Monday, June 7, 2010

Krugman Versus the Wingnuts- Not Really a Fair Fight

Okay, as promised, I would like to comment on an article by Nobel Prize winning Princeton economics professor Paul Krugman, which I linked to, and the right wing replies that my post received.

Krugman's post quickly demolished the absurd right wing canard that the real estate collapse was caused by liberals forcing lenders to grant mortgages to unqualified minorities, via the Community Reinvestment Act. Before getting to Krugman's points, let me remind you that this law did no such thing. All it did was to prevent lenders from denying mortgages to fully qualified minority borrowers, because they lived in minority neighborhoods. There was not a shred of evidence at the time that loans to these people were any riskier than ones to white people, and no such evidence has ever been produced.

Now, on to Krugman. He bases his argument on the following facts:

"The Community Reinvestment Act of 1977 was irrelevant to the subprime boom, which was overwhelmingly driven by loan originators not subject to the Act."

Something that we all know, but which my commenters have chosen to ignore.

Krugman continues:

" The housing bubble reached its point of maximum inflation in the middle years of the naughties...During those same years, Fannie and Freddie were sidelined by Congressional pressure, and saw a sharp drop in their share of securitization while securitization by private players surged."

As befits a reasonable person, Krugman demonstrates the correctness of his claim by a group of charts showing clearly what he is talking about. You can see it all here.

Now, to the comments elicited by my post on Krugman's article.

Silverfiddle has this to say:

"Krugman is a crafty crapweasel who selectively plucks statistics to make narrow political points... Bush's loose money policy dealt the coup de grace to the whole progressive house of cards...Again, Krugman is an Enron crapweasel who should be using his education to actually educate and enlighten."

Basically, Silverfiddle responds to Krugman's clearly presented data by calling him a disgusting name, and then making the absurd, sick claim that Bush, their hero for eight years, who was hated universally by Democrats, was really a liberal, rather than the textbook conservative that he obviously was.

Dmarks has this to add to the conversation:

"Hope that was not another leap of imagination to some sort of nonexistent racial code-word like sometimes happens in these parts. After all, poor white people probably outnumber all African-Americans."

Rather than engage Krugman on his data, dmarks simply resorts to a typical sample of right wing race baiting. He continues:

"So, what do you think of government employees being paid tens of millions of dollars?"

Which has, as far as I can tell, absolutely nothing to do with Krugman's argument, but is, I suspect, just some other right wing talking point.

And, of course, what would be this argument without a contribution from Derek:

"You ignore the dollar amount of commitments to the CRA."

Which cryptic remark has, as usual, nothing whatsoever to do with Krugman's evidence.

Well, there you go... name calling, phony claims, outright lies, and Republican talking points. That's the only answer they have, because the facts are on our side.

Krugman ends his post:

"Of course, I imagine that this post, like everything else, will fail to penetrate the cone of silence. It’s convenient to believe that somehow, this is all Barney Frank’s fault; and so that belief will continue."

I wish I could tell him that Silverfiddle, dmarks and Derek had proved him wrong, but as usual, being Paul Krugman, he's right on target.

1 comment:

Derek said...

"Which cryptic remark has, as usual, nothing whatsoever to do with Krugman's evidence."

But it has everything to do with how the CRA affected the crash. Just because Krugman ignores it doesn't mean that it isn't relevant.

"let me remind you that this law did no such thing. All it did was to prevent lenders from denying mortgages to fully qualified minority borrowers, because they lived in minority neighborhoods."

No, that isn't what the act did. You act as though it was an antidiscrimination law, which is in part true as that was how it was put forth, but in reality these "minority neighborhoods" as you call them are very poor areas. The act subjected banks to regulation should they not give a certain dollar amount of loans to individuals from these poor areas.

That is why the dollar amount matters. The CRA was only part of what caused the recession, but it was an essential element.