by the Sandwichman,
I tracked a backlink back to Mark Thoma's blog and there the preceding item, "I am Not Paid Enough to Deal with This Lying Bullshit," quoting Brad DeLong, caught my attention. In the quoted post, Professor DeLong stated:
I trot over to the J-School TV studio as part of the sober, sensible, bipartisan consensus, intending to carry water for Ben Bernanke and Hank Paulson.
Can someone explain to the Sandwichman how "carrying water" as part of the "sober, sensible bipartisan consensus" differs from "dealing with this lying bullshit"?
Um, because Ben Bernanke is not Grover Norquist?
ReplyDeleteNo, Bernanke is not Grover, but he certainly can spin a similar tale as does the clever Norquist. Two seperate sources for similar bullshit. Remember a lie twice told has so much better effect, and when the tellers of the tale are so seemingly unlike one another the effect of distortions are yet greater. This is true whether by intention or not.
ReplyDeleteIf one carries the water in a search for validity one can be satisfied that the task is worth the effort. When sensible bipartisan consensus is little more than the content of the latrine the task become odious at best, though the remuniration is often handsome.
Brad often berates others for carrying the water of politicians so when he used this term regarding his own writing - it made me pause.
ReplyDeleteSome of his writing should, itself, make one pause. I do give him credit for trying to prompt Paulson and Bernanke into doing something constructive regarding the heaps of BS that often come out of the mouths of people who support, and sometimes speak for,
ReplyDeleteMcCain. I'd be a bit mor impressed, however, if DeLong could have said that he chewed their ears on that subject on the phone last night. What's the likelihood that either of them read DeLong's blog?
Can someone explain to the Sandwichman how "carrying water" as part of the "sober, sensible bipartisan consensus" differs from "dealing with this lying bullshit"?
ReplyDeleteYes. You and I have to deal with SSBC BS. BDL was promulgating SSBC BS.
"Dealing with" is not "promulgating." DeLong is queuing up to join the Concord Coalition in telling us how evil it is that one might use the efficiencies possible in government to actually provide for the commonweal.
To which the only possible response in most circumstances is, "nu?"
"Brad often berates others for carrying the water of politicians so when he used this term regarding his own writing - it made me pause."
ReplyDelete"Carrying water" means to defend someone against their critics. More specifically in this and many other contexts it means to defend someone whom you do not agree with on all issues against misguided criticisms. This by itself is not necessarily good or bad. That's all about WHOM you are defending and HOW you are defending them. And the WHOM and the HOW are obviously related since it would near impossible to defend someone like Grover without resorting to lying.
So I don't see a problem here.
"No, Bernanke is not Grover, but he certainly can spin a similar tale as does the clever Norquist. Two seperate sources for similar bullshit."
Can you, in any way, back up this empty assertion? And I think you're mistaking eloquence for argument in your last paragraph - common folly on teh blogs. Just because you can write a pretty sentence does not mean you've said anything of substance.
Bernanke is often in the unsatisfying position of having to support the White House economic agenda. In general he carries the tale whether or not that tale may be widely upheld in his own field of expertise. Can an economist get away with such a performance? Given that economics has a limited degree of precision virtually every concept held dear to the individual is arguable on both its sides. Can I provide specific instances of Bernanke telling a lie? Of course I don't sit waiting to evaluate every statement he makes, but if you evaluate his general approach as one designed to support a morally bankrupt Executive Office, Bush et al, then he does begin to approximate the effects of Grover and his ilk. The general thesis is often more significant than any specific lies told. You'll find very few definitive statements from such sources. It's a brilliant approach to creating an alternative reality, but it is still without social merit.
ReplyDeleteOh, and thank you for the compliment. I'm not often described as eloquent, but I do like to be understood, even if not agreed with.
Carrying water refers to a subordinate, non-substantive role. The water boy isn't a player on the team. I would push the metaphor a step further and say that the Fed chair is a water boy for the banks. So Brad sees himself as a water boy's water boy.
ReplyDeleteSo -- rhetorical question -- is the wellbeing of the banks really equivalent to the prosperity of the nation? That is the presumption the Federal Reserve operates under. There is no comparably empowered agency looking out for the wellbeing of working people. Their wellbeing is presumed to be a consequent of a stable, prosperous, dynamic banking system.
That's just lying bullshit. But to the extent that it is bipartisan, consensus lying bullshit (as distinct from radical right-wingnut lying bullshit.), I guess economists are obligated to bow down to it as sober and sensible.
