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The Lost Generation
Who’s to Blame for a World in Flames? Walter Russell Mead

People like to blame their current statesmen when the world takes a nasty turn. But this global meltdown has its roots with the generation of leaders at the helm in the wake of the collapse of communism.

Published on: October 6, 2014
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  • Andrew Allison

    ” . . . , but a general understanding of how computers work is still worthwhile for non-programmers, just as non-mathematicians still make of basic math on a daily basis for the rest of their lives”. Why? How many drivers have a general understanding of the internal combustion engine? Etc.
    The chronic failing of the education system is its failure to imbue critical thinking skills in its victims.

    • Greg Olsen

      Chances are the average driver does know that a mixture of fuel and air is combusted driving a piston that turns a crank shaft and that energy is transferred to the wheels through a transmission. A driver learns to use a car, just by paying attention to regular maintenance of the vehicle: refueling, engine oil and filter, air filter, water in the radiator, etc. Chances are the owner does not do his/her own maintenance, but the knowledge is gained in how the vehicle works. Can the same be said of a user of the iPad?

      • Andrew Allison

        Surely you jest? I’ll wager $5K to the charity of the winner’s choice that the average driver knows as little about what makes their vehicle work as the average homeowner does about how their fridge does.

    • Corlyss

      You took the words right out of my mind. I too wonder exactly what the value of this kind of trendy idea in comparison to education in, oh, history, civics, competent English, scientific literacy, economics, and critical thinking, not necessarily in that order. I just don’t get it. You used the internal combustion engine; I’d offer the tv too. No one needs to know that stuff to take advantage of the benefits of the invention. It’s a mystery to me why people keep harping on it. Basic computer skills are 1) typing; 2) knowing the call center’s phone #; 3) being able to follow the instructions they get from the call center. I used to think I was hot stuff because several years with MSN taught me a lot about how to compensate for incompetent computer program launches. But by now even that knowledge doesn’t serve me as well as it used to. You don’t have to know how to make bricks to live in a brick house either. The analogies are legion, just underscoring the fatuity of the original advice.

  • Michael W.

    6 months after my internship as an engineer in a solar installation company, I got interested in writing code as a hobby. I quickly realized from the fundamentals that a simple software program can make the company a lot more efficient. When I returned to the company 18 months later, I found the perfect software program and it saved the company a lot of money. The only reason that I was the only one at the company who cared to look for this software program was because I was the only one there who knew how to write code.

    Think of all the untapped efficiency potential that exists out there because no one at the company knows what simple code is capable of. They don’t need to be computer programmers, they just need to know how code can change their life.

    • Corlyss

      Michael,
      Not subtracting any from the value of your experience, I’d like just a tad more statistical evidence that teaching a lot of people code when they are not computer programmers is worth both the time and the money. You might be an outlier.

  • Anthony

    An added consideration K-12 ought to be, especially for those capable of accessing curriculum, fundamental coding – if such a thing exist; all the while remembering “there is long path….” Then going forward, generations acquire tech familiarity until next epoch changing innovation.

    • Andrew Allison

      Anthony, good coding is about symbolic logic, a skill which applies to much more than coding (and about which Charles Dodson wrote 150 years ago). Restricting its application to coding leaves the student exposed to the idiocy of much of what passes for “information” today.

      • Corlyss

        Okay. That’s the first answer that’s made some sense to me.

      • Boritz

        One must consider that the vast majority of Phd’s support Obama and the Democrats and their policies. This goes for overwhelmingly for people with doctorates, masters, and bachelors in computer science. In this light computer literacy is somehow a kind of poison.

