the secondary market for mortgages by the federal government. Suddenly, the loose lending standards of the CRA were no longer small. Loose lending + instant liquidity = increased demand for housing. Housing prices started rising rapidly.

Then the Fed set interest rates artificially low in 2001 to counter the recession caused by the Internet bubble collapse, the Enron/Worldcom/auditing crisis, and 9/11. The favorable mortgage rates and eagerness to lend generated a whole lot of speculation in housing, driving prices up even more. The Democratic party prevented any serious investigation of FNMA and FHLMC, while they provided easy liquidity for marginal loans — this is where the criminal collusion occurred. Government-subsidized rating agencies completely missed the weakness in mortgage securities that infiltrated due to the relaxed lending criteria, and new federal regulations in Sarbanes-Oxley forced banks and financial institutions to invest artificially large sums in AAA-rated securities (look up “Recourse Rule.”)

When land prices started dropping, as the price of any artificially-inflated commodity must, major holders of mortgage-backed securities were forced by yet another Sarbanes-Oxley provision (“mark to market”) to write down the value of their holdings, and then to try to borrow enough to meet federal reserve requirements. This sucked all the air out of the capital markets. Most of the financials couldn’t get the loans to cover their reserve requirements, so they had to declare insolvency. Then the bailouts started — more collusion.

Count the number of times “federal” gets mentioned in that thumbnail description. This collapse was manufactured by brainless federal policy. The claim by progressives that the collapse was caused by “a failure of capitalism” and “deregulation” is a joke without a punchline; the economists saying it know they’re lying, and most of the people repeating it are too ignorant to understand why they’re making idiots of themselves.

Yes, we can complain about the hippies protesting capitalism, but that’s not what needs to be said here. What needs to be said is that Occupy Wall Street is the Obama White House’s response to the Tea Party, and that it is an organized, political movement that represents the political interests that caused the collapse in the first place. The protesters are helping the very people they protest. The real, public objection to the corruption that caused the meltdown in 2008 is the Tea Party.

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4 Comments »

October 10, 2011 @ 6:17 pm #

http://www.theblaze.com/stories/occupy-wall-street-is-creating-jobs-astroturf-jobs/

$17.5K starting salary to be a professional protester for the Left in New York City.

But this is a spontaneous demonstration. :)

October 20, 2011 @ 10:09 am #

What I find amusing is that Pelosi declared the Tea Party to be Astroturf, organized by the GOP. Now the story is that the OWS is “grassroots – just like the Tea Party”. Was she lying then or is she lying now? Both, I’m guessing. It seems to come naturally to her. But maybe I’m being unfair – maybe she (they) just can’t conceive of the populace (the sheep) acting on their own.

They also tried – and failed – to start a “Coffee Party” or Club, or Klatch, or some such. That was supposed to be “grassroots” but it was organized by a party lackey.

The Tea Party scares them. No doubt.

November 15, 2011 @ 1:22 am #

Crap! I thought I saw another post here I wanted to reply to, and came back and it was sanitized.

November 15, 2011 @ 1:22 am #

Or accidentally deleted?

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