One might think that the intellectual duty of an economist would be to question such presumptions rather than to carry water for its water boys.
If I remember correctly the early history of a national bank started with A. Hamilton being persuaded by a friend, or friends, to take part in the establishment of such a bank.
ReplyDeleteEven at that early time Hamilton shortly recognized that some activities of the bank, which bore his support, seemed a bit unseemly. I don't recall the details, but his friend, the new banker, was soon embroiled in some financial shenanigans through the bank. Hamilton soon disassociated himself from the bank, but was left with a significant stain on his reputation.
Such is the early history of banking in the US. Are all bankers crooks? Not likely, but each and everyone readily admits that their only loyalty and their best efforts are aimed at increasing the capital of the bank share holders. Depositors, borrowers and the general public take second rank in the system of banking. Have we not had two major banking upheavals within the past 25 years? Have those two major upheavals managed to include every manner of bank, and had some adverse effect on the entire banking system? The Federal Reserve system was set up by bankers and is run by bankers for the express purpose of assisting banks and bankers in their quest for yet more capital. What's in it for the rest of us? We are currently seeing the answer to that question playing out before us, and it's not a pretty scene. It is now, as it did 25 years ago, going to cost us all (maybe not the bankers) a lot of capital.
jack,
ReplyDeleteThank you for elaborating (and the portion of the compliment that actually was a compliment was sincere). I think you might, just might, have an argument there - if you were talking about Greenspan's endorsement of Bush's tax cuts. But you still haven't provided any kind of evidence to back up your assertion - a quote, a fact, etc. - that Ben Bernanke is in any meaningful way comparable to Grover Norquist.
Sandwichman,
"Carrying water refers to a subordinate, non-substantive role. "
Sure. Apparently Brad recognizes the fact that he is not a chairman of the Fed but merely a respected economist at Berkeley and a proprietor of a widely read blog. Again, I don't see a problem here.
"So -- rhetorical question -- is the wellbeing of the banks really equivalent to the prosperity of the nation?"
Sandwichman, you make it really hard for me to hold back the snark (and I've been trying). But assuming that what you write is sincere and not a New Yorker style parody of what a right winger believes a left winger to be, allow me to answer your rhetorical question. It's ill posed but the answer is obviously "no, the well being of the banks is not equivalent to the prosperity of the nation". But this seemingly innocuous rhetorical question subtly sets up a straw man - none are arguing that they are EQUIVALENT, which is the magic word at which point you stuffed the rabbit into the hat. Nonetheless, a sound and functioning banking system generally is a REQUIREMENT, or at least conducive, for prosperity. Hence (oh oh, conclusion is about to follow from some premises) folks who are concerned about prosperity might legitimately pursue the goal of a sound banking system.
Or are you a liquidationist? Perhaps the banks should be allowed to fail, to teach them bad ol' bankers a lesson (echoes of right wingers harping about moral hazard here Sandwichman) regardless of the fact that they may take many a workingman's savings or even jobs with them? DeLong, Krugman, and yes, even Bernanke, are here taking the classic, standard, at one time respected, old school Keynesian view of things. You're being either a faux-Trostkyite ("we must make things worse so that they can get better!"), a right wing liquidationist in the spirit of Andrew Mellon or a ... well, lemme try to hold back the snark one more time since it got out if its cage there for a second - refer back to the beginnings of the paragraph above this one.
This comment has been removed by the author.
ReplyDeleteYouNotRadek,
ReplyDeleteSandwichmen don't waste their time parsing the snark of sock puppets (or of water boys twice removed -- there's that old devil, infinite regress, again). But two more rhetorical questions do come to mind. Old school Keynesians, eh? So when do we get on with the euthanasia of the rentier?
Sock puppets? Sorry, gmail account is messing up so I used the old one, assuming it wasn't a big deal and that a good number of people would know anyway. So yeah, any of the above is by "YouNotSneaky". Sheesh. Paranoid-much? (A rhetorical question) At least when BDL deletes people's comments he doesn't accuse them of sock puppetry.
ReplyDeleteAnyway. Did you get that difference between "equivalent" and "conducive"? Any comments?
Actually wait. Since I've put my email address in both type of comments, an email address from which you can clearly figure out who I am, and the email on this account makes it pretty clear who I am, I think that shows pretty well that there was no intention to hide my identity or mislead you about it. As a result your calling me a sock puppet is insulting, dishonest and/or just plain confused as to what that term actually means. I don't care about insults generally (I find "water boys twice removed" mildly amusing) but this is a serious one. If I had a modicum of expectation that an apology in this context was possible I'd ask for one, but given... how it is, you know what, forget about it.
