(Article changed on January 12, 2013 at 12:08)
(Article changed on January 11, 2013 at 18:38)
Wall Street has a saying: Money talks, bullshit walks. Business is about money, not about empty words. The narrative is always framed around the numbers; never confuse words, or actions, with actual results. Or as Nate Silver said recently, "Peggy Noonan is very very talented at making bullshit look like a beautiful souffle."
To keep the vulgarity at a minimum I'll substitute the word "doublespeak" for "B.S." Doublespeak is used to obscure or distort the meaning of critical information in order to leave a false impression.
Take, for example, the case made by a consortium of right wing think tanks against the 30-year fixed-rate mortgage. It's complete and utter doublespeak. There is zero quantitative evidence, none whatsoever, to support their claim, which is that adjustable-rate mortgages are not significantly more risky than fixed rate loans. It's like saying your risk of heart disease stays the same whether or not you take up smoking.
Right Wing Conspiracy of Silence
Which is why the doublespeak artists who argue against fixed-rate mortgages--at the American Enterprise Institute, the Cato Institute, the Heritage Foundation, the Mercatus Institute, and the Heartland Foundation-- adamantly refuse to engage in any discussion that examines loan performance over time. Their right wing conspiracy of silence is part of a campaign to perpetuate The Big Lie that the financial crisis was caused by affordable housing policies.
Review any of the following pieces, and seek out any numbers comparing loan performance between ARMs and FRMs. You'll come back empty-handed:
The Risky Mortgage Business: The Problem with the 30-Year Fixed - Rate Mortgage
The Dark Side of the 30-Year Fixed-Rate Mortgage
The Dark Side of the 30-Year Fixed-Rate Mortgage, Part II
Housing Market Will Be
Fine without 30-Year Fixed Loans
Do We Need The 30-Year Fixed-Rate Mortgage?
All of these authors engage in similar sleights of hand. They use words like "risky" and "safe" outside of any context, in order to create an impression of false equivalency.
None of them outdo Edward Pinto of the American Enterprise Institute, who perverts the history of the S&L crisis in the early 1990s, and the recent financial crisis, by claiming they were caused by fixed rate mortgages:
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