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rex murphy

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Well-known member
Dec 11, 2009
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America destroying itself from within

Jul 16, 2011 – 8:30 AM ET | Last Updated: Jul 16, 2011 2:37 PM ET

If America falls, it will not be from external enemies. It will be by her own hand. That is the inescapable conclusion one carries away from a reading of Reckless Endangerment, an account of the ferocious financial crisis that exploded in 2008 and through which, to this very day, the United States is still struggling to find safe and solid ground. It surely isn’t over yet. Witness the current tussle between the White House and the Republicans on whether or not to “raise the debt ceiling,” which is already over the incomprehensible level of $14-trillion.

First, a note about Reckless Endangerment’s authors. They are, respectively, Gretchen Morgenson, a Pulitzer Prize-winning New York Times business reporter, and Joshua Rosner, a financial analyst — solidly competent and authoritative both. Reckless Endangerment does not come, in other words, out of the wild territory of hyper-partisanship or the backwaters of conspiracism.

Any person with a regard for the United States, or with some surviving faith in the virtues of representative democracy, will finish this book severely angry. It’s a good game to play, should you start to read it, to keep count of the number of times you lay the book down in exasperated wonder that the American system could have been so twisted, so abused and so turned against itself.

What brought on the sub-prime crisis, as the meltdown of 2008 has become known? What brought about the worst crash since 1929, impoverished millions, tipped the government of the world’s most powerful country into near window-ledge panic, pushed its Treasury into unprecedented outlays to forestall absolute collapse and left most of America with an almost broken faith in the integrity of its financial institutions and those who preside over them?

The most obvious villain is the one we all know. Wall Street is everything its wildest detractors want to label it.

It is a dog of greed and self-interest. The investment houses, the brokers, the great wizards of the street: Once the great sub-prime market began to swell, and once the great tranches of excessive earnings and those wonderful bonuses began to fill, they abandoned all scrutiny, flouted their own best practices and pushed the ever more risky market with all the adrenalin that hypergreed can supply.

But equally deserving of blame are the two federal institutions somewhat infantilely known (from a phoneticization of their acronyms) as Fannie Mae and Freddie Mac — whose ostensible purpose is to expand home ownership by providing a buyer for mortgage-backed securities. Originally, these entities were designed in 1938, in the aftermath — irony alert — of the Great Depression. By the early 1990s, they had mutated into weird, almost autonomous, speculative, rules-defying and ruthlessly aggressive money-making machines for the benefit of the handful of executives who ran them.

This space does not have length enough to tell how Fannie Mae and Freddie Mac were so thoroughly hijacked. The accounts given in Reckless Endangerment of executives James Johnson and Franklin Raines, just to pick two examples, are astonishing. These two were/are monsters of rapaciousness and arrogance. They so brazenly used the truly vast resources of their mortgage retailing to launch public relations campaigns, hire relatives of the politicians who oversaw them, fund lobbyists by the dozens, and orchestrate fake campaigns of “public support” every time two or three brave regulators began the Sisyphean task of calling them to account.

Reckless Endangerment tells us which elected officials did their bidding. If there is ever a Mount Rushmore for hypocrites, the face of Democratic Congressman Barney Frank — Fannie Mae’s friend in every sordid scrape (until nothing could be hidden anymore) — should be the first to go up. It was the complaisance and complicity of elected politicians like him that enabled Fannie Mae and Freddie Mac to achieve the power they did, to violate so utterly their own charters, to defy and slander their regulators (they set rumours afloat that one honest overseer was having “mental problems”) as long as the mortgage giants tossed funds into their political kitties, gave them ribbon cutting ceremonies for “minority housing,” and greased their re-election efforts.

The real story of Reckless Endangerment is more a story of democracy corrupted than it is a story of financial fraud. It is a story of America’s great wounding of herself. And even now, with this book, the full account is not nearly as known as it should be; and as the authors so sadly point out, nearly every one of the principals who brought such misery and shame upon their countrymen are free, prosperous, in many cases highly honoured and “serving” still at the highest levels of political and financial power.

One weeps and despairs.

• Rex Murphy offers commentary weekly on CBC TV’s The National, and is host of CBC Radio’s Cross Country Checkup.


Well-known member
Apr 12, 2008
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real world
Good article.

The bubble that started all of this was in the 90s, and then it was the housing bubble, in an attempt to correct.

And those that started both, are still part of the present administration.

Presidents should have some knowledge of what they speak......Bush had little and then the American public elected someone with less that Bush.

He had no history, no knowledge and no record, except a marxist upbringing, exposure, teachings and mentors.

"enemy within"? the voters of obama welcomed it in, with open arms, by being uneducated, vindicative and partisan.

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