George Will on the Morgenson and Rosner Book

by Don Boudreaux on July 3, 2011

in Books, Crony Capitalism, Housing, Other People's Money, Politics, The Crisis

George Will writes on the dark and despicable political maneuverings that inflated the now-burst housing bubble.

Happy 4th-of-July everyone.  Can we again declare independence from predators, today with names such as Barney Frank, James A. Johnson, and Chris Dodd?

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kirby July 3, 2011 at 10:25 am

They say hunger is oppression. I say hunger is a measurement.

kirby July 3, 2011 at 10:26 am

They say hunger is oppression. I say poverty is how hard you work.

Single Acts Of Tyranny July 3, 2011 at 11:00 am

If only…..

Warren Smith July 3, 2011 at 7:41 pm

Morgenson and Rosner (Reckless Endangerment) have written a great book, as have McLean and Nocera (All the Devils Are Here) and Sowell (Housing Boom and Bust)…to be avoided are Sorkin (Too Big to Fail) and Lowenstein (The Fall of Wall St).

All of this was earlier examined with piercing foresight by Frank Partnoy in 1997 (Fiasco) and again in 2003 (Infectious Greed).

Years ago Martin Mayer (Greatest Ever Bank Robbery)wrote of the savings and loan collapse and much of the set up for what was and would come, Ben Stein (License to Steal) gave a look at Milken’s junk bonds.

None of this should have occurred.  The end result of congressional and special interest manuevering was all well seen in advance.  The fore-knowledge of the end game is why the Johnsons et all have walked away with the cash rather than remain as victims of the crash.

kirby July 3, 2011 at 11:29 am

Well in America, we’re pretty close. Sorry for the double post, I lagged.

Mao_Dung July 3, 2011 at 12:31 pm

Does George Will own his own home? I bet he does. I wouldn’t be surprised if he owned multiple homes. The rich usually do. He’s not going to pay rent to no stinkin’ landlord. It is beneath him. Such a hypocrite.

There are a few necessities in life: food, shelter, medicine, clothes, air, & water. Everybody should have a clean, comfortable, affordable place to live, and raise their kids. The rich abound with LUXURIES. The rich should be forced to pay for at least a modest abode for the less fortunate, because they have way too much. They can easily afford to do it, more so with every passing day in this rotten, corrupt, unfair world.

I would take decisions about pay away from the board of directors and the shareholders, and put it squarely in the public sphere. What is best for the country? Corporations suck the lifeblood out of the planet then mal-distribute the resulting rewards. There has to be a maximum wage set for these clownish capitalist conglomerate characters. I’d say about one million dollars per year. There are millions of homeless (As many as 3.5 million people experience homelessness in a given year: 1% of the entire U.S. population or 10% of its poor, and about 842,000 people in any given week. – Wikipedia),while these guys can have hundred million dollar mansions, perhaps several around the world. Enough is enough!

Don’t accept the status quo bad world in which you live, brainwashed libertarians. You are a cog in the capitalist machine that is tearing down the planet environmentally and socially. Rebel against the machine! Accept the challenge to save the planet!

maximus July 3, 2011 at 3:27 pm

“Does George Will own his own home? I bet he does. I wouldn’t be surprised if he owned multiple homes. The rich usually do. He’s not going to pay rent to no stinkin’ landlord. It is beneath him. Such a hypocrite. ”

He’s my neighbor, dung. So no, he doesn’t own multiple homes. Neither do I, just one with a huge manicured garden and 35 bathrooms. I have hundreds of slaves maintaining it. I think their Mexicans but I can’t be sure. All I know is they don’t look like me. Too bad about them homeless folks. I could give them work, but hells bells guy they wanna get paid! I feed my people so they can get up before dawn and start working in my massive yard, but the lazy ones I feed to my pet wolves. So what’s your point?

Andrew_M_Garland July 3, 2011 at 3:43 pm

To Mao_Dung. I don’t understand the mildness of your criticism. You say clownish characters are sucking the lifeblood out of the planet, and your punishment is merely to limit their income to one $million per year.

Are they beneficial or not? If yes, then why limit their income? If no, then only prison or death is appropriate for the lifeblood suckers. Are you a corporate sympathizer?