  • Greg Olsen

    The definition of basic computer literacy needs to be better clarified. If basic computer literacy is defined as how to navigate a UI and use office productivity tools, as it is in K-12 and community colleges, then people are being ill-served. For example, enterprise software delivered as a service is the current cutting edge IT (I counted 54 startups funded in 2013 alone); chances are sales rep–a non-technical position in today’s job market–works for a software or services firm and needs to be able to use Powerpoint, but also to be effective that sales rep needs to understand how the product works, how it is consumed and what technical or operational problem it solves. There needs to be a much greater literacy in computer organization, networking, IT and the logical constructs of programming. A revamping of general education requirements in 2 and 4 year colleges is in order. Every student should have to take at least one course in computer organization (CPU, memory, storage, I/O, etc.) and one course a high level programming language. They aren’t going to learn to be a software engineer, but they will at least no how computers work.

    Then there is the issue of technology’s relationship with society. User interface technology has come a long way since the 1970s and 80s when I started with computers. It has democratized the use of technology, however, with the side effect of making the machines the master of the mankind rather than mankind the master of the machine. When you don’t know how the machine works, or why it works some way, or how to change how it works, you are no longer master of the machine. It has mastered you.

    One thing I will be doing with my kids now that they are reaching the age of taking on the project, is instead of getting them a computer, I will be helping them build their computers as a first step in understanding how to master technology rather than be mastered by it.

    In a 30 year career in IT, both doing, selling, and marketing, I’ve noticed a gradual degradation of the skill set of the average IT worker, who has grown up in the era of the iconic desktop (Macintosh, Windows, smartphones) and now gesture controlled user interfaces (Wii). The actual understanding of how the product they use and are responsible for administering works has declined over time. In a perverse way, the members of Generation X who went into technology have more actual technical ability than the Millennials that followed them and grew up plugged into the Internet.

    • Andrew Allison

      All very interesting, and completly unrelated to the hypothesis that learning to code should be part of every child’s education.

  • Big Bad Vodoo Daddy

    Great article with excellent points. Mr. Mead, thanks.

  • rheddles

    Go back farther. Both Thatcher and the Russians had reservations about German reunification. It was probably going to happen, but it could have been different.

    Nato was created to combat the Soviet Union. Once the USSR had disappeared so had the justification for Nato and its continuation was a clear threat to Russia.

    China should never have been allowed into the WTO until it became a democracy. This is probably the greatest error of all and the most corrupt.

    • GS

      Samuel Huntington defined NATO as a security organization of the Western civ. As such, it is directed against any hostile xenocivilization, under whatever symbol it goes – be it a hammer & sickle, or a two-headed eagle, or anything else.

    • Corlyss

      “NATO was created to combat the Soviet Union.”

      It was created to “keep Germany down, Russia out, and America in.”

      Have you run into Michael Meyer’s The Year That Changed the World? Apparently, the panic that struck Thatcher and Bush when the Wall fell is worse than you describe. Thatcher actually called Gorbachev and tried to get him to invade East Germany to prop up the regime and stop the unpredictable consequences of East Germany’s sudden disappearance from the geopolitical landscape. I never thought the Iron Lady would succumb to such thoughts, never mind act upon them. Shameful.

      http://www.amazon.com/Year-that-Changed-World-Untold/dp/1416558454/ref=tmm_hrd_swatch_0?_encoding=UTF8&sr=1-1&qid=1412661890

  • Boritz

    “History was over, the Western establishments thought, and with it the necessity of heavy lifting in world affairs. Everything was going to be for the best in this best of all possible worlds, and with only a very little effort on anyone’s part, a global utopia of free governments and free markets would rise on every side.”

    This very old end-of-history philosophy and the Marxist travelers who propagate it in our culture are going to impoverish and kill quite a lot of people. The antidote is to believe in Nietzschean eternal recurrence: Bad things that happened in the past can happen again because the conditions that brought them about before are still possible and indeed may already be manifest. The rub is that if Nietzsche is correct, going down this stupid end-of-history road is unavoidable because it too is recurrence.

  • Anthony

    “The last generation wasn’t wrong that liberal capitalism and technological progress are humanity’s best hopes for a better future. The lost generation didn’t pick the wrong direction: it underestimated the difficulties of the journey….”