If you lend your professional credentials to a morally bankrupt Executive Office you become a member of the team that focuses on ideology rather than good government. That Norquist is more obviously a propagandist, and well paid for his efforts, does not excuse Bernanke for his participation albeit in a far more subtle manner. The difference between the two, therefore, actually contributes to the strength of the message that they defend. A similar story line from a variety of sources has great effect on the public's unerstanding of where the truth lies about complex issues that are not readily comprehensible and the data for which is itself open to subjective interpretation.
ReplyDeleteThe social security is in crisis issue is a good example. Too much gross data, subject to too much potential measurement error being the basis for to many projections.
Where does the truth lie? Is there really a crisis? Too many level heads with no apparent hidden agendas contradict the White House and their supporters who are over burdened with other agendas.
So yes, Bernanke and Grover play on the same team, even if Grover is only on the second squad.
Part II, Radek,
ReplyDeleteIf we're going to have a banking system that repeatedly requires "bailing out" by the government, ie the rest of us who gain no profit from that system. then why not simply nationalize the thing. If tax payer money is going to cover inept, maybe fraudulent, banking procedures and bankers' behaviors, then why not the tax payers own the bank(s)?
Let's not get into who can do the job best. The repetitious need for the bailing seems to answer that question. Even the FMs seemes to run into fewer "difficulties" before they became share holder, profit focused entities.
YouNotSneakyRadek,
ReplyDeleteSince you've acknowledged that both pseudonyms are indeed yourself, I apologize for assuming a deceptive, sock-puppet motive behind the shape shifting.
Actually wait. I don't see what email accounts comments come from and wouldn't know where to look to find them. Also the comment I deleted was my own that I wanted to edit. So your calling my reply to your Radek persona "insulting, dishonest and/or confused" was paranoid and a red herring. So there.
But I forgive you. Or perhaps I just want to pretend to forgive you as a pretext for replying to the substantive kernel buried in your characteristic torrent of superiority and disdain.
Did you get that difference between "equivalent" and "conducive"?
Yes, I agree there is a difference of emphasis and my use of "equivalent" may have had more of a rhetorical than a strictly factual motive. So let's rephrase my critique and see if you concur with that. You won't, I'm sure.
"A sound and functioning banking system" does not require a policy regime in which the interests of banks and bankers takes precedence over the interests of all other groups in society. One might argue, to the contrary, that such a regime of favoritism actually undermines the soundness of the banking system or at least usurps its function from playing a supporting role to being the main show. The policies of the central bank are part of that broader policy regime but they are not the whole thing.
Obviously, a central banker who bucks the system would have a hard time of it. One might even conclude that given the institutional constraints Bernanke's performance as Fed chief has been reasonable. I am not myself so concluding because I'm not an expert on central banking. I do have some specialized knowledge with regard to the history of economic thought, though. And I conclude, based on that knowledge, that the rationale trumpeted for the overall policy regime and the given institutional constraints is, shall we say, tendentious and self-serving.
As a mere gear in the bigger machinery, Bernanke has to mouth the platitudes -- the lying bullshit, as DeLong calls it -- that uphold the entire apparatus. The mainstream view, call it the "Washington Consensus" or neoliberalism or whatever, is a stagnant morass of cherry-picked textbook apologetics for privilege.
I'm not surprised that Bernanke doesn't appear before Congress and deliver a withering Marxian critique of the last 30 years of fiscal and monetary policy. Actually, I would be shocked if he did. But there are degrees and nuances of departure from the script. Bernanke is clearly a there-is-no-alternative defender of the status quo.
Norquist poses as an antagonist of the status quo but that's a good cop / bad cop charade mounted on the ridiculous pretense that rich folks are a persecuted minority in some totalitarian social democratic alternative universe called the USA. Clue: the fiction is another way to uphold the status quo.
As Jack points out, Bernanke and Norquist play on the same team, even if Grover's function, as clown, is only to create a diversion while the Bernanke, the lion tamer, sets up the next act. If DeLong is content to carry water for Bernanke, he can't be too choosy about who else on the team takes a sip from the bucket. Deciding who gets a drink is not the water boy's job.
