Alan Greenspan: Political Tool

Alan Greenspan was the world's chief executive officer for economic growth and stability as Chair of the Federal Reserve Board for nearly twenty years from the mid-1980's until the crash of every international market due starting in 2007.  Republicans deified Greenspan crediting him with economic prosperity through sound monetary policy that enabled successfully balancing the federal budget in the Clinton years.

But when asked to explain the housing bubble and the collapse of financial markets for which he was the chief overseer, Greenspan acts as innocent as the little kid surrounded by pieces of the broken cookie jar when asked what happened.

Greenspan says he didn't believe governments should avoid intefering with the choices people make in open markets.  Better to trust financial institutions in their measurement of risk than to insert government regulation.  True enough.

But how does Greenspan explain  the behavior of businesses responsible for evaluating the risk of mortgage-backed securities?  Fitch, et al assigned the same AAA rating to mortgage-backed securities for liar loans as they had previously given to the rating of mortgages for loans that previously required a substantial down payment and conservative ratios for borrower income to debt.  The rating agencies explained they had no historical data on which to assess the risk associated with loans that had no down payment or verification of income.  Therefore the rating agencies explained they had no choice but to give the same AAA rating.  Investment bankers such as Citibank used the AAA rating dubiously assigned by the rating agencies to make huge profits in packaging the questionable loans at the same price as loans previously adhering to more conservating underwriting practices.

Curiously, the Federal Reserve under Greenspan never bothered to challenge the assignment of AAA ratings or examine how an overheated housing market was fueling the overall American economy.

At the same time every American was given the chance to claim any income without proof in order to buy a house, President Bush was assuring the American public that closing factories and sending our manufacturing overseas was creating a chance to re-invent the American worker.  And President Bush could point to a strong economy as proof new jobs were right around the corner for the middle class workers displaced by closing businesses.

In reality, the housing boom was masking the gutting of the American economic engine.  When the housing bubble finally burst there were no jobs to shift to in the new American economy.  The American economy was actually dependent upon housing construction, real estate sales, mortgage brokers, escrow companies and the housing construction after market:  the companies and jobs related to furnishing houses and landscaping the yards.

Greenspan didnt want to do anything to slow down the housing bubble because the artificial economic stimulus served the purposes of the Bush Administration.  Greenspan is turns out was little more than a very bright but disingenuous tool of Republican right.  Bush was able to fuel the economy and in turn his wars in the Middle East with taxes from the housing bubble.  Given the shift of so many businesses overseas combined with tax breaks for the remaining big businesses, the housing bubble became a key source of jobs and tax revenue.

Koch, Trump and Refining the Formula for Fascism

Calibrating the Formula for Fascism

Trump’s pandering populist rhetoric may test the boundary of what our democracy can tolerate in the way of diverse points of view.  The National Review says of Trump,

“ Trump is a philosophically unmoored political opportunist who would trash the broad conservative consensus within the GOV in favor of a free-floating populism with strong-man overtones.”

The cynical view is Obama has said little and done less over seven years to show respect for people who have a work ethic, believe in God, and value patriotism.  The really cynical view is that he has done this to allow a demagogue to peel off a portion of this group to join the extreme right to achieve the critical mass for a third party candidate.  This third party candidate would vote at the expense of the Republican mainstream.  The Democrats would then have certain victory in the next Presidential election.

The Republican Party is trying to figure out how to keep Trump from using his populist base to  start a third party.  That third party candidancy would make Clinton a shoe-in as our next President. 

Sounds clever.  But at what cost?  Trump may lose interest in serving as the spokesperson for the large mass of people looking for simplistic explanations in a complex world. 

Unlike the George Wallace era, we now have the Koch Brothers able to do real-time and long term behavioral response surveys to help find-tune their messaging.  They have already gone through at least four transitions:

·         Christian (Pretentious) Fundamentalism

·         Soccer Moms

·         Tea Party

·         Trump’s nascent formulation of a Fascist Party.

With each new phase the Koch Brothers have expanded their base.  But perhaps more ominous they have reduced the American people’s alarm at the notion of a fascist state.

So we may be certain that Trump wont be the Republican candidate and that a third-party candidacy is certain to fail.  But that is not cause for celebration.  The Koch Brothers will not see this as a setback.  Trump is simply the next iteration toward calibrating the formula to Fascism.