Tag Archives: housing crisis

An important article to read about another example of the fading rule of law in America

Summary:  An important article at Harper’s, one every American should read, about the Mortgage Electronic Registration Systems (MERS), created in 1995 by the banks to circumvent property and mortgage laws in the US.

“What’s happened is  that, almost overnight, we’ve switched from democracy in real-property  recording to oligarchy in real-property recording. There was no court  case behind  this, no statute from Congress or the state legislatures.  It was accomplished in a private corporate decision. The banks just did  it.”
— Christopher Peterson (Prof Law,  U Utah)

Stop Payment! – A Homeowners’ Revolt Against the Banks“, Christopher Ketcham, Harper’s, January 2012 — Open PDF’s are online at Scribd (until it’s taken down). Hat tip to Barry Ritholtz.

Other posts about the housing bubble

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More use of the big lie: shifting the blame for the housing crisis

Summary: Weakness always produces aggression by the strong, and we have chosen to be weak.  In America the mode of conflict is information.  Conservatives have worked long and hard on their information programs (aka propaganda).   Their decades of skillfully conducted work have earned large rewards, advancement of their policies to the benefit our ruling elites.  This is another chapter in a series about the origins of the housing crisis (links to the others appear at the end).

“Facts are stubborn things,” said he, “and whatever may be our wishes, our inclinations, or the dictates of our passions, they cannot alter the state of facts and evidence.”
— John Adams argument in defense of the British soldiers accused in the Boston Massacre, 4 December 1770

Propaganda works through many channels. New viewpoints seep into people’s minds through repetition. Large scale lying saturates our mindspace, and keeps the opponents playing defense — the hopeless game of responding to the latest lies. Today we examine a few of a thousand examples seen during 2012.  Other posts in this series:

  1. Facts are an obstacle to the reform of America, 20 October 2011
  2. Our minds are addled, the result of skillful and expensive propaganda, 28 December 2011


  1. Paul Krugman sets the stage
  2. Joe Nocera dares to explain the big lie
  3. Other posts about the origin of the housing crisis
  4. Other posts about propaganda

(1)  Paul Krugman sets the stage

Joe Nocera Gets Mad“, Paul Krugman, New York Times, 24 December 2011 — Excerpt:

Today Joe once again goes after the Big Lie — the claim that Fannie and Freddie caused the crisis — and drives home the point that the people advancing this story aren’t just wrong but are acting with intent, engaged in deliberate deception …

Basically, Joe is arriving where I’ve been since 2000: what’s going on in the discussion of economic affairs (and other matters, like justifications for war) isn’t just a case where different people look at the same facts but reach different conclusions. Instead, we’re looking at a situation in which one side of the debate just isn’t interested in the truth, in which alleged scholarship is actually just propaganda.

Saying this, of course, gets you declared “shrill”, denounced as partisan; you’re supposed to pretend that we’re having a civilized discussion between people with good intentions. And you’re supposed to match each attack on Republicans with an attack on Democrats, as if the mendacity were equal on both sides. Sorry, but it isn’t. Democrats aren’t angels; they’re human and sometimes corrupt — but they don’t operate a lie machine 24/7 the way modern Republicans do.

(2)  Nocera dares to speak the truth about the big lie

The Big Lie“, Joe Nocera, op-ed in the New York Times, 23 December 2011 — Excerpt:

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Who caused the housing crisis? Why do people not believe all the studies?

Summary:  Among our most serious problems is the success of well-funded engines of propaganda at manipulating public opinion, making effective public policy reforms almost impossible.  Here we examine one example, convincing Americans that the government caused the housing bubble.  This is a follow-up to Facts are an obstacle to the reform of America and Who should we blame for the mortgage crisis?

People become easily led once they are trained to believe appealing lies.   Not just the occasional myths in the belief structure of every political movement, such as the Left’s doomster exaggerations about global warming, and their faith in the phantasm of the Social Security Trust Fund.  Sometimes a movement’s leaders find that their followers have abandoned their skepticism, lost confidence in society’s experts, and become credulous about stories that confirm their biases.

It’s a national tragedy that this has happened to America’s conservatives.  Their leaders investment large sums wisely and patiently, building a structure of plausible-sounding institutions to propagate well-constructed propaganda.  After years of indoctrination, gradually they’ve spun increasingly wilder falsehoods.  From misrepresentations about the adequacy of western europe’s healthcare to outright lies about Obama’s religion and citizenship.

So most discussions about public policy, especially economics, devolve into a debate about interlocking layers of falsehoods, exaggerations, and misrepresentations.  Worse, conservative positions have become solidified — immune to facts.  Obama’s citizenship is the extreme example.  Here we look at another:  the government’s role in the housing bubble and collapse.

Below are links to reports that examine the role of the and the 1977 Community Reinvestment Act (CRA) and Government-sponsored enterprises (GSE).  I am aware of no analytical works coming to conclusions other than those shown.  There are many books and articles blaming the government, mostly anecdotal in nature — and not remotely similar in depth of data and analysis to these studies.  Yet to no effect, as faith-based conservatives hold to comforting stories told them by well-funded engines of disinformation.

Introduction to the subject

(1)  An excellent introduction to the subject: “Did Fannie Cause the Disaster?” Frank Partnoy (Professor of Law and Finance at the U of San Diego) and Jeff Madrick, New York Review of Books, 27 October 2011

(2)  One of the two most extensive studies done today: Report of the Financial Crisis Inquiry Commission, a bi-partisan inquiry, January 2011 — Excerpt:

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