    Hindsight remains 20/20 WRM. Clinton, Kohl, Mitterrand, et al could not anticipate events of the Oughts (2000s) and beyond. From a generational standpoint or in the historical perspective of the very long run, three big mistakes referenced in essay may be consequence of many factors – economic, demographic, political, etc. That is, factors perhaps unlikely to be foreseen a generation ago. The world as you have repeatedly written is and remains a complex entity. The global order referenced may not have seen (in both totality and interrelatedness) Asia rising, reformation of capital dynamic, disintegration of Sykes-Picot, and consequence of arbitrary dismissal of both Russia’s history and tradition. To be sure, global state of affairs screams for new instruments or organizing principles to facilitate journey into 21st century unknowns but basis for current concerns (world in flames) ought not be laid singularly at door of Clinton, Kohl, and Mitterrand, et al – despite looming of the shadows in Mirkwood (yes, there is no time to waste).

    • mnemos

      Yes – it’s true that hindsight is 20/20, but the disaster of the euro was quite clear, and quite well criticized, at the time. This is not really as debatable as it might seem either: requirements for a stable currency union were actually laid out in the treaties themselves and subsequently ignored – the choice to ignore what was already recognized as necessary was deliberate. The folks who did criticize the euro were demonized for it, which continues today.

      In the case of the financial system an argument can be made that it is not just about “20/20 hindsight” but propagation of the same errors in the current financial regulations: choosing not to limit leverage for large institutions and legitimizing too-big-to-fail in the Dodd-Frank act.

      A review of the new book by Codevilla hints at a similar argument with respect to the disintegration of Sykes-Picot and Russia’s situation.

      • Anthony

        The above is not a specific argument of Euro/ECB (discussion requiring much more detail) nor Skyes-Picot. Primarily context that may or may not have factored in essay’s theme of attribution. That said, if the countries of Old Continent are to cooperate more closely European political institutions will have to change (only ECB at moment operates centrally and thus far has been insufficient).

        • the viceroy’s gin

          Isn’t ECB part of the problem? Means would seem to think so.

          • Anthony

            Depends on what you identify as problem. Nevertheless, the ECB’s main difficulty is that it must deal with seventeen separate national debts and seventeen separate national governments.

          • the viceroy’s gin

            Precisely. It’s a problem no matter what.

  • ‘The illusions are beginning to clear away now. ‘

    Never underestimate the posh elite’s gift for building ever more bypasses around reality.

  • wigwag

    When it comes to international affairs, Professor Mead is usually remarkably insightful. He’s the Peyton Manning of the “American Interest.” Unfortunately, with this essay he more closely resembles Geno Smith, the maladroit quarterback of the New York Jets, than Denver’s Hall of Fame quarterback.

    Why stop at Bill Clinton when it comes to criticizing the impulse for financial deregulation? That impulse was kindled in the “government is bad,” “regulators are evil” sentiment championed by Ronald Reagan. But maybe we shouldn’t blame Reagan either; after all, the conservative movement that eventually prevailed with the election of Reagan had its genesis with the presidential electoral campaign many years earlier of Barry Goldwater.

    Where do we stop? Should we blame Jimmy Carter and Zbigniew Brzezinski for the tragedy of September 11, 2001. After all, in their enthusiasm for winning the Cold War, they armed the Afghan Mujahideen which returned in a later incarnation as the Taliban and Al Qaeda. Adam Garfinkle thinks the concept of “blow back” is rubbish, but the theory that Professor Mead is proposing here is a kissing-cousin to the idea of blowback.

    On whom should we blame the rise of an autocratic and hegemony-bent China? Isn’t that really the fault of Nixon and Kissinger. After all, it was their policy that neutralized China as a player in the Cold War by reaching out to the Chinese. It was Kissinger and Nixon who formed a tacit alliance with the Chinese at the expense of the Soviets. Many former communist nations are on the road to democracy and capitalism. Is it possible that if Kissinger hadn’t given the Chinese communists a pass that China might more closely resemble Poland today rather than the autocratic and aggressive nation that it is?