"Since you've acknowledged that both pseudonyms are indeed yourself,"
ReplyDeleteThis one's not a pseudonym. It's as if I came across something written by a Tom Walker and proceeded to accuse him of sock puppetry.
"I apologize for assuming a deceptive, sock-puppet motive behind the shape shifting.
Actually wait."
Close enough. Thanks.
As to the rest. How often do banks get bailed out? Less often than airlines for one thing.
Also even if YOU happen to believe that Bernanke and Norquist "play on the same team" I don't think BDL does and hence his post. "Sober, sensible bipartisan consensus" does not include Norquist, or you for that matter, whatever one may think of the merits and demerits of that consensus.
How often do banks get bailed out?
ReplyDeleteSigh. Bailouts are not the only way public policy favours banks.
From my perspective, a sound and functioning system of labor representation and collective bargaining ranks NO LESS than a banking system as a prerequisite for a prosperous and JUST society. A cornerstone of Fed policy over the past 30+ years has been fighting inflation with unemployment (NAIRU). NAIRU is the semi-official creed of the SSBC. You're right that the SSBC does not include me.
One might suspect that a policy geared to discouraging "inflationary wage demands" (that is to say, higher wages) might lead to lower union density, particularly if the unions' main goal in bargaining is higher wages (leaving aside the question of whether that is/was the strategically appropriate emphasis for unions).
I'd suggest tha a major multi-billion dollar bail out twice in 25years is twice too often. First the S&L debacle in the mid-80s, I think it was, and now the mortgage
ReplyDeletefraud debacle. Not a fraud? Wake up and smell the coffe.
"'d suggest tha a major multi-billion dollar bail out twice in 25years is twice too often."
ReplyDeleteMaybe it is twice too often in the sense that it'd been better if it hadn't had to be done but, actually, putting things in perspective, that really isn't that much (again, look at the airlines). Particularly since that if it hadn't been done, it would've been more than just banks that would've gone down. Sometimes the interests of workers and of bankers coincide. In the real world it really's NOT all class war, all the time.
What's this radek, you don't believe in the wonders of free market capitalism? Bear Sterns bites the dust. Break up the pieces and sell them off to the competition. Insolvent and its creditors are now sinking fast? Where's the lesson of better risk management in the bail out? The errant managers lost their jobs and a little bit of their equity stake? Pay me $10-$20 million per year for several years and you can have 50% back if things don't go well. That's a better deal than the government is getting from those who may have been swept out.
ReplyDeleteSometimes the interests of workers and of bankers coincide.
ReplyDeleteThis may come as a shock, Radek, but I agree. The other half of that thought is: sometimes their interests don't coincide. Something else: even when they do coincide, it's not necessarily the bankers or their friends who have the best idea of what to do about it.
Why aren't there ever "trickle up" bailouts?
"Sometimes the interests of workers and of bankers coincide. In the real world it really's NOT all class war, all the time."
ReplyDeleteCoincidence is like correlation; it tells you only about the concurrence of varying aspects of an issue. How those interests are attended to becomes far more important and the source of the various skirmishes and battles in the forever continuing battle wherein the working class can only hope to hold a line before the avaricious greed of our friendly bankers.
While the primary theoretical fiduciary duty of bankers is to protect and increase the capital of the banks owners (shareholders), in the real world, the primary motivation of those bankers is the protection and increase of their own personal income and wealth.
ReplyDeleteThis primary motivation helps to explain both the blatant larceny of bank managers and employees who gain exposure in massive financial scandals and the plodding day to day mismanagement of resources by bankers that remain compliant with banking regulations and laws.
The primary rule of maintaining employment in any enterprise is that the incumbents primary function is to maintain and increase the income from the employment. The interests of shareholders rank much lower than the personal interests of managers and operating the business.
For the managers of the banking system (or any other enterprise ) the health of the enterprise or the entire system is only incidental to their own well being.
Banking managers can be compared to the intestinal bacteria, who thrive in the gut of their host, providing essential services, but occasionally cause great damage. The difference between the banker and the E coli is that the E coli
does not pretend that its function in life is to protect the fiduciary of its host system.
In summation, there is a robust correlation of sober, sensible, symbiotic consensus of banking analysts and the bovine intestinal product.
"While the primary theoretical fiduciary duty of bankers is to protect and increase the capital of the banks owners (shareholders), in the real world, the primary motivation of those bankers is the protection and increase of their own personal income and wealth."
