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RUSH: Here’s Nicholas in Columbus, Georgia. Great to have you on the EIB Network. Hello.

CALLER: Hey, Rush. Thank you for taking my call.

RUSH: You bet.

CALLER: Well, I was calling you today about how the Republicans — what I’m worried about is that Republicans won’t have learned their lesson about past monetary and fiscal failures because, I mean, the Democrats have made this situation way worse with the high taxes and demonizing the wealthy, but the Republicans have had their past failures such as having low taxes, which are good, but having very high spending and very low interest rates, which have, I think, hurt the economy and kind of set this bubble up, the housing crisis and all that kind of thing. What I’m worried about is that the Republicans and the election will kind of take advantage of the Democrats but not really, you know, change the game in that we’ll all be in the same mess as before, you know what I mean?

RUSH: I think I do.

CALLER: Like they claim that they want to cut spending and cut taxes and all that stuff. I kind of worry that we’ll play the same game as before and we’ll keep taxes low but we’ll just keep on —

RUSH: You’re talking about the RINO Republicans. You’re talking about Republicans in part of the ruling class. You’re not talking about conservative Republicans, and there are the Republicans that you’re talking about who will say whatever they need to say to get elected, and then they’ll forget or just ignore what they promise they would do and govern in a whole different way. But that’s not an unknown. I mean the whole notion that conservatives need to take the Republican Party, need to recapture it, take it over is something that we have been encouraging and suggesting for a number of years here. To say that there are some Republicans that are — although I have to tell you something, the Republicans do get a bad rap for spending, but they’re pikers compared to what this guy’s done. Bush’s last deficit was not even $200 billion. Obama’s first deficit is $1.4 trillion. So I mean there’s really no comparison here in the destructive nature of these two parties. They’re not the same, even as bad as some Republicans can be.


RUSH: Now, that last caller never got to the point that I was told he was gonna get to, and that is that Republicans are responsible for the meltdown. That’s the only reason I took the guy’s call, because he was going to say the Republicans are responsible for the meltdown, and he didn’t get anywhere near that. But I still want to address this notion of these are third-party types: ‘Rush, there’s no difference between the two parties. Republicans are just as bad as the Democrats are when it comes to spending.’ Republicans have never had control of Congress for more than a blink of an eye when compared to how Democrats controlled both houses for most of this and the last century. Remember when the Republicans won the House in 1994 is the first time in 40 years — and even when the Republicans won the Senate in 2000, they entered into a stupid power-sharing agreement.

Who came up with that idea? Who was running the Republican Party? Trent Lott decided, ‘To show we’re fair, we’ll have a power-share agreement with Tom Daschle.’ Now, you can argue that in the recent years that the Republicans were in control, they were so stunned to find they had the majority they didn’t know what to do and they acted like it, and there’s no question that a lot of Republicans… This is the whole thing we talked about in this Angelo Codevilla piece in the American Spectator last week on the ruling class. There’s no question that Republicans that live in Washington want to be part of it. Lindsey Graham is a great example of wanting to be accepted, wanting to be in the big clique. There’s no question there are some Republicans like that.

But just like the left loves to say in defense of communism, ‘It’s never really been tried…’ That’s what they say. ‘Well, yeah, communism has never been tried. The right people never really have done it. We really never had the proper amount of funding.’ That’s what all this talk when Obama was nominated was about. ‘We’re the ones we’ve been waiting for,’ meaning: ‘Finally! Finally, after all of these decades and eras! Finally the right socialists have come along to create our utopia,’ and you could almost say the same thing about Republicans in control of Congress, but the idea that the Republicans are responsible for this meltdown? My friends, I want to go back and refresh your memories. There is one primary reason for this meltdown.


It is the subprime mortgage business, which was a creation of Democrats and leftists. It was based entirely on leftist ideology, and that is that life is unfair. ‘If somebody can afford a house, everybody should be able to be in a house. It’s not fair that some can’t own a home. Not in an America that’s just and moral.’ So we had to come up with a way because market economics doesn’t work that way, because not everybody is equal. No two people can ever be equal if there is indeed genuine free will and freedom. It’s not possible. But that doesn’t stop the left. So it was created with, whatever, the Investment Redevelopment Act or whatever the name of the laws were. The banks were forced to make loans to people who could never pay ’em back.