    Professor Mead’s suggestion that a primary reason for Russian belligerence in the 21st century is rooted in the decision of late 20th century leaders to exclude Russia from the EU and NATO is just silly. Russia was never equipped to become a western-style democracy; it has neither the culture or the history to sustain the type of political system that we favor in the West. Russia is what it always was. Czarist Russia, Soviet-era Russia and contemporary Russia share far more similarities than they share differences. Very little of what the United States or Western Europe did in the 1990s could have altered Russia’s path. That path was inexorably set by Russia’s history and cultural milieu, not by Western policies.

  • mf

    this article, penned by someone with high “conservative credentials” is a step in right direction. It still remains too partisan in my opinion. Partisanship is a poison that is paralyzing American politics at a national level, to a lesser degree at the state and local levels where people have no choice but to be more pragmatic. Just a few short points:
    Deregulation of finance was a result of long held conservative advocacy which proposed, in essence, that the government is counterproductive and indeed damaging in all aspects of national life other than the military and law enforcement. A collapse of the Soviet Union was taken as an affirmation of this viewpoint, rather than affirmation of a less absolutist viewpoint that centrally planned economy does not perform as well as mixed economy which, during the cold war, combined free markets with pragmatic government intervention in areas like financial regulation, environmental regulation, some protection for labor in areas where labor and capital were in conflict, minimum income in retirement, etc. The fault of Bill Clinton was that he went along, thus acting essentially as a Trojan Horse for these ideas. By being a Democrat, he disarmed what would have been a natural opposition that could at least moderate the implementation. Democrats are still playing this role relative to Wall Street and the aforementioned ideas still dominate the Republican party today.
    The outcome was made worse by a combination of rapid population growth in developing countries and economic globalization. The former guaranteed that one cannot extend western standards of living to poor multitudes without major technological transformation. The latter gave capital, practically speaking, an infinite supply of labor that was willing to work for food. Markets for all the goods were maintained by expansion of debt which continued until debt filled developed economies to a point when further growth of debt would have to be exponential. This is where we are at today, and we are apparently determined to keep on digging. Unwillingness to admit to this truth is bipartisan, but decidedly skewed to the right of the political spectrum.
    I will finally flatly disagree with the author on the issue of Russia. I do freely admit to being born and raised in Eastern Europe. You can see my views as biased or better informed by experience and education, does not really matter to me. Russia has been a colonial ruler of her periphery for a number of centuries. The rule has never been benevolent, but during XXth century it became particularly murderous. The beginning of XXth century witnessed a collapse of colonial rule with one exception, which was colonial rule by Russia, otherwise known as the Soviet Union. Expansion of NATO was not a triumphalist plot against Russia, but an expansion of a system of collective security by heretofore enslaved states of Russian periphery. They asked, or more properly begged for it. In hindsight, it was a prescient aspiration, born from good understanding of Russian society. Today we are witnessing nationalist reaction in Russia which is calling for re-assertion of the colonial rule. No surprise there, colonialist states never let go of their colonies easily. This reaction is also reinforced by the failure of the Russian state to reform politically and economically. This failure is not a fault of the West, but failure of Russia. Not the first one historically, and unfortunately most likely not the last one. Nonetheless, the only choice the world has, in my opinion, is to stand firm and endure this relapse without any apology.

  • Dracovert

    Psychopathy is the world’s worst mental disorder. Psychopathy is measured by Dr. Robert Hare’s Psychopathy Check List (PCL) developed from Dr. Hervey Cleckley’s brilliant insights in the 1941 book, “The Mask of Sanity.” Psychopaths are characterized by Anti-Social Personality Disorder, Malignant Narcissistic Personality Disorder, criminal tendencies, and sexual immaturity. The “mask” that Dr. Cleckley referred to is an attractive and charismatic personality that serves to provide cover for the criminal behaviors of the psychopath. Psychopathy is commonly caused by brain damage, brain hereditary mal-development, and/or psychological damage, often associated with abuse during childhood.

