Poisoning the Patient

Here is a good recap of the real culprit in the financial meltdown. We know, of course, it was government interference. But sometimes, in the heat of argument, the facts slither away. Particularly when faced with an opponent whose opinion was formed by reading the New York Times.

Peter J. Wallison, The True Origins of This Financial Crisis

"Two narratives seem to be forming to describe the underlying causes of the financial crisis. One, as outlined in a New York Times front-page story on Sunday, December 21, is that President Bush excessively promoted growth in home ownership without sufficiently regulating the banks and other mortgage lenders that made the bad loans. The result was a banking system suffused with junk mortgages, the continuing losses on which are dragging down the banks and the economy. The other narrative is that government policy over many years--particularly the use of the Community Reinvestment Act and Fannie Mae and Freddie Mac to distort the housing credit system-- underlies the current crisis. The stakes in the competing narratives are high. The diagnosis determines the prescription. If the Times diagnosis prevails, the prescription is more regulation of the financial system; if instead government policy is to blame, the prescription is to terminate those government policies that distort mortgage lending."

If we don't recognize that government is the culprit, we are screwed. The Sizzling Pork Doom about to be foist upon the unsuspecting economy will be just the first of many prosperity-killing policies...as we force-feed the patient poison, and can't figure out why he's not getting well.

The Gunslinger