Mao_Dung July 4, 2011 at 1:02 am

The suggestion about limiting pay in one year to a million dollars is to put a break on excess compensation. One million is still excessive, but I wanted to be a pragmatist, and not an extremist. I also believe that gradual change is best.

The sudden collapse of the Soviet Union was a disaster for most of the population, and still is. I do believe that most conglomerates are bloodsuckers to one degree or another. How that will be dealt with depends on what the company is actually doing, and on the thinking public’s priorities. Corporations should not dominate the political process, usurping your freedoms to enrich themselves beyond their wildest dreams. Limiting compensation, as I suggested, is a mild start to putting things right.

Libertarians are, from what I can glean, very radical, and are ready to throw the baby out with the bathwater. How many times have I heard: Do away with the IRS, the Dept. of Education, Social Security, et cetera.

jim July 4, 2011 at 1:56 pm

You write very well for a dung head. Ever thought of getting paid for it?

Dan H July 3, 2011 at 4:55 pm


235 years ago, some of the greatest men to ever live declared independence from people like you. All they wanted was to be left alone. King George made them fight for the right to be left alone.

Today, I declare independence from you. I want you to leave me alone. Are you going to make me fight for that right?

Mao_Dung July 4, 2011 at 1:11 am

Yes, I’m prepared to fight to save the planet from people who are destroying it. Although I’m not in favor of violence, and I’d like to outwit my opponents rather than exchange physical blows. I’d like people like you to get crushed by an asteroid, or by an out-of-control falling elevator.

Terc July 4, 2011 at 1:41 am

“But when Muriel reads the writing on the barn wall to Clover, interestingly, the words are, “No animal shall kill any other animal without cause.”

Mao_Dung July 4, 2011 at 6:05 am

I am also prepared to kill myself in the name of Gaia.

tdp July 4, 2011 at 3:10 pm

Way to totally miss the Animal Farm reference. Perhaps if you’d read some Orwell (who was no libertarian) you’d stop lowering the world’s average intelligence quotient.

Terc July 4, 2011 at 1:37 am

“No one believes more firmly than Comrade Napoleon that all animals are equal. He would be only too happy to let you make your decisions for yourselves. But sometimes you might make the wrong decisions, comrades, and then where should we be?”

Mao_Dung July 3, 2011 at 12:43 pm

I admit it. I laughed. “Natural Law” trumps libertarian foolishness every time.

Tim July 3, 2011 at 7:47 pm

What an idiot you are.

Other people’s lives are not yours to control. Free people make their own decisions and suffer the fate of their own free decisions. Libertarianism doesn’t tell you that people who don’t do xyz won’t suffer the consequences of xyz, Libertarianism tells you to buzz off and mind your own business, you tyrannical interloping nag. You have a legitimate interest in what you do to preserve the safety of your own person, and not in what others do to preserve theirs.

Mao_Dung July 4, 2011 at 12:29 am

I may be an idiot, but you’re a phony.

I know that you’re phony because you want someone else to take care of and pay for all the brain/ spine injured people who are maimed for life and often bound to a wheelchair with little or no use of their limbs. I want you to pay for the injuries and be forced to spend every waking moment of your life having to wipe a cripple’s ass.

I also want the next excess billion people born on Earth to live in your house. I don’t care how cramped it becomes. Deal with it! Fit those people in your house and feed them, you big phony. All libertarians are fakes. Problems of your faux freedoms are not your problems. Disgusting really, you pathetic, and nasty egotist.

Mao_Dung July 4, 2011 at 6:15 am

Also I hope the people stuffed in your house are blacks because I can’t stand niggers.

Observer_Guy1 July 4, 2011 at 11:26 am

I’m the author of the above, putrid comment, and I don’t apologize for it in the least because I’m a racist, low-life who steal people’s identity with aplomb, alacrity, and limitless ill will. I’m your typical immoral libertarian. Deal with it, suckers!

Denno July 3, 2011 at 2:02 pm

More people die in car accidents than motorcycle accidents, so do you believe that those who ride in a car should wear helmets as well? Should pedestrians be forced to wear pads and a helmet? Classical liberalism is about freedom – freedom for everyone.

“Has any act of selfishness ever equaled the carnage perpetrated by disciples of altruism?” – Ayn Rand (1906-1982)

“Underlying most arguments against the free market is a lack of belief in freedom itself.” – Milton Friedman (1912-2006)

Mesa Econoguy July 3, 2011 at 2:17 pm

And Dick Syron, and Henry Cisneros, and Andy Cuomo….

