Joe Nocera had one of those excellent moments last week — what I call an “I’m as mad as hell, and I’m not going to take this anymore” moments.
While not as universally applicable as the disgust and anger the 1976 cult classic movie portrayed, Nocera was pointing out how outright propaganda machines masquerading as tax-exempt and subsidized think tanks can create an alternate reality out of whole cloth, and how our main stream media and Congress adopt and spread that propaganda. In this case, his target was one of the more dishonest Resident Scholars at the American Enterprise Institute, and his widely repeated lies.
As I mentioned at the time the Financial Crisis Inquiry Commission made its initial report to Congress, this campaign of disinformation about the root cause of the financial crisis is unfortunately repeated as “truth,” that Federal government community reinvestment policy and government sponsored enterprises Fannie Mae and Freddie Mac were the main reasons we went into a financial tailspin.
The reality, that subprime and alt-A mortgage securitization madness was the cause — that reality is being swept under the rug.
Those two previously quite small mortgage market subsectors were terribly abused by Wall Street and the real estate industry, and they were completely the creation of the free-market capitalists that the AEI owes allegiance to.
It’s something to behold when a significant fraction of our citizens and our lawmakers are so invested in protecting their fundamental (almost religious) beliefs that they end up giving a free pass to the crooks and their methods. Along the way, “true believers” like Peter Wallison actually invent facts and re-write history rather than face the truth that their ideology needs examination and maybe a fix or two.
As the main proponent of this baldfaced lie, Wallison knows the untruth of his positions. If he had any doubts, he could ask his fellow AEI employee (Fellow of AEI) and real housing finance expert Alex Pollock, who gave us this excellent warning about the coming crisis in late 2007.
That said, here’s Nocera’s withering broadside.
A few choice paragraphs for those who don’t follow the links:
“You begin with a hypothesis that has a certain surface plausibility. You find an ally whose background suggests that he’s an “expert”; out of thin air, he devises “data.” You write articles in sympathetic publications, repeating the data endlessly; in time, some of these publications make your cause their own. Like-minded congressmen pick up your mantra and invite you to testify at hearings.
You’re chosen for an investigative panel related to your topic. When other panel members, after inspecting your evidence, reject your thesis, you claim that they did so for ideological reasons. This, too, is repeated by your allies. Soon, the echo chamber you created drowns out dissenting views; even presidential candidates begin repeating the Big Lie.
Thus has Peter Wallison, a resident scholar at the American Enterprise Institute, and a former member of the Financial Crisis Inquiry Commission, almost single-handedly created the myth that Fannie Mae and Freddie Mac caused the financial crisis.”
Now, back to effort of correcting the record and telling the inside story.