    The common perception of psychopaths dates from the semi-fictional Hannibal Lecter, but quite literally anyone can be subject to the factors that cause psychopathy. With one percent of all people exhibiting psychopathic traits, most psychopaths are found in dysfunctional families, but a substantial minority of convicts are positive in psychopathic assessments. The most damaging psychopaths are found in organizations; there are corporate psychopaths, financial psychopaths, military psychopaths, religious psychopaths, and political psychopaths. Dr. Clive Boddy made a credible argument that the $40 trillion 2008 worldwide financial meltdown was the product of manipulations by financial and political psychopaths. There has been no serious discussion of the LIBOR fraud, which involves $70 trillion in financial derivatives.

    No ethical psychologist will make an assessment of psychopathy without extensive personal interviews. But that leaves a gaping hole in the historical and contemporary records. Marx, Lenin, Stalin, Hitler, Mao, and Saddam Hussein were functional psychopaths. Putin, Obama, and the militant Islamists are also functional psychopaths, but I cannot convince them to go to Dr. Hare and be assessed. Good luck with that, I suppose we will spend the next fifteen centuries being preyed upon by a bunch of brain-damaged misfits.

    • emerich

      The key question: what system of government channels the energy of psychopaths and sociopaths into the least destructive, or even constructive paths?

      • Dracovert

        Dr. Kevin Dutton has tried to convince himself that psychopaths can be contributors to society, but Dr. Martha Stout has utterly refuted that idea. Dutton violated the first rule of dealing with psychopaths: “Thou shalt not listen to what a psychopath says, but only watch what the psychopath does.” Moreover, Dutton has classified the actions of brain surgeons as psychopathic because brain surgeons at work have a cold psychopathic intensity, when in fact brain surgeons act cool under pressure as a conditioned response to stress.

        Psychopathy is considered incurable, and is unlikely to ever be cured as it is the product of neurological damage or intense psychological damage. Do not look for a “constructive path” for psychopaths. Criminal psychopaths belong in jail. Organizational psychopaths (corporate, military, religious, financial, political) need civil restraints. A myopic person must wear glasses to drive, A financial psychopath should not be allowed to work in a bank or financial institution. That would wipe out half the financial executives and a substantial number of politicians for other than menial labor.

  • Corlyss

    “Chinese leaders concluded that their hour had struck and that the scepter of global power was slipping from Washington’s palsied hands.”
    The Chinese have neither the temperament nor the accessible history nor the human resources nor the political skill to do what they think they are setting themselves up to do. They won’t for generations if not 100+ years. This is not 3000 years ago.

  • stefanstackhouse

    Let’s really take the gloves off, now, shall we? The real problem is that the US no longer produces real statesmen (or statespeople, if you insist), and hasn’t for decades. It is no longer actually capable of doing so. If one were deliberately to set about creating a system to assure that wise, capable, hard-reality-tested people would never reach positions of influence and authority, one could hardly come up with something that works as effectively to that end as what we now have in the US.

    It really is starting to feel as if the US is heading for a great disaster. The ordinary people outside the Beltway that nobody pays any attention to are all beginning to sense it, even though the inside-the-Beltway set are still in denial and totally clueless. When the disaster finally comes, there will be plenty of finger pointing all around, and the ordinary citizenry will not be blameless. However, it will be those to whom much was given that much was expected, but was not delivered.

    • Fred

      Absolutely true. It’s no coincidence that of the three Baby Boomer presidents so far, two have been among the worst in history and the other was at best mediocre. I doubt very much that will change or that Generation X or the Millenials (assuming we haven’t collapsed by then) will produce any better leaders. Things fall apart/The center cannot hold. But it has been said, truly I think, that people have the government they deserve. The rot didn’t begin at the top. Our leaders reflect the general decay; they didn’t cause it.

