“It’s complete horse sh*t!”: Watch an Ivy League professor dismantle GOP’s austerity lie

[applegrove]

“It’s complete horse sh*t!”: Watch an Ivy League professor dismantle GOP’s austerity lie

by Ilias Isquith at Salon

http://www.salon.com/2015/02/09/its_complete_horse_sht_watch_an_ivy_league_professor_dismantle_gops_austerity_lie/

"SNIP....................



Part of it is because what I think the financial crisis is best seen as — and we’re still dealing with the aftermath of it, whether we like it or not — is that there’s a class-specific put option. Let me explain what I mean by this: A put option is a contract that’s very common in finance where essentially someone is selling insurance and the other person is taking the income for payments. At some point, they get to basically cash in the put. One way to think about this is, Europe’s been expanding up to the borders of Russia and there’s a country called Ukraine, and, essentially, that means that Europe is writing a put option, which Ukraine has now decided to cash in. Which is why, basically, Europe’s now on the hook for all the crap that is Ukraine. That’s a put option contract.

What has this got to do with the financial crisis and why do I feel passionately about it? Well, remember all those banks that got bailed [out]? In order to get bailed out you need to have assets, and my liabilities are the bank’s assets. The bank doesn’t give a damn about my condo because they’ve got an income stream coming from the mortgage. The assets and liabilities of the bank and the private sector sum up to zero, so when you bail that out, what you’re doing is you’re bailing out the private sector’s assets, which basically means the top 20 percent — if not about the top 10 percent, the top 1 percent — of the income distribution.

How do you pay for those bailouts? You pay for those bailouts with cuts. And who are the people that use government services? Well, it’s not the top 20 percent or above of the income distribution, it’s the bottom 70 percent and below. That’s what I mean by a class-specific put option. The people at the top get their assets bailed; the government says, Oh my God, look at all that spending! It’s out of control! We need to cut policemen and fire brigades and healthcare and various public services.

But what does one have to do with the other? Well, the people at the top who get their assets bailed, you’re not going to tax them, as Obama just found out with his college proposal. So what do you have to do? You have to take it from those who have very little already. I find this personally offensive because, although I’m an Ivy League professor today with a named chair and all the rest of it, the only reason I’m here is because of the British welfare state. I grew up in a single-parent home with my paternal grandmother on basically no money at all, and if it wasn’t for free schooling and free university… I don’t know where I’d be, but I wouldn’t be an Ivy League professor.

So what you’re doing is you’re bailing out the assets of me today so that a younger person of me down the income distribution doesn’t get to go to college like I did. That’s total bullshit.



.....................SNIP"

[msongs]

1. does this also dismantle the democrats' austerity lie? nt

[VanillaRhapsody]

2. Did you take a wrong turn at Albuquerque?

this is DEMOCRATIC Underground....we LIKE Democrats here and do not tolerate bullshit being spewwed about them...

There is Discussionist....your positions are much more tolerated in that joint!

[laundry_queen]

3. if a democrat spews republican austerity horse shit

then they deserve every bit of bullshit thrown at them.

Austerity is the biggest lie out there. It is nothing more than a way of further enriching the already too rich.

Great article.

[VanillaRhapsody]

4. and who has?

You seem to be indicting the entire party...

Left Leaning Independent I presume?

[laundry_queen]

5. You presume often.

and it cracks me up.

I'm a Canadian NDPer aka practically socialist. I suppose I'm still the type of person you are talking about though, you know, since I'm (ew!) "left leaning".

I'm not indicting an entire party, never said anything of the sort. The operative word in that post is IF. You might want to reread the post as it seems you missed it the first time around.

[GummyBearz]

6. lol...

I'm sure your earlier post wont be the only one this person doesn't actually respond to

[laundry_queen]

10. I'm used to it

This ain't my first rodeo.

[VanillaRhapsody]

7. well if the shoe fits!

If you condemn the entire party with bullshit...and or cannot agree to vote for whomever we elect in the Democratic Primary election.....YOU might be a Left Leaning Independent.

Its not hard to make that presumption!

Being Canadian....its even worse because THIS is a site devoted to the election of DEMOCRATS!

[laundry_queen]

8. Seems you missed most of my second post as well.

re: the word if. And lol - one cannot be independent if they are a member of a party, so by definition, I'm no independent.

It's okay. I know your style.

Anyway. Have a great day! I'll even give you a heart. Maybe it'll cheer you up.

