Why Was There a Crisis? GOP: Well... "Bubbles Happen"

(Via CJR)

It's hard to know where to begin after you read the primer conservative defectors from the Financial Crisis Inquiry Commission.

Krugman gives us the primer's origin story:

Last week, reports Shahien Nasiripour of The Huffington Post, all four Republicans on the commission voted to exclude the following terms from the report: “deregulation,” “shadow banking,” “interconnection,” and, yes, “Wall Street.”

When Democratic members refused to go along with this insistence that the story of Hamlet be told without the prince, the Republicans went ahead and issued their own report, which did, indeed, avoid using any of the banned terms.

Here's a sample from the primer:

Bubbles happen. In retrospect, they always seem easy to identify, but as they are building, experts debate whether they exist—and, if so, why. The recent housing bubble was no different. Despite national home price appreciation well above the historical trend for almost a decade, and local markets with even more pronounced price swings, most homeowners and mortgage investors believed there were sound fundamentals underpinning their investments.

We will likely never have a complete explanation for why there was a housing bubble, but we have some clues. First, even without a big change in the costs of building a home, a sharp increase in demand for homes can cause rapid price increases until new homes are built, bringing prices back down.

Got that? We will likely never have a complete explanation....

Geez guys, couldn't you have just said No one could have conceived...?

CJR's Ryan chittum does us all a solid and directs us to Bethany McLean's column over at Slate.

She calls the primer what it is - bullshit.

...get ready for a few of the primer's breathtaking conclusions. "Put simply, the risk of a housing collapse was simply not appreciated." Shit happens. ("Bubbles happen" is, in fact, the first sentence in the report.) How about some exploration of why consumer advocates—who in the 1990s began warning the Federal Reserve and members of Congress that people were getting loans they couldn't pay back—were ignored? Here's another genius insight: "The panic ended when confidence returned." That one inspired me to check the definition of panic (a "sudden overwhelming fear") to make sure I wasn't wrong to find this a bit redundant. Daylight appeared when the sun rose. War ended when the armies stopped fighting. Hurt went away when the pain subsided.

In a way, we should be greatful to Vice Chairman Bill Thomas and commissioners Peter J. Wallison, Douglas Holtz-Eakin, and Keith Hennessey for so clearly illustrating who they work for.

They wrote a report about the financial crisis and agreed to avoid using the words "Wall Street."

Ye gods.