      • stefanstackhouse

        Mainly true – but the problem is systemic, and the ordinary people had virtually nothing to do with the structuring of the system. They are also not the ones that have been gaming the system to their own personal benefit at the expense of the common good.

    • Xenophon

      I don’t think it is the fault of our crop of statesmen per se, I think it has more to do with how utterly divided the country has become over the last 30 years.

      • stefanstackhouse

        That we are so divided was not inevitable. In large part I blame the media. They love to set up a fight between two talking heads of opposite persuasion. They call that “fair and balanced”. What it is not is representative of the entire spectrum of opinion; in particular, the center is left totally out of the picture. As it so happens, a very good case could be made that one will find what is best for the common interest exactly there in the center, so it is the public interest and the national interest that is left totally out of the picture as well. One would never get that listening to our mass media.

        Less visible is that behind these two massive factions lies two very small cabals of special interests. Each stands to gain tremendously by moving public policy in their respective desired direction. By spending lavishly in both overt and covert means, the ordinary people have been manipulated by their propaganda into lining up with one or the other camp. These two cabals do share a few interests in common, one of the very most important of which is to continue to convince the majority of the people of the lie that these two extremes are the only possible public policy positions there can be, that this binary polarization we have now is inevitable and necessary, and that one has no choice but to fall into line with one side or the other. This is just about the one thing on which they are totally in agreement upon, and they make sure that through not just explicit propaganda, but also the implicit message that comes through by excluding voices from the center, that the general public gets this and only this loud and clear.

      • the viceroy’s gin

        How are we “divided”?

        The Beltway cabal is in full alignment, in these issues Means is speaking about .

        They’re in alignment re US spending and debt, too .

  • Andrew Allison

    I beg to differ. The fact that the successors to the incompetents whole failed to deal intelligently with the issues in the 1990s learned nothing from their mistakes. Our propensity to elect incompetents is an entirely different matter

  • FriendlyGoat

    “A thoughtful, careful approach to deregulation that took the long history of financial crises into account, that weighed and weighted the potential risks with due care, and then proceeded cautiously and deliberately towards a reasonable goal would have yielded much better results than the reckless course we chose. But the combination of technocrats and Wall Street promoters that the Clinton administration empowered (with support from Republicans in Congress) rammed through a set of changes that made the most damaging economic crisis since the 1930s inevitable.”

    This is the psycho-babble you get when a conservative begins to realize that financial deregulation is/was a horrible idea. We should have “proceeded cautiously and deliberately toward a reasonable goal”, they say. Undefined BS!
    We should have left most all of it off completely and run in the other direction.

    Clinton did it, we hear. Yeah, with a host of Republicans who now seek to blame him for what every last dang one of them demanded at the time. So, whoopee, we have conservatives complaining that Bill wasn’t a strong enough liberal to put the brakes on THEM. Helluva observation.

    • the viceroy’s gin

      No, I’ll think you’ll find it was the same neocons who supported the wars then and now, who supported their brother neocon Clinton .

  • Andrew Parle

    The idea that the Global Financial Crisis was caused, or even partly caused, by financial deregulation seems to me to be not sustainable on the evidence. For one thing, no-one has been able to point to any deregulation which had any great bearing on the disaster. Glass-Steagall is sometimes put forward as a candidate, but the best analysis I’ve come across (Gretchen Morgensen’s ‘Reckless Endangerment’) considers it only marginally relevant.
    This isn’t to say that government fingerprints aren’t all over the crash, but I’d place the blame on Fannie and Freddie and perhaps the Community Re-investment Act – neither of which count as deregulation of the financial sector.
    Always open to alternative points of view, as long as they’re well informed.