[VanillaRhapsody]

9. No I didn't I noted your Canadianness....

and I stand by it...

besides...YOU ignored mine first....Please do go on...tell us who!!!

[jalan48]

12. I thought this site was about the discussion of politics and ideas.

[Enthusiast]

18. Well done.

[Jim Lane]

16. Well, the party's highest-ranking elected official has, for one.

"The hard truth is that getting this deficit under control is gonna require some broad sacrifice, and that sacrifice must be shared by the employees of the federal government," Obama said. "After all, small businesses and families are tightening their belts. Their government should, too."

(from "Obama: Federal gov. needs to tighten its belt", November 29, 2010)

I count that as an example of "republican austerity horse shit": Republican, because many of them were saying it; austerity, because it calls for cutting deficits during a period of economic contraction; and horse shit, because that's precisely the wrong fiscal policy.

Incidentally, your statement "You seem to be indicting the entire party..." is ludicrous. In the post you criticized, laundry queen said that IF a Democrat takes this line then they deserve to be criticized. I interpreted "they" to mean "he or she", i.e., that particular Democrat. No sensible person would say that if one Democrat says something stupid then the entire party is to blame. I personally don't like the use of "they" as a singular pronoun but we purists are losing that battle.

I wonder, VR, what you're going to do when we have an official TPP/fast-track proposal to debate. It's a virtual certainty that there will be Democrats on each side of that bill. No one on DU will be able to discuss it without at least implicitly criticizing some Democrats. Will you respond with your usual "this is DEMOCRATIC Underground" cant? Will it be impossible for anyone to discuss TPP without being labeled a -- gasp -- LLI? (The horror, the horror.)

[ND-Dem]

14. so you're claiming there is no democratic austerity lie? or you just don't want it discussed?

[Enthusiast]

17. We don't like Republicans that masquerade as Democrats. We are sick of them infiltrating our party..

We can determine their identity by the way they never stand up for Social Security and Medicare while they advocate ever more military spending.

Just wearing the Democratic Party uniform does not make one a Democrat. It's just a piece of cloth.

[LWolf]

20. Yes. nt

[WillyT]

11. K & R !!!

[ND-Dem]

13. kr

[certainot]

15. here's what limbaugh said about the 2008 econ disaster- he's occupy OWS now!

a real caller actually got through the best call screeners in the world.

this is why democracy in the US doesn't work anymore- they can blast 50 mil q week with this crap. this is why there is no progress

he calls the caller a seminar caller. he won't say paid caller because that's a staple of rw radio. and using a bunch of coordinated scripted callers for a propaganda operation is a part of rw radio.

this is what the limbaugh site labels it as

Liberal Seminar Caller Educated on the Cause of the Subprime Mortgage Crisis
February 03, 2015


Windows Media
BEGIN TRANSCRIPT
RUSH:  This is Cranbury, New Jersey, Perry.  Welcome, sir, glad you waited.  Welcome to the EIB Network.  Hi.
CALLER:  How are you doing, Rush?  It's like 24 degrees out here.  I'm walking my cocker spaniel, Little Lulu.
RUSH:  Twenty-four degrees.  What's the wind chill?
CALLER:  It's even colder than that.
RUSH:  Yeah.
CALLER:  I'm not even taking that into consideration. The actual temperature, what I'm looking at now, 25.  Cold.
RUSH:  I was up there. We were up in New Jersey on Saturday and the wind chill was like 10.
CALLER:  Yeah, man, it's cold out here.
RUSH:  So I put on my suit jacket instead of just wearing short sleeves, it's cold.
CALLER:  This is what I wanted to say to you.

RUSH:  Yeah.
CALLER:  About an hour ago, before I took Little LuLu out, I was watching TV and they said that Standard & Poor's is gonna have to pay a $1.4 billion fine for its role in the 2008 crash, and what that is, you know, I hear you say all the time that liberals want free stuff.  Well, I'm a liberal, and I don't want free stuff, even though I didn't make a lot of money in my life, I'm 60 years old, I was investing and I had a broker.  The broker told me that these mortgage-backed securities were AAA rated by Standard & Poor's and I should go ahead and buy them.
RUSH:  What a crock that was.
CALLER:  Excuse me?
RUSH:  What a crock that was, AAA rated?  Subprime mortgages were --
CALLER:  By Standard & Poor's.  And so it turned out that when it crashed, not only did I lose my money, but my tax money had to go bail out Wall Street.
RUSH:  Yes!  Exactly.
CALLER:  And so, as a liberal, I don't want free stuff, but I want to make sure that somebody regulates and keeps an eye on what these people do, because so far we found out, Rush, that the honor system just doesn't work, and that's what regulations are for.
RUSH:  Okay, so what is your real point here?  Are you calling as a liberal to say we do need regulation, are you translating that to the vaccines, or are you just talking about something entirely different than the vaccines that --
CALLER:  No, I'm not talking about vaccines at all.  I'm talking about --
RUSH:  Okay.
CALLER:  -- you know, the news that just came on --
RUSH:  Right.
CALLER:  -- the news an hour ago.
RUSH:  Right.