ReplyDeleteWhich under scores one of the most destructive aspects of banks moving from privately held corporations to public stock holder entities. By the time the share holders become fully aware of the damage to their equity the managers are in Tahiti sipping MaiTais on the beach. Would Bear Sterns have gone off the deep end if it had functioning as a partnership? I would suspect that the senior partners would have exercised a bit more caution regarding the risk of their exotic new mortgage backed securities.
In 18th century France we had a better way to handle such inadequate management.
Regarding "sock puppetry," I think this charge is only relevant when one of the identities is refusing to admit that it is also the other one. That is not the problem with either Radek/younotsneaky or Tom Walker/Sandwichman.
ReplyDeleteOf course where sock puppetry gets really nasty is when there is not only deception, but the deception is used to puff up one of the identities, the poster boy case being the notorious use by the gun guy, John Lott, of "Mary Rosh" to praise himself on various blogs, an act I consider to be not merely unprofissional but seriously unethical. (It must be noted that he did eventually apologize for this, although I saw him not too long ago trying to justify it because people were supposedly "out to get him.")
In summation, there is a robust correlation of sober, sensible, symbiotic consensus of banking analysts and the bovine intestinal product.
ReplyDeleteHear! Hear! Jim.
Barkley, I already dropped the charge of sock puppetry.
I know you did. Just clarifying, really more to get at the difference between the not-such-a-big deal sock puppetry and the really egregious sort.
ReplyDeletethe difference between the not-such-a-big deal sock puppetry and the really egregious sort.
ReplyDeleteI can't imagine any sock puppetry being a really big deal, Barkley. A sock puppeteer is someone not rich enough to hire toadies and not important enough to attract sycophants. So the sock puppet has to stand in for toadies and hangers on. That's more pathetic than egregious.
The "sock" part of the term attests to the improvised, clumsy and fundamentally artless nature of the performance. It's not even a full-fledged puppet -- just an old sock with some buttons sewn on for eyes and, at best, a patch of red felt sewn into the mouth hole.
"What's this radek, you don't believe in the wonders of free market capitalism?"
ReplyDeleteWell, no. I think it's the worst economic system except for all the others.
(as an aside I do think the banking system should be heavily regulated. But the occasional bailouts come along with that regulation. I think this is part of that SSBP consensus that Brad is talking about)
As to the sock puppetry thing. Sandwichman did withdraw it so it's fine. Just don't be so quick with accusations next time. Even against people that you don't like.
"The other half of that thought is: sometimes their interests don't coincide."
ReplyDeleteSure. Sometimes the interests of ornery cabinet makers don't coincide with the interests of bespectacled librarians either. However, in the particular case under discussion - the one that BDL is implicitly referencing in his original post - the interests of the above mentioned parties DO. The economy's on the brink of recession if not already in it, food prices are high, energy prices are high, there's a housing bubble bursting - under these circumstances it's not crazy to think that a collapse, or even a mini-collapse of the banking system (n.b. Bear Stearns was pretty much allowed to go under. Yes, I know there was a Fed assisted loan. Still, it's not bail out everything, every time, everywhere) would drag down a good part of the economy - including "the workers" - with it.
(Bank of United States?)
The economy's on the brink of recession if not already in it, food prices are high, energy prices are high, there's a housing bubble bursting - under these circumstances...
ReplyDeleteRadekyns,
My argument would be that precisely those circumstances have been brought about by the arrogant pursuit of the sober, sensible bipartisan consensus. To fix the problems you mention may require in part some of sort of tactics that the Bernanke Fed is using. But it will also require a clear departure from the sober, sensible crapola business-as-usual of the past 30+ years. NGTH: Not going to happen.
The economy's on the brink of recession if not already in it, food prices are high, energy prices are high, there's a housing bubble bursting...
And when the the credit markets are stabilized and normalcy is restored there will be a bill to pay. Who will pay that bill? The corporate honchos, Wall Street bankers and brokers who benefited most from the policies that have brought the economy to its present peril. Or the cabinet makers and librarians whose interests reputedly coincide with those of the bankers? If it's left up to the sober, sensible bipartisan consensus, I think we already know the answer.
The economy's on the brink of recession if not already in it, food prices are high, energy prices are high, there's a housing bubble bursting...
BTW, I don't dislike you, Radekyns. I just think too often you display a sophomoric disdain for ideas that have been denounced as blasphemy by the sober, sensible bipartisan priesthood. I guess that's obligatory if you aspire to the priesthood. But it's sad to see your obvious intelligence and wit squandered on defending doctrines not able to take care of themselves.