    • the viceroy’s gin

      Why wouldn’t Fannie and Freddie and the CRA count as deregulation of the financial sector? They are regulated, and if the regs are relaxed whether by statute or agency, that’s deregulation, is it not?

      • Andrew Parle

        Well, no. If you argue that deregulation (by government of the free market) the solution is to increase or restore regulation. I would argue that it was mostly the opposite – it was government interference in the free market which is mostly to blame, and the solution is less government interference of that type. this is NOT an argument against regulation in general.

        The financial crash in the US was basically caused by a flood of subprime loans going bad at once. Why did this happen? Probably lots of factors – human greed being a constant throughout history – but the distortions of a rational market by the government are at the top of my list.

        Fannie and Freddie, following the wishes of Congress, developed a huge appetite for subprime and liar loans, thus making it profitable and low risk for banks and other institutions to make such loans and then sell them to F&F.

        The CRA was a regulation which basically forced banks to make more subprime loans, by requiring that loans to different racial groups couldn’t be (seen to be) discriminatory. This forced a lowering of lending standards when making loans to minorities. As isn’t uncommon, this measure intended to help minorities ended up hurting them as a high proportion of these loans went bad, thus impoverishing those who had been encouraged to take the loans in the first place.

        If this story is (mostly) correct, then I would make the government rather than an insufficiently regulated market the major villain.

        • the viceroy’s gin

          You’re agreeing with me, but you’re also trying to say you don’t agree with me. It’s confusing .

          If Fannie and Freddie are suddenly buying up tons of bad loans, that’s relaxed regulation.

          If the CRA is suddenly forcing creation of a bunch of bad loans, that’s relaxed regulation.

          The “market” doesn’t give a rip how many bad loans get out there, as long as they’re certain of a bailout, which they were and they are .

          • Andrew Parle

            If the CRA is suddenly forcing creation of a bunch of sub-prime loans, they are doing it at the behest of Government wanting to extend the benefits of home ownership to low income people. No regulation was changed.
            If the CRA is forcing the creation of sub-prime loans which won’t be paid, that’s excessive regulation.
            There is no regulation against creating bad loans. You don’t need regulation to stop that – going broke will stop that for you.
            BUT if government regulation creates the incentive (CRA) and Government Sponsored Entities are suddenly in the market for large numbers of sub-prime loans, then bad loans are going to be written. This would not have happened without Government intervention, and if it had, it wouldn’t have been systemic. Probably.
            To be honest, we can’t be certain – although Big Government fingerprints are all over the 2008 crash, we all know that crashes can also happen without Big Government.
            Did the banks go ahead expecting a bail-out? I don’t think so. Lehrman Brothers died, after all, and so did WaMu. I don’t think they expected a crash to occur at all – otherwise, they would have off-loaded all the high risk paper while there was a market for it.
            Unless you can point to a regulation which was relaxed which is a plausible candidate for causing the crash, I still maintain that blaming it on deregulation is contradicted by the facts.

          • the viceroy’s gin

            Yes, it’s regulation that was changed, because there was no legislation calling for that change. It was regulatory driven. You’re arguing illegitimately here, I’m afraid. The bad loans were made as a result of regulatory changes and relaxation, and FNMA were buying them up not as a result of legislation, but as regulatory changes and relaxation allowed.

            Yes, the banks did what the did because they expected a bailout. Sorry, but again, you are arguing disingenuously.

            You are not presenting any facts. You are presenting only opinion. Can you point to any legislation, recent legislation, that led directly to tons of bad loans and the introduction of them to the market?