CALLER:  That now we're starting to find out that the reason why, you know, the whole economy crashed was because the Bush administration was looking the other way while Wall Street did what it did.
RUSH:  Oh, see, no, that's not why the economy crashed.
CALLER:  It's not?
RUSH:  No.  It's not why the economy crashed. 
CALLER:  I lost half of my net value that year.  Thankfully it came back, big time.  I tripled my net value.
RUSH:  That must have happened in the Obama administration, then.
CALLER:  That I tripled it?
RUSH:  Yeah.
CALLER:  Absolutely.
RUSH:  Had to be.
CALLER:  But the honor system doesn't work.  Rush, the first thing that the Republicans did when they just got in this new Congress was repeal Dodd-Frank, because Dodd-Frank was put in there to make sure that companies like Standard & Poor's couldn't lie --
RUSH:  It hasn't been repealed.
CALLER:  They didn't repeal it, but they took away a lot of the --
RUSH:  No.
CALLER:  A lot of the regulations.
RUSH:  No they haven't. They wanted to.  They announced it and made a proposal, but it didn't go anywhere because the Democrats oppose it, Obama's not gonna sign it.
CALLER:  Absolutely.

RUSH:  Dodd-Frank is still alive and ready and able to punish financial -- You've got this -- (crosstalk)
CALLER:  Honor systems don't work.  We don't want free stuff.  We just don't want to get swindled.
RUSH:  Okay, now I understand what this is.  This is out of left field.  I'm struggling here to relate.  This is an Open Line Friday call, and I don't know it.  I'm the last to figure it out.  Okay.  This guy is calling in relationship to nothing that we've talked about today.  He's just a liberal, and he's offended that I say liberals want freebies.  And he's calling to say he's a liberal and he doesn't want freebies. He just wants what's due him because the economy crashed when the Republicans were in the White House and because the honor system doesn't work. 
I'm worn out.  I just get worn out, especially when now the subject is subprime mortgage?  The one place where somebody tried to stop that from happening was the Bush administration.  The effort might have been half assed, but they at least tried.  I can get audio sound bites for you of Barney Frank telling regulators to go pound sand as they were trying to rein in what was happening.  Honor system, my foot.  There wasn't any honor system, and nobody ever claims the honor system.  You get this idea that we here are totally opposed to regulation, that we are for unfettered, unchallenged, unregulated capitalism, and nobody's ever made any such assertion. 
Your call is just coming out of the clear blue here.  It's like it's your turn to call talk radio, and Media Matters gave you this topic, so here you're reading from the script. (laughing) Oh, man.  The subprime mortgage crisis was birthed by Jimmy Carter, fueled by Bill Clinton, and it was sent to the moon on a rocket ship by the Democrat Party.  It was based on the premise that it's unfair that people that can't afford houses don't have them.  And the government made lenders -- I can't believe I'm going through this again.  The federal government, starting with Carter into Clinton, demanded that banks -- Janet Reno threatened the banks if they didn't do this -- demanded that the banks loan money, lend money, to people that could never have a prayer of paying it back.  And if they didn't do that, they were gonna be investigated by Janet Reno and the Justice Department and all hell was gonna be breaking out against them. 
Okay, so these banks and institutions are told they've gotta make these loans, which nobody in their right mind would make, so what did they do?  They figured out a way 'cause not anything is statistic, you see.  Clinton and the boys thought the banks would sit there and suck wind for a couple of years in order to make Clinton look good and compassionate so he could say, "Look what I've done for home ownership."  But the banks said, "You know what, we're not gonna lose money here. We're not gonna loan money to people that can't pay it back and sit here and go out of business."
So what they did was package these worthless loans into what became mortgage-backed securities.  And you know what they were worth?  Nothing!  They started out being worthless and they stayed worthless, but they were packaged, what they did was pool all these mortgages, and then they sold them, and they sold 'em on the basis that all these mortgages combined were gonna produce this millions dollars of dollars' worth of income every month.  And so those worthless mortgage-backed securities were purchased under the belief that there was massive amounts of monthly incomes via the monthly payment that all these mortgages were going to create. 
And as each buyer of the worthless mortgage-backed securities learned that they had bought nothing, they continued to repackage 'em into something that some other sucker would buy, until there weren't any suckers left.  And that's when we got the financial crisis.  That's when they all had to be bailed out.  And that's when the Bush administration and everybody fell prey to the crisis presented to us by Henry Paulson and everybody else, that if we didn't bail out these banks, which the government had demanded make these worthless loans in the first place, and backed by the Democrat Party but it was their idea, Bill Clinton and his alone, Barney Frank and Freddie Mac and Fannie Mae, they were all involved in this.  It was all designed to make poor people experience the American dream of home ownership because it wasn't fair. Don't forget that people who couldn't afford a house didn't have one. 
Well, it was not just poor minority people.  It was a large block of it, it was minority based, but it wasn't just poor minority people that didn't have houses.  There's a bunch of white people that didn't, either, and they were part of the -- it was all a ruse.  It was all a ruse to show how compassionate the Democrat Party was.  Anyway, by the time all this worthless paper had made the rounds and had been sold and sold and sold, all over the world, the smartest bankers in the world who bought worthless paper time and time again then claimed they needed to be bailed out because if they weren't, the world economy was gonna collapse.
So Henry Paulson got his guys together and he said (imitating conversation), "Do you like your second and third homes in the Hamptons?" 