In fact, loans were structured with no down payment. It was only principal that was being retired, and these loans were then sold. These worthless loans, these worthless mortgages were then sold to whom? Fannie Mae and Freddie Mac, who insured them — and guess who it is that’s not being reformed in any of this so-called financial regulatory business? Fannie Mae and Freddie Mac. Guess whose executives — and not just executives. A lot of people at Fannie Mae and Freddie Mac were also ‘Friends of Angelo’ who got sweet deals on their mortgages from Countrywide, along with Chris Dodd and Barney Frank and all the rest. So these greedy banks who were forced to make these loans to people that they knew were never gonna pay ’em back, had to come up with ways to turn something worthless into value.

So they came up with ‘Mortgage-Backed Securities,’ and they came up with ‘Collateralized Debt Obligations,’ and who the hell knows what else, and they started selling them to each other as insurance policies. Then Fannie Mae and Freddie Mac come along and buy up all these worthless mortgages and thus guarantee them, all because a bunch of liberal Democrats were buying votes and making sure that people who had no business owning a home owned them. Of course they couldn’t pay the utilities. They couldn’t pay to furnish them. They couldn’t do anything. So that was handled too with other loans that didn’t cost them any money for other things. That’s the foundation of this so-called meltdown. So we had a bunch of ‘toxic assets.’

We had a bunch of worthless mortgage loans, a bunch of worthless paper. Well, these people circle the wagons for each other, and the people in government (Hank Paulson and the rest) circled the wagons for them, and created this notion that we were going to have a worldwide financial economic collapse in 24 hours if we didn’t bail these people out and come up with ways to pay these toxic assets, or make them worth something. Hence TARP was born. But the first vote on TARP failed. It was two weeks before TARP was actually voted on, and in the two weeks we didn’t have anything near a financial meltdown. We were had. It was a giant, 100% scam.

And it was all based on the fact that the powers that be who created the problem had to then make their buddies whole so that they didn’t lose their homes in the Hamptons or in Aspen or wherever the hell else they have their second or third homes. So they had to bail out these people. These people who are creative on Wall Street had to come up with ways to make these worthless mortgages worth something, so they created all this stuff. You can talk to some of the people that were involved in this stuff at the time and they knew that what they were doing was ridiculous. They knew that most of it could not even be explained, much less understood.

They knew at some point the bubble was gonna burst on all of this because the only thing that kept this fraud alive was the continuing escalation of housing prices, real estate values. Once that bubble burst, the dam broke, and everything fell to the wayside — and that’s when the ruling class got into business and said, ‘We need these bailouts here. We need these bailouts there, because we need to make these people whole.’ The financial crisis was going to destroy the people who engineered the scam, and they had to be bailed out. ‘Financial meltdown’ implies that every aspect of our capitalist system fell apart, and it didn’t. That’s why we’re in the mess that we’re in now, because enough people were convinced that capitalism was corrupt and capitalism by design failed.

So all of a sudden now a whole system on which the greatest nation on earth was founded and operated is under assault, when in fact capitalism didn’t fail. Central Planning and command-control economies with subprime mortgages (and their creation and their demand to be implemented under fear of federal investigation) is what led to the meltdown. Liberalism! Socialism, Marxism, whatever you want to call it, that’s what led to the economic crisis that we’re in, not capitalism. You can say that these greedy bankers creating all these phony things (like CDOs, the Collateralized Debt Obligations or whatever) insurance policies, quasi that they came up with to try to give their worthless paper some value. They wouldn’t a-done it in the first place if they weren’t forced to make these stupid, worthless loans. No responsible person in the banking industry is gonna loan money to somebody that cannot pay it back and do it as a matter of policy.

They may have friends that’ll scratch their back like Angelo Mozilo. He’d give Chris Dodd a favorable deal on a couple mortgages or Barney Frank and the guys at Fannie Mae and Freddie Mac, but institutionally nobody’s going to give away money. It doesn’t happen! Yet it was happening. Banks and whoever else were giving away money, in effect giving away houses. So homes were being built that had no business being built because the people buying them really couldn’t. The whole thing was artificial, the whole thing was a fraud, and it wasn’t capitalism that did it. It was activist social engineering brought us started by Jimmy Carter, acted upon and enlarged by Bill Clinton, and then really amplified by Barney Frank and Chris Dodd. There were regulators who knew this, and there was the Bush administration who knew this and they tried to shut it down, and the regulators were impugned out of town. The regulators were harassed and threatened by members of Congress when they dared speak the truth about all this.

