Robert Scheer: Clinton Bubble: Clinton's Actions Led to Housing Collapse that Devastated Homeowners [View all]

[amborin]

This is the story of how Clinton Democrats laid the groundwork for the collapse of the U.S. economy in 2008—a catastrophe from which working blacks in particular still have not recovered.

the roots of this disaster go back much further, to the free-market propaganda of the Reagan years and, most damagingly, to the bipartisan deregulation of the banking industry undertaken with the full support of “liberal” President Clinton. Yes, Clinton. And if this debacle needs a name, it should most properly be called “the Clinton bubble,” as difficult as it may be to accept for those of us who voted for him.

His were the words of technocrats, arguing that modern technology, globalization, and the increased sophistication of traders meant the old concerns and restrictions were outdated. By “modernizing” the economy, so the promise went, we would free powerful creative energies and create new wealth for a broad spectrum of Americans—not to mention boosting the Democratic Party enormously, both politically and financially.

And it worked: Traditional banks freed by the dissolution of New Deal regulations became much more aggressive in investing deposits, snapping up financial services companies in a binge of acquisitions. These giant conglomerates then bet long on a broad and limitless expansion of the economy, making credit easy and driving up the stock and real estate markets to unseen heights.

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http://www.truthdig.com/arts_culture/item/the_great_american_stickup_is_bush_really_20100916

At the bottom, a plethora of aggressive lenders was only too happy to sign up folks for mortgages and other loans they could not afford because those loans could be bundled and sold in the market as collateralized debt obligations (CDOs). The investment banks were thrilled to have those new CDOs to sell, their clients liked the absurdly high returns being paid—even if they really had no clear idea what they were buying—and the “swap” sellers figured they were taking no risk at all, since the economy seemed to have entered a phase in which it had only one direction: up.

(critics) never had a chance, though; they were facing a juggernaut: The combined power of the Wall Street lobbyists allied with popular President Clinton, who staked his legacy on reassuring the titans of finance a Democrat could serve their interests better than any Republican.


Clinton’s role was decisive in turning Ronald Reagan’s obsession with an unfettered free market into law. Reagan, that fading actor recast so effectively as great propagandist for the unregulated market—“get government off our backs” was his patented rallying cry—was far more successful at deregulating smokestack industries than the financial markets.