They said, "Yep." 
"You guys in California, you like your second and third homes in Lake Tahoe and Palm Springs?" 
They said, "Yep."
"Do you like your private jets where you're flying your dog and kids around?" 
"Yep." 
"Well, then you're gonna sign this piece of paper demanding that you want $35 billion minimum from the government." 
The Wells Fargo guy, "I didn't do this. I didn't join this parade. I don't want a bailout." 
Paulson said, "You're not getting out of the this room 'til you sign it." 
So they all signed it, all the banks did, making it look like every bank needed to be bailed out.  That gave us TARP and a number of other things, all to save the global economy.  Now, what's the caller's name?  Perry.  Perry, I know you're still out there.  If you want to know why all of this happened -- and, by the way, your dollars were used to fund mortgages for people that had no money to pay 'em, had no business being given them.  If you want to know why all that happened, the Democrat Party behaving under the auspices of liberalism, led by Jimmy Carter, the first fool to get involved. 

Bill Clinton saw a great idea and tried to expand on it, got Janet Reno threatening the banks and it was people in the regulatory agencies that you seem to love here during the Bush administration that were trying to get accountability into this and to shut this down, and it was Democrats led by Barney Frank of liberalism, which was doing everything to intimidate these regulators to shut up and go the hell away.  This one's owned from beginning to end by the Democrat Party.  There may have been some Republicans involved in this bailout and Paulson, don't know what he was, he was part of the Bush administration engineering all this, but this was a bailout, and what do you think quantitative easing is, buddy? 
That is more of your liberal Democrat banking buddies being given money, printed by the Federal Reserve so that they can enjoy profits through the roof in the stock market.  Everything you're supposed to hate is propping up Wall Street at the expense of Main Street.  You ought to be out there decrying every day that Wall Street has a big gain.  Because the reason it's happening is that the insiders are taking care of themselves.  The Fed's printing money, buying stock with it.  You want to know why there's a big gap, wealth distribution gap, why the rich keep getting richer?  What do you think is gonna happen?  The Fed is gonna print three and a half trillion dollars and essentially give it to the stock market.  You think people in the stock market, Perry, are gonna do okay? 
Now, who's in the stock market?  Who do these people on Wall Street vote for, Perry?  Same guy you voted for.  Do you realize under Barack Hussein O this income distribution gap, the income gap, however it's portrayed, the wealth gap, income gap, inequality, what, it has skyrocketed under Barack Obama.  It's just mathematics.  You print three and a half trillion dollars, and that's not an error, called quantitative easing, is to make sure the stock market didn't plummet with the rest of the economy.  Because the Masters of the Universe are gonna take care of themselves and not become paupers.  If they control the money, if they control the printing presses, why in the world should they ever go broke?  That's the way they look at it.  That's the value of going to Harvard, Princeton, Yale, whatever.  Anyway, gotta take a break .  How did that call happen?  I'm still trying to figure it out.
END TRANSCRIPT

[Enthusiast]

19. Kicked

and recommended a whole bunch!