Then election years rolled around, and it was time to put all this under the rug so nobody knew what was going on. ‘Let’s continue the facade that all’s well and hunky-dory in the real estate market,’ when everybody knew that was involved that this was a time bomb that was going to blow up at some point, and it just so happened to explode in the 2008 presidential campaign. Why, shazam! It just happened to blow up in August and September 2008, right out of the Democrat convention in front of the acceptance speech with those fake Greek columns, and they played our nominee like an absolute Stradivarius fiddle. The guy cancels his campaign and goes into Washington to deal with the problem that his own ruling class had created. Capitalism did not create the problem. Capitalism was not the corruption that led to the disaster. We are in the financial straits that we’re in…

I know there are some other things that are now a part and parcel of this. It’s not just the subprime crisis, but that’s the foundation. That’s the floor that gave way that led to where we are now, and it was predictable, and the people involved knew it at the time. This subprime stuff dates back to the ’90s, folks. The subprime stuff was not created during the Bush administration. The subprime loan and mortgage business actually got rolling in the nineties. It took ten or 15 years for it to crash and burn, and all it took to crash and burn was the housing bubble bursting when the value of real estate finally peaked and started plummeting. Now look where we are. Look at how many people’s homes are basically ‘underwater,’ not worth the monthly payments.

Now we’ve got stories urging people to just walk away from them. Just walk away from the mortgage! Banks own all kinds of properties here. The price of housing continues to fall. This was all brought about by policy, not capitalism. It was all brought about by liberalism. One-fourth of the mortgages in Miami are either late or in foreclosure. That tells me that one-fourth of the mortgages in Florida had no business being created, if that. Have you ever stopped to ask yourself in this economic crisis…? You look around and you’ll find there are a lot of people that are not hurting. A lot of people have been dinged. I mean, anybody who had a stock portfolio has been dinged, but there are a lot of people who are not hurting.

There are a lot of people who aren’t underwater. There are a lot of people who are not ‘living to paycheck to paycheck.’ Do you ask yourself who they are and why they’re in that circumstance? Because there are answers to it, and they’re the good old-fashioned answers. (interruption) What? No, they’re not lucky. It’s called thrift. It’s called understanding the basics of not spending what you don’t have and not financing what you’ll never be able to pay back, and continuing to roll that debt over and over and over. So there are choices. This economy has not ensnared everybody. Everybody is not in dire straits. I was explaining this to somebody the other day. They said, ‘Well, then why are you concerned about it?’

I said, ‘I love the country! I hate this! This whole thing has been artificially manufactured.’

The October Surprise of 2008 was the subprime mortgage crisis failure’s timing. That was the October Surprise. If you have the view of this country that I have — the greatest country ever, the greatest land of opportunity (no cliché) ever — to find as many people who live in this country as shut out and denied that opportunity on purpose? By design? Yeah, it makes me mad, too. The ruling class was not hurt in the Depression. FDR wasn’t hurt during the Depression. The ruling class has not been hurt. John Kerry is still out there buying yachts (and not paying taxes on them). The first subprime loan was given in 1993, folks. The subprime mortgage business, that’s the floor that fell out of all this. That’s why there is a ‘meltdown,’ if you want to call it that. It’s not the fault of free market capitalism.


RUSH: Now, folks, on this subprime business, let me be charitable. Even if the Democrats did not purposely cause the financial crisis via the Community Redevelopment Act and the subprime mortgage, even granting that they were simply purely motivated by altruism, they just wanted affordable housing, as Barney Frank said, they just wanted to get poor people into housing because it’s the fair thing to do, even granting that, when the whole thing fell apart they didn’t try to manage it, they tried to exploit it. And when the whole thing fell apart they tried to blame capitalism, Republicans, and conservatives for it. So even being charitable — and that’s a big stretch here, I’m just doing it as an example — even being charitable, they’re still a bunch of creeps for what they’ve done here.


RUSH: Really, folks, this is a point well worth remembering. Obama and the Democrats, when a crisis comes up, even a genuine crisis, they’re not going to manage it or try to fix it; they exploit it. The oil spill, you name it, whatever crisis comes up. In fact, crisis, that’s what Rahm Emanuel meant: a crisis is too important to waste. They exploit them. Everything is political to them. Not about you.


RUSH: We’re talking about managing crises and dealing with them rather than exploiting ’em. You just look at how much destruction this regime has done in just a little more than 18 months, and their people are unhappy, which is natural, because they’re constantly enraged and angry. Eighteen months! There has been more destruction of the country in 18 months, I mean just taking us back to where we were, you know, Obama and his boys say that nobody wants turn back — yes, we do. We would love to go back to just 18 months ago. And stop and think of that. Just returning us to where we were in 2008 would today represent one of the most startling reductions in federal power ever known in our entire history. And even at that it wouldn’t be nearly enough but that’s how much we’ve lost. That’s how much of the private sector has been usurped in 18 months. If we could just roll the clock back to 2008, simply return to where we were, the greatest reduction of state power in our history. It’s sadly an illustration of what we face.

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