          • Andrew Parle

            I’m still waiting for an example of “deregulation of the financial system” which can be shown to have lead to the financial crisis. You haven’t provided one, because it doesn’t exist. My examples demonstrate interference by government to be a more plausible culprit. Instructing the GSEs to buy more sub-prime loans for political purposes isn’t deregulation of the financial system – it is interference in it.
            Similarly, the bailouts. No evidence that private banks expected bail-outs. But everyone expected the government to bail out the GSEs – which in fact they did, to the tune of hundreds of billions of dollars. This is not to say the bailouts of other financial entities such as AIG were good or bad, just that I see no evidence that they acted in the expectation of receiving bailouts.
            So as far as I can see, WRM’s contention that it was deregulation of the financial system leading to the crash is simply wrong. If you call political interference in the running of the GSEs to be “deregulation”, it is you who is being disingenuous.
            As for facts – you have provided none of your own, simply unsupported guesses (“the banks expected a bailout”) and pretending that “ordering government connected firms to act irrationally for political purposes” is the same as “deregulation of the financial system.” Do you have any actual information to contribute? My first comment was a request to back-up WRM’s original claim; you haven’t told me anything I didn’t know, and I find your spin that it supports the claim unconvincing.

          • the viceroy’s gin

            You’re arguing disingenuously, and you’re doing it repeatedly. To
            repeat, and please acknowledge this statement of fact, and then refute
            this statement of fact: If FNMA suddenly begin buying up bad loans, and
            lenders suddenly began making those bad loans, and neither of those
            happenstances occurred as a result of legislation as we know, then it
            had to occur as a result of deregulation.

          • Andrew Parle

            Okay, what do we have? You haven’t given any example of “deregulation of the financial system”, however deregulation is defined, that I was not aware of. I will take this as your conceding there is no other “deregulation” that we need to consider. So we agree on that.

            Your entire argument is that interference in the GSE’s should be interpreted as “deregulation of the financial system”. That’s fine – you can use words in any way you like, it doesn’t change reality. If WRM was indeed only referring to the interference in the GSEs when he used the term “deregulation of the financial system” then we are only differing about words, not the facts (although there’s no way to call the change in enforcement of the CRA as deregulation, since it was actually becoming stricter and more coercive).

            So as far as I can tell, we agree on the actual causes (CRA+GSE) and differ on terminology, which isn’t important.

            However, when we come to the question of what changes need to be made, your terminology becomes unstuck. Clearly, if “deregulation” lead to the disaster, you think the answer is “reregulation”. This is wrong. The answer based on the actual facts is “reduce government interference” by delegislating the CRA and dismantling the GSEs.

            I know you’d like to blame Goldman Sachs et al for the problem (and I hold no brief for them – I’m sorry they didn’t go bankrupt!) but neither you nor I know of any deregulation affecting them which caused or contributed to the financial crash.

            I strongly suggest you read “Reckless Endangerment”, as long as your blood pressure is under control. There’s plenty of blame to go around, but you can’t ignore the role of government control. For example, the government squeezed out the head of AIG (who had resisted, amongst other things, insuring those complex financial instruments against default) on basically trumped up charges. The new man reversed that policy which lead to tens of billions in losses and a government bailout.

            The one new thing which I know nothing about that you mentioned was the claim that “the banks” were counting on being bailed out. I’d like to know what evidence you have of this being the case, or whether you’re just repeating a false claim. And look where the bulk of the bailout money went to – the GSEs.

          • the viceroy’s gin

            You’re dreaming if you think I’m going to wade through that disjointed gibberish, troll.

            My above post and previous were examples of deregulation, you lying troll.

          • Andrew Parle

            In the absence of facts and of reasoned argument, you resort to abuse and name calling. Anything to avoid being forced to consider ideas from outside your thought bubble. Your loss.

          • the viceroy’s gin

            …and your projections complete the picture, troll. It’s gratifying that you’ve exposed yourself, at least .

          • Andrew Parle

            Whatever you say. I doubt you believe what you’re saying, I don’t know why you think that anyone who read this thread would agree with you.

          • the viceroy’s gin

            Er, you don’t follow public polling much, do you, troll?

            Again, it’s gratifying that your projections exposed what you are, troll.

  • moron

    OBAMA.

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