Tuesday, March 12, 2013

A Bright and Shiney Lie

Everything you hear about economics in America is a lie. It has to be - the truth having nothing to do with the entrenched cultural narratives we use to distract ourselves from our own inevitable deaths. One of the most insidious lies is that lazy minorities caused the housing crash. Really, you can't fix stupid...

But it's an adaptive stupid, as Darwin would say. Blaming "lazy people" defaulting on their mortgages fits in with the dominant brainwave that hard work is worth a damn in this country. And it's much easier to get into than the reality of securitized debt. You need to understand that to really understand the crash of 2008.

Here's how it worked - banks made loans to whoever, however, and whenever they could and then chopped up their side of those bargains and sold 'em off in much the same wild way they did the loans. They were making money coming and going from commissions on the loans to bidding on the debt obligations so they had no incentive to do the loans properly. It's not like they were gonna get stuck with the default - but the rest of the country was.

And that could still fit the lazy black people meme being forced by all the morons. Folks did indeed default on their loans, maybe because they were irresponsible, but the degree to which it happened indicates a national standard - or lack thereof - of loan procedures that discouraged wise business practices.

"Hold on!" the idiots say. "The Community Reinvestment Act forced the banks to make those bad loans!" Yeah, the Big Bad Gub'mint commanded them to make buckets of cash...

Except that's not how it worked at all. Not in any way, shape, or form. There's as much truth to that as the claim that 9-11 was an inside job and for proof of that you don't need to go any further than my own bank. Cardinal Bank got sued a couple years ago for refusing to loan to low-income families in DC. The suit explicitly cites the act all the Reagan-sucking dweebs insist is the real culprit behind the crash. Cardinal argued they couldn't in good faith have made these loans because the recipients would never have made the payments.

And the bank won.

So there's a court case in which a bank refused to make loans and not even the hated Give Black People Money Act could bring them to heel. And when you dig into it, you find this is pretty damn common. So that Act counts for exactly fuck all in our continued financial crises.

Rather, we've got systemic corruption of the financial sector. You can't even play the revolutionary and blame the basics of capitalism as the process you've just seen laid out is fundamentally criminal - making loans in bad faith and then foisting the ownership of said loans onto others, so they get to suck on the inevitable default. That's the definition of fraud but it's clearly not enough fraud for the banking industry as they've since been trying to foreclose on properties they don't own anymore.

It's a grotesque, criminal enterprise... but it gets a pass because we want to believe the lie. We want to believe hard work will make our dreams come true. We want to believe the unfortunate are responsible for their own failures, because then it could clearly never happen to us. We want to believe we matter too much to ever be a statistic.

We don't. Deal with it.

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