The economy's on the brink of recession if not already in it, food prices are high, energy prices are high, there's a housing bubble bursting...
... and our house is going up in flames! Let's place our faith in the arsonists to put out the fire?
Well, sometimes egregious sock puppetry is not done by losers. As much as anybody, John Lott, aka "Mary Rosh, adoring student of John Lott," was the man responsible for the recent Supreme Court ruling against the Washington D.C. law outlawing handguns. He is not a loser, but riding very high right now. He is all over the place and also engages in suing people who cross him too vigorously, although generally only if they are very rich, such as Steve Leavitt. Not a harmless sock puppet at all.
ReplyDeleteNo, losers are not always harmless. I seriously doubt, though, that John Lott's stint as Mary Rosh was the deciding factor in any Supreme Court ruling.
ReplyDelete"... and our house is going up in flames! Let's place our faith in the arsonists to put out the fire?"
ReplyDeleteExactly the point that needs to be emphasized. After the bail, or what ever $$ assistance the Fed et al are inclined to dish out, who suffers a legitimate consequence of the actions that brought these circumstances about? Symbiotic consensus? More likely incestuous liaison. There is a distinct corporate class in this country awash with money and the banking and finance sectors house the greatest number. By class I refer to the executives of the group and their sycophantic entourage that carries their every word, not deed, and boosts their ideology of the me before the many. After the bail do any of them give up their gains. The public has already suffered the lose in the declining values of their small share of the pie, but that's another related topic too broad for this thread.
S-man,
ReplyDeleteI would agree that Lott's influence with the Supremes had nothing to do with his sock puppetry.
"... and our house is going up in flames! Let's place our faith in the arsonists to put out the fire?"
ReplyDeleteWell, I don't think the Fed's the arsonist here although other parts of the regulatory system of financial markets maybe (or at least looked the other way when the arsonists were buying their gasoline and matches). Similarly it's my sense that FM and FM, although they did take out some risky investments (which probably didn't look that risky when they were made) are more 'collateral damage' than perpetrators. So for the most part neither the bailer-outter (the Fed) is the arsonist nor are many of the bail-outtees (FMs).
So who are the arsonists here? Well, I was listening to NPR the other day (week actually) and there was an interview/story with a woman who took out a home loan. The monthly payments on this loan exceeded twice her monthly income. I just sat there wondering: "who in the hell would take out a loan like that and why???" And then: "who in the hell would make a loan like that and why???".
So to the extent that some parts of the regulatory system are to blame it's not because they set the fire, but rather because they didn't ask "why in the hell are you buying all this gasoline and matches?".
BTW, thanks for the compliments, although I'd like it to be noted that I espouse and argue for the ideas that I do NOT out of any desire to join some kind of a priesthood (and I think my rhetorical style betrays the fact that I think any and all kinds of priesthoods can go bite themselves if they don't like what I think) but because I sincerely believe those ideas to be correct. Because I'm essentially a radical moderate.
Because I'm essentially a radical moderate.
ReplyDeleteEgads, Radek, speaking as moderate radical, we may yet find common ground!
The mortgage mess has two levels of perpetrators. On level one, the entry, you have the mortgage maker, the broker of loans, not the lender its self. Two types of loans originate at this level. One is as radek describes, the buyer/borrower who should not have been approved in the first place. Blame those people? Not until you've made an effort to understand the dynamics of real estate sales and mortgage brokering in the sub-prime market place. Not a pretty scene, and one which deserves intensive review by the judicial system. That's not likely to happen.
ReplyDeleteOne the other hand we have the straw deal in realty sales and lending. There is far more illegal intent at this juncture. Houses sold for 50% to 100% of their genuine market value to names that were never intended to
occupy the properties. Mortgages for such deals provided a handsome payoff, especially so when that same property is next resold for yet a higher price to yet another straw. Now there is both a gain on the value of the property and new mortgage money lent to close the deal. With property values rising so fast there's big money to be made. Which comes first, rising values or the straw deals that make them.
Now that hot air is floating the real estate market the mortgage origination money is being replenished at the second level of the lending mess. Mortgage backed securities allow the financiers to market a trove of new paper providing replenishment to the mortgage bankers and fat fees and quick gains to the re-marketers of that ingenious new instrument. Where did the money go? What I'm puzzled by is why no one in the fraud bureaus across the nation seems interested in digging into either of the two levels of perpetration. The only concern seems to be to stop the bleeding rather than to prosecute the shooters.