Um, the Bailout Bill was signed by George W. Bush - a Republican approving the work of his own cabinet.
The bailout wasn't the issue, by the way. Faced with a catastrophic crisis, propping up a criminal enterprise that we are utterly dependent upon is very much a lesser of two evils choice. The real problem is with sparing these bastards from even a hint of prosecution after the fact.
If you want a more accurate view of where the GOP stands today, consider Eric Cantor (i.e. their leadership) who actively courted Wall Street during the election, promising that the Republicans would provide "better service" and getting a highly disproportionate of the bribes (ahem) contributions in return.
And don't get me started on Elizabeth Warren. She was actively and articulately opposed to the criminal class that's developed in banking. And the agency she designed (the CPFB) was the target for the most vitriolic rage that the House Republicans have managed to date, and that's saying something, given who we're dealing with.
I didn't say opposition to bailouts was unanimous among Republicans, merely that the majority opposed them.
As for "criminal enterprise" and "prosecution", could you remind me what crime was committed, and by whom? Last I checked, taking a long position on housing (the cause of the crisis) wasn't a crime. If it was, we need to jail every homeowner.
Keeping Elizabeth Warren out of the public policy arena is a fantastic move. She is driven primarily by ideology, and displays a remarkable ability to state correct facts in a manner that misleads reporters and the public. See, for example, her nonsensical claims that medical costs cause millions of bankruptcies, or her confusing presentation of data in the "Two Income Trap" which obscures the fact that the primary cause of the two income trap is taxes.
Oh for god's sake. Are you really that uninformed about the crash? Do you honestly think it was simply banks "going long"? Tell you what, if it's an education you're after, see "Inside Job". It's right here, free and legal, for your convenience: http://vimeo.com/54817244.
For someone who knows as little about what actually happened as you appear to, it's probably the best crash course available.
You are correct. The scale of your ignorance combined with the depth of your obliviousness to it rendered me speechless. Should you actually have any curiosity here (which I suspect you don't), you'll find that the resource I provided offers a view vastly more comprehensive than any one person could include in a single HN post.
And not being one to suffer fools gladly, referring you to a comprehensive account of multiple, interlocking frauds spanning a variety of institutions spares me the effort of engaging with someone displaying a Creationist's level of epistemic closure. This particular discussion of rampant corruption and outright criminal conduct (fraud, mostly) has the added benefit of being a very high profile account. It has been widely circulated, closely examined, and generally accepted as a fair and accurate assessment. This level of exposure means you'll have an easy time verifying the claims, should you choose to do so (which, ha).
In the meantime, I'm going to go back to being amazed that someone discussing this in 2013 can do so without appearing to know what a derivative is, let alone how one works.
"yummyfajitas" may have been a quant, but if he's at all sincere about the questions he's asking, he's still a blithering idiot, and deeply dishonest to boot - with himself, if no one else. Here's more on the massive criminal fraud that he failed to see swirling all around him (unsurprising, perhaps, given the source of his paychecks).
Knowing the limits of my own knowledge, I was careful to say "appears".
But honestly, that only makes him even more dishonest. After all, he was saying that there was no real difference between banks involved in the subprime crisis and any homeowner "going long" with a bet on rising home prices. Except that there's a world of difference between placing a bet on a specific piece of tangible property in an open, regulated market, and placing bets of derivations from that market so far removed that they have no clear connection to reality. And he, of all people, should know it.
This refusal to see how cynically the inputs for financial models were being manipulated supports my view that many of the quants who played a key role in this mess had no idea who or what they were working with, that they were oblivious to the fraud and corruption engulfing the firms that employed them, and that they failed to register what would happen when things like fraudulent AAA ratings on securities found their way into a system. Among a broader class of market observers this blindness was attributed to a quasi-religious belief in efficient market theory, rejected the possibility of fraud out of hand.
The basic problem can be summarized as mistaking the map for the territory. In this case, the map was the Black-Scholes Equation. Or rather, the source of the maps was this formula. People who learned to model various risks to determine prices without properly understanding the equation's limits (there were many of both) ended up with catastrophically misguided decisions to their credit.
If there's one thing that 'Inside Job' makes clear, it's that the policy framework that governs markets is absolutely critical to their stability and value. In America, this framework was subverted by the rise of an ideological (again, quasi-religious) form of market theory that say deregulation as both a practical and moral virtue. This was deep tissue corruption, and as it found its way into the laws that governed market players (or failed to govern, as the case may be), it opened the door to a cascade of fraud - people deliberately describing X as Y.
Like a ever-growing fog (toxic cloud, really) this continued until none of the major players had any idea what positions their counterparties were in. Knowing how fraudulent their own positions were, they had every reason to fear the worst from others in the same game. And then, on one horrible day in September, the music finally stopped.
To put it in very crude terms, a system built around bullshit eventually choked on the stuff. I'm not surprised that a person who shared more responsibility than most for the resulting catastrophe would respond by entering a state of deep denial. But it's sad, nonetheless.
> See, for example, her nonsensical claims that medical costs cause millions of bankruptcies,
It is "common knowledge" that medical costs drive bankruptcies so I'm surprised to hear you say this; but of course, I know that "common knowledge" is often wrong. Can you explain how medical costs don't actually often result in bankruptcy?
(This is not an attempt at a sarcastic troll--I think you often, but not always, do have correct contrarian opinions, I just don't know what this one is.)
It has been "common knowledge" ever since Warren pushed a study claiming it during election season.
The gist of the flaw is this:
# Medical bankruptcies = # of bankruptcies x [P(bankruptcy | medical cause) - P(bankruptcy | no medical cause)] x P(medical cause)
Warren computed only P(medical cause | bankruptcy). Thus, her study cannot, even in principle, be used to estimate # medical bankruptcies.
However, she used verbiage hinting that P(medical cause | bankruptcy) x # of bankruptcies = # of medical bankruptcies (do the math - it's not). A bunch of innumerate reporters read the verbiage and ignored the math, leading this "fact" to become "common knowledge".
The claim may or may not be true - I don't know of good data on it. But all Warren did was deliberately confuse the issue to support her political allies.
Aye: 171 D, 91 R. Nay: 63 D, 108 R.
http://www.opencongress.org/bill/110-h1424/show
Why are you complaining about the GOP holding the house? Based on their votes, they seem to be the party of letting banks pay for their mistakes.