Friday, March 27, 2009

The Meltdown and Race Politics

Brazil's President, Lula da Silva has joined the list of world leaders making undiplomatic statements as the economic slowdown begins to bite. Addressing a press conference alongside Britain's Prime Minister Gordon Brown, Lula brought race into the equation: "This crisis was caused by no black man or woman, by no indigenous person, by no poor person," he said, "This was a crisis that was fostered and boosted by irrational behaviour of people that are white, blue-eyed, that before the crisis looked like they knew everything about economics."
There you have the third world, or postcolonial, view of the meltdown. Lula himself, it is worth mentioning, is white, though not blue eyed, continuing a Brazilian tradition of pale presidents leading a racially diverse population.

American right-wingers have a different take on the matter. They blame the crisis on the Community Reinvestment Act, signed by President Carter and strengthened by President Clinton, which encouraged banks to lend in low-income neighbourhoods. Although the legislation was colour blind, the neighbourhoods affected were frequently dominated by blacks or Hispanics, which has resulted in Republicans grumbling about 'minorities' in their analysis of the meltdown.
Republicans have also pointed fingers at the two quasi government companies, Fannie Mae and Freddie Mac, established during the Great Depression to facilitate mortgages for low-income workers. Among their main targets has been Franklin Raines, Bill Clinton's former budget director, who resigned as CEO of Fannie Mae back in 2004.

Raines was #2 on CNN's list of ten 'culprits of the collapse', right behind #1, which was 'You', meaning the American consumer. Clearly neither the Republicans nor CNN are going to buy Lula's 'no black man' claim.
The majority of experts reject the Republican contention that the Community Reinvestment Act played a central role in the crisis. A greater proportion blame banks which created and traded in complex derivatives that now go under the alias 'toxic assets'. Matt Taibbi recently published a strongly worded, well-researched screed titled The Big Takeover in Rolling Stone magazine, which includes this passage:
"The banks knew they were selling crap," says a London-based trader from one of the bailed-out companies. To get AAA ratings, the CDOs relied not on their actual underlying assets but on crazy mathematical formulas that the banks cooked up to make the investments look safer than they really were. "They had some back room somewhere where a bunch of Indian guys who'd been doing nothing but math for God knows how many years would come up with some kind of model saying that this or that combination of debtors would only default once every 10,000 years," says one young trader who sold CDOs for a major investment bank. "It was nuts."
OK, so we've blamed blue-eyed white guys; blacks and Hispanics; and now Indians. What about those usual suspects when dealing with matters financial, the Jews? Well, that's the big taboo in politics as well as media. Only crazy mullahs blame the Jews, right? So everybody's been pretty quiet on that front. One can't imagine Taibbi publishing, even as a quote, a line like, "They had some back room somewhere where a bunch of Jewish guys who'd been doing nothing but math for God knows how many years would come up with some kind of model..."
This didn't stop the Anti-Defamation League, a body that sniffs out anti-jewish sentiments wherever they exist and in a few places they don't, from conducting a survey and trumpeting their finding that a third of Europeans believe Jews are responsible for the financial crisis.
The Arabs and Chinese appear to have got away clean thus far.

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