|Behind the Great Recession, there was a credit crunch. Behind the credit crunch, there was a housing bust. And behind the housing bust, there was an explosion in debt in mid-2000s among low-income households.
So what was behind that?
One explanation begins with inequality. The idea is that the rich-poor gap leads to credit booms—as the poor try to close the gap with borrowed money— and this leads to defaults, financial busts, and recessions. This story would make the "keeping-up-with-the-Joneses principle" a key player in the great crash. It would also implicitly shift some of the blame to low-income people being, well, jealous and greedy for the lifestyle of their richer neighbors.
There are two problems with this story. First, there's no evidence that inequality actually leads to credit booms, in the first place. Second, a new paper finds that the parts of the country where poor families took on the most debt weren't the areas with the most inequality. They were the areas with the least inequality.
To examine whether big rich-poor gaps turn poor people into big borrowers, researchers looked at local levels of income inequality and debt-accumulation. They found that poor households didn't borrow more in high-inequality areas. Instead, poor households borrowed more in poorer areas (i.e.: areas with less overall inequality). In short, it's the opposite of what the keeping-up-with-the-Joneses effect would predict. Poor households borrowed more when they had poor neighbors, not rich neighbors.
One possible answer is that banks operating in richer counties were more likely to reject loans to poorer families. "Lower-income mortgage applicants in high-inequality regions are rejected more frequently and pay higher mortgage rates than similar applicants in low-inequality regions," they write.
Another plausible answer is that predatory lenders were preying on poor families in poor areas. Gail Burks, president and CEO of Nevada Fair Housing Inc in Las Vegas, told the Financial Crisis Inquiry Commission that she had witnessed a "metamorphosis" in the lending industry that had given birth to "predatory lending practices such as flipping loans or misinforming seniors about reverse mortgages." [...]
Blast from the Past. At Daily Kos on this date in 2007—Obama vs. Fox Noise Channel:
|Over at what Keith Olbermann now calls Fox Noise Channel, they just can't back away from their attempt to slime Barack Obama. Not only did John Gibson repeat the lies long after they'd been debunked, he also repeated the bogus "it came from Hillary" assertion.
And since Fox follows the Bush administration's golden rule "when you're in a hole, dig faster," they've also gone after CNN's Anderson Cooper for calling them on their lies. Hilariously, Fox spokesperson Irena Briganti demeaned Cooper's reporting ability and called his correction of Fox's errors "a cry for help." Coming from a network whose sole purpose is whining, Cooper should take this as unvarnished praise.
The Obama lies are a model for the off-key moaning of the right's media machine. Fox ran the lies on two shows, and plastered it on Papa Murdoch's king of yellow journalism, the New York Post. From there it was picked up by right wingnut talk show hosts who pitched in to keep the swift boats sailing. This included Dan Caplis, who not only repeating Fox's false accusations about Barack Obama and Hillary Clinton, but adding his own dash of nuttery by calling Obama's elementary school a "Muslim seminary."
As usual, no one on the right seems to be interested in facts when they've got a good character assassination underway, especially if they can sling mud at Obama and Hillary at the same time. Stopping now would be slander interruptus.
On today's Kagro in the Morning show, Mike Huckabee says women must control their libidos, and Dick Black says men can't, because "nighties." Greg Dworkin rounds up the Christie news, Ryan Cooper's "The tea party and the structure of American government," Beinert on Rand Paul, and two from Sarah Kliff tracking ACA news. We gave in to more Richard Sherman stories, again comparing his bravado to that of, say, "successful" businessmen and tech bros. Very Serious News interview interrupted for a Bieber update! "Take your tech start-up gospel and shove it." And "When companies break the law and people pay: The scary lesson of the Google Bus."