Republicans have their myths, their myths have a mass media sustained independent life leading to a bizarre nirvana where the free market fundamentalism will enfold and enrapture everybody. Of course selected winners holding the most conservative values will lead our white middle class with selected standout minorities, Republican of course, to the promised land also. The top of the list:
Myths such as " the GSE's were responsible for the economic collapse. ("forced by goverment regulations to make banks lend to unqualified borrowers"). As pointed out elsewhere on DK the Commerce, Banking regulation was for fair treatment and non discrimination in the review or evaluation of loans, not on mandatory granting them to any one group by fiat. And the GSE's portfolio to supposedly lower quality and poorer borrowers were only 1/3 as likely to fail by review of actual records than all the rest of private borrowings combined. ( More on the jump)
Myths such as the supposed lack of drilling in the USA and off the continental shore is responsible for "high gas prices".
The myth that huge potentially huge consequences is the stunt over threatening to paralyze the US economy with a debt ceiling increase stall and freeze.
This will 'change the course of government according to the extremists in the Republican party and their supporters.
Forcing a default in the debt ceiling is easily the worst and the one that will have lasting and irrevocable impacts and that is the one I will address in this diary about the size, scope, duration, and who to blame for the current economic crisis. The myths about lending to "unqualified borrowers by the GSE's" are as wrong as everything else they have for problems and solutions. See leonard architect's excellent diary yesterday for succinct analysis of the flaws and detached from reality thinking of this.
It is mostly wrong, terribly wrong however. Other economic quackeries include restricting government investment at a time of reduced investment and boosting fossil fuels to absurd excess.
Solutions include, "Deregulation! the more the better!" Then the drilling myth.
"Drilling, more drilling!" everywhere be it a goldrush mentality to hydrofrack the hell out of the Northeast and anywhere else they can stick a drill down into.
Not even talking about natural fracked gas escape rates of 10 to 50% or even more . Most of that gas will escape into the atmosphere where it is a much worse heat trapper than CO2. Less regulation! Waste of a resource!!! It is all good as long as their campaign donor benefits.
No, throw the entire remaining undrilled area open for any and all. No comments on the expense of drilling in the yet untouched areas which are significant because: resources are more energy consuming to extract, located deeper, or more difficult to access costing much more to extract which is the reason they have not been pursued before. The price to consumers must go up to justify most of these quite expensive to recover new drilling "opportunities".
The more they drill in the USA and offshore, the more expensive gas and oil will get. There is no connection between "more drilling" and "lower prices." Exactly the opposite.
And finally, speed up foreclosures and indemnify the companies and biggest banks from fraud charges so more properties can be brought to market and "flipped ".
No CPFB! No consumer protection impeding those bank profits! How are people going to make good choices and even have good credit and loan decisons without some yardsticks, guidance and regulation? We do what has been done the past 10 years and expect a different outcome? Duuuu-uuuh! That's our republicans in action!
when these properties from "deadbeats" are turned over and the enterpreneurs (speculators) can get hold of them, a lively market will clear out the old problem loans and unqualified borrowers and we will be raptured into a new boom in home sales!
that's how these idiots think. No explanation of how we have 8% underwater mortgages in 2008, get to 28% underwater in 2010 even with new mortgages and marginal borrowers chased out of the market or their loans by then, and up to 48% underwater by 2012. That is DeutchBank calculations on US prospects. No US bank dares to even confirm that because it undermines their business model and they are in a panic over what to do in this crisis.
The last myth is the best. " Lets crash the economy and blame the DEMOCRATS for not going along with drastic cuts in safety net programs and cuts to salaries of government workers and pensions so we can act fiscally conservative and be heroes to our patrons!" We can refuse the increase in the debt ceiling without massive spending cuts (and we should do it anyway to create anger towards them and have them (D's) blamedfor the fallout from failing to raise the debt ceiling in 2012!"
"Of course this will hopefully finish off all those government programs that are political bribes to their base, like affordable homes, Medicare, the Affordable Care Act, etc."
To act recklessly on the plan to cure the mortgage crisis and dismantle government programs, the R's want to freeze the debt ceiling and cause defaults.
Now here are the unintended consequences. Within weeks, or even days after that happens, the G8 , other leading economies will get together outside of the USA and examine the situation that was never supposed to happen.
The USA defaulting on its sovereign and pledged national debts. The USA not covering its international obligations. The dollar becoming an instrument of doubt, not a stable reserve currency as it has been since WW 2 circa 1946.
What that means to the republican myth makers and ideologues of magical thinking is a great levelling where the Dems supposedly are humbled and they, the R's will ascend to dominance by default.
What actually happens is the votes of other countries after America's default to vote in a market basket to replace the dollar. What the tradeabilty, convertability of the dollar is becomes immaterial because it now will be only one of 15 items in a "basket" of currencies. That defrocks the dollar as the prime currency.
What that means is the US will no longer be able to demand and accept dollars as payment for its own debts, it will have to convert them at a higher ratio for the "market basket " equivalent. And it will be higher because the cost of borrowing will go up, every Fortune 500 company costs to do business internationally will go up, and their benefits from using dollars will vanish. As soon as the US welshes out, cannot confirm it stands behind its debt obligations, the dollars will not be as useful, the US economy will be suspect and it will cost everybody more to do business, use banking services because our economy will lose its primacy. That is what cheapening the dollar and collapsing it means. And that is the IMMEDIATE and DIRECT result of the Republican NO! vote. Thank you, you fiscal geniuses playing gotcha! with our economic lives. I won't lose billions or millions when it happens. but gas prices in "basket" currency will cost more, imported goods (and we import huge amounts) will cost more, and the transactional costs of doing a business or everyday life wwill be impacted , too. Thank you T-republicans." It won't be bad!" myth from economic cretins.
And it will cost everybody in the US dearly because the bedrock of a sound currency, the 70 years of priority of the dollar over all else will be replaced with an international moving average where the better economies will do better and the weaker ones will pay more. And, we are not doing well right now, Far from it.
And the Repub Tea Party will have done this to the USA just when we are in the throes of a very ugly recession, the worst in 80 years and we are not coming out of it for years.
That is what they want, us to suffer, and we have to fight like hell to not have it happen because our lives, our survival, what we eat and how we pay our bills if we even can depends on how we fight and if we win on this.
Excellent diary on a strategy by fromer yesterday "Now is the time for boldness"
When the punditocracy and current wisdom is so wrong, one must take a sharp tack away from the mistaken and discredited notions. We have a raging deficit of underinvestment, a huge aging infrastructure, much to be rebuilt, much to be upgraded and built anew and repurposed. how will that be done without huge borrowing, hopefully at still low rates. If we default thru inaction on the debt ceiling it will cost a great deal more and we might not be able to do as much quickly. we could turn into a Japan that has lost 15 to 20 years of investment/GNP growth thru caution and underinvestment in their own country.
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http://www.dailykos.com/....
(My comment on the history of this crisis and the Republican obfuscation and Dem inaction).