M.R. Orlowski July 3, 2011 at 2:37 pm

No, Lincoln settled the fact that the Union is an end in and of itself. Political secession is impossible almost, and political decentralization only works to an extent under the current regime.

Laughable Premise July 3, 2011 at 3:34 pm

So the Democrats in 1977 caused it. Is there no limit to their evil?

Rob July 3, 2011 at 4:21 pm

Only if we can also declare independence from the likes of John Boehner, Mitch McConnell, and John McCain. What say you to that Don?

Laughable Premise July 3, 2011 at 5:18 pm

“So we have banks that are not covered by the CRA, being forced to make loans that are not covered by the CRA, which were hugely profitable, by a rule that had no enforcement mechanism. Welcome to the world of George Will logic.”

W.E.Heasley July 3, 2011 at 5:30 pm

“As housing prices soared, many giddy owners stopped thinking of homes as retirement wealth and started using them as housing prices soared, many giddy owners stopped thinking of homes as retirement wealth and started using them as sources of equity loans — up to $800 billion a year. This fueled incontinent consumption”. – George Will

Yes, what goes up…..always goes up!

It is worth noting, while politicos through the mechanism of government fueled a housing bubble, another series of politicos through the mechanism of government created a state and local government spending bubble.

That is, the housing bubble and spending bubble [“….as sources of equity loans — up to $800 billion a year. This fueled incontinent consumption”] increase state and local tax revenue and once again ….what goes up…always goes up. Politicos on the state and local level increased spending at a wild pace based upon increasing state revenues in which they too took on the mind set of what goes up always goes up. Not only did they increase spending they issued plenty of new debt as well.

Now that state revenues have collapsed so does the politico induced bloated state government collapse.

That newly issued debt? Meredith Whitney likely has the answer to that question:

tdp July 3, 2011 at 5:54 pm

George Will: 1
Liberals: 0

Jeffrey Neal July 3, 2011 at 7:27 pm

G Will and the authors whose book he reviews make the political case. There is more to the financial dealings that led to the “crisis.” Multiple forces worked together over a number of years to produce the bubble and eventual collapse. Try here for a layman’s explanation of the financial activities that were contributing factors. >

Kevin July 3, 2011 at 8:21 pm

Will finishes with “Morgenson and Rosner report. You decide.” Gretchen Morgenson does not report. She hasn’t reported in at least a decade. Every article oozes the worst of the NYT’s tendency to conflate opinion and reporting. I’m stunned Will would endorse this.

Stephen A. Boyko July 4, 2011 at 9:08 am

There were three corruptive information errors that were causal to the Subprime Crash:

• First, there was a misdiagnosis of renters as owners where renters received property rights that created perverse incentives relative to property foreclosures.

• Second, there was a mischaracterization of the underlying economic environment that conflated risk and uncertainty resulting in mispriced subprime debt. Uncertain issues such as no-money down, NINJA MBSs have neither mark-to-market valuations nor positive cash flow from which to price investments. How could uncertain securities receive an AAA-rating?

• Third, there was a misapplication of governance where policymakers responded to market excesses of the Enron crisis with regulatory excesses contained in Sarbanes-Oxley of 2002. Treating an issue-specific crisis as though it were a systemic crash resulted in disproportionate governance causing normative market commerce to migrate to economic externalities that encumbered the implementation of Dodd-Frank.

Institutionalized flawed governance is toxic. If there is complexity, there is uncertainty. one-size-fits-all deterministic governance of uncertainty has resulted in the frightening trend of larger and more frequent economic crashes.

Randall July 4, 2011 at 11:09 am

“… he (Johnson) may be more responsible for the debacle and its still-mounting devastations — of families, endowments, etc. — than any other individual.”

I’m sorry, but Alan Greenspan holds the title of most “responsible for the debacle.” Without cheap money a bubble cannot happen, period.

jim July 4, 2011 at 2:03 pm

This is a great way to celebrate your 4th. If you don’t like the USA – LEAVE!! It’s not going to change for you – you’ve got to change for it and earn your entitlements over a lifetime of work…at whatever pay the job market thought you were worth over your working years!

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