We are a commune of inquiring, skeptical, politically centrist, capitalist, anglophile, traditionalist New England Yankee humans, humanoids, and animals with many interests beyond and above politics. Each of us has had a high-school education (or GED), but all had ADD so didn't pay attention very well, especially the dogs. Each one of us does "try my best to be just like I am," and none of us enjoys working for others, including for Maggie, from whom we receive neither a nickel nor a dime. Freedom from nags, cranks, government, do-gooders, control-freaks and idiots is all that we ask for.
Whenever there are crises in markets, socialists are quick to label them as failures of capitalism and free markets. While markets surely do, on occasion, fail, freeze-up, or get clogged (although they are far more effective than planned economies), in this case you need look no further than the role of government regulation and control to see the seeds of the problem:
Rep. Barney Frank: I do think I do not want the same kind of focus on safety and soundness that we have in OCC [Office of the Comptroller of the Currency] and OTS [Office of Thrift Supervision]. I want to roll the dice a little bit more in this situation towards subsidized housing. . . .
Yes, Congress asked Fannie and Freddie to roll the dice, and they did so while making a pretty penny for themselves. As Kimball put it today:
... in recent years the “invisible hand” that adjudicates among competing interests to produce the most efficient channels of economic growth has increasingly been replaced by the heavy hand of government-sponsored social engineering. One especially onerous one is in the form of the Community Reinvestment Act, which, in its fully-developed, post-1995 form, was a gigantic wrench tossed into the engine of capitalism that stymied the orderly evaluation and pricing of risk. It’s one thing to give Chris Dodd or Barack Obama a sweetheart mortgage for favors rendered. It’s quite another to force banks to issue more than $1 trillion of risky mortgages to people with bad, or no, credit history and then prop them up with taxpayer guarantees through the agency of entities like Fannie Mae and Freddy Mac.
Banks didn't want to own all these loans so they packaged them in creative ways and sold them like bonds to willing buyers (albeit with possibly erroneous triple-A ratings). You can call that "greed" or you can call that smart. But when the market for these packages disappeared because the housing bubble burst, the owners of the packages were forced under the new laws to mark to market - and there was no market. It's as if you tried to sell your house today for $500,000., but nobody gave you an offer today, so overnight your net worth (and your ability to get credit) dropped by $500,000.
Anyway, now banks are hoarding cash to meet their capital needs and to avoid further risk. That is why we will begin to see funds fail, and maybe more institutions fail, unless the Feds do more than their rescue bill to loosen up credit.
Marxists and statists of all stripes are, as one might expect, rubbing their hands in glee and declaring this the final death crisis of Capitalism. But I think just the opposite is occurring. What we are in fact seeing are the final death throes of governmental social engineering. As I noted two weeks ago, we are in a kind of Mentos-in-coke world right now - where, thanks to tech, the sheer speed of transactions and the enormous breadth of response, almost any outside influence can quickly turn the whole economy (or culture) into an explosive brew.
Please commission a special investigative body headed by a prosecutor to investigate negligence and possibly criminal behavior on the part of officials at Fannie/Freddie, HUD and congressional members charged with oversight of these bodies. This should be treated like a financial Watergate and let the chips fall where they may...We must investigate the causes of this housing meltdown that triggered a banking crisis the likes of which the world has never seen. We do a disservice to the public and will condemn Americans to relive these crises in the future if we don't find out the causal factors and change the behavior of individuals and overhaul failed policies and statutes that are at the root cause. It is not enough to say that Fannie/Freddie had a tacit blank check from the government and therefore it created an environment of unreasonable risk-taking in mortgage lending. What effect did the Community Re-investment act have on lending policy? How do ACORN and other so-called advocacy groups influence Congressional oversight? Do these advocacy groups receive public funds? Who gets paid and how much? Were banks pressured by Congress to make bad loans? Who made the money while the American taxpayers were left to pick up the tab? Americans would be gratified to see ten thousand predatory bankers, lobbyists, advocates, and even a few Congressional members sent away to Federal prison for leading this country to a financial precipice from which we may never fully recover. Our loss in hundreds of billions of dollars, hundreds of thousands if not millions of jobs, careers, businesses as well as the loss of credibility in world markets and in the eyes of the world deserves a fair, factual, and thorough accounting.
Yes, absolutely...I hope that a groundswell of public opinion will force their hands...I'm not sure President Bush has anything to lose. Of course, an Obama Presidency will mean the end of fact finding in this regard...
This post is right on. What I find disturbing is that McCain and Palin are not making this case. Palin, when asked in the debate with Biden last night what caused the problem, she said it was all Wall Street greed. She might as well have been a Democrat talking.
She simply said that for political reasons...the debate was not the forum to get into a technical discussion of the causes of the crash. This was simply a populist rhetorical tactic to not get trapped into a rat hole of which there is neither time nor full facts to properly discuss. And yes Wall Street greed is certainly a contributing factor.
Given that this is the level of moral courage we can expect from the leadership of a major Christian Church in this country today, I must ask this question:
who can we expect to confront the evil doers in DC and on Wall Street?