My new VDARE.com column explains what former Republican Senator Phil Gramm is talking about in last Friday's Wall Street Journal, when he says it wasn't his financial reforms that caused the crash: it was loose money and politicized mortgages:
If you aren’t a regular reader of VDARE.com, you’d need a secret decoder ring to understand what Gramm means by “politicized mortgages”. The closest he manages to come to explaining what he’s talking about in his Wall Street Journal op-ed is his euphemistic reference to Fannie Mae and Freddie Mac’s 35 percent quota that “targeted geographic areas deemed to be underserved”.
You know and I know that “underserved” is Diversity Speak for black and Hispanic neighborhoods. Yet Gramm still can’t come out and say it in public. (In his oral presentation at AEI, he had used the somewhat more revealing term “inner cities and depressed areas”. But he didn’t dare be even that clear in the WSJ, or maybe the editors wouldn’t let him)
Moreover, that raises a fundamental question: How can Respectable Republicans like Gramm ever hope to persuade the public when they are terrified of saying what they mean for fear of being branded a “racist”?
I guess Gramm would prefer to go down in history as the man who blew up the world than to be accused by the SPLC of uttering hatefacts.
For example, it would strengthen Gramm’s case to point out that Crash was kicked off not just by a subprime lending crisis, but one concentrated in merely four states: California, Arizona, Nevada, and Florida. In August 2008, these accounted for 50 percent of all foreclosures and the vast majority of defaulted dollars.
But if Gramm were to mention that, it would also raise the unmentionable specter of Demographic Change.
There was overlending going on all over the world—yet the collapse started in a few rapidly Hispanicizing states in the U.S. Why?
You have to look at both sides of the equation: lending and repayment. In California and Company, not only was too much money being lent relative to past rates (which was happening in lots of other places, too), but, also, the earning capacity of the new homebuyers to pay back their loans was declining—as Americans moved out and Latin Americans moved in.
That double whammy in the Sand States of increasing lending and decreasing human capital is, more than anything else, what blew the gasket on the world economy.
Of course, we also needed a third element—political correctness—to keep investors from noticing what was happening.
And that, judging from Gramm’s timidity, appears to be as strong as ever.