“Washington Brewed the Poison,” Jonah Goldberg, New York Post, September 19, 2008
A Good Short Analysis of the Financial Crisis
14 Responses to “A Good Short Analysis of the Financial Crisis”
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“Washington Brewed the Poison,” Jonah Goldberg, New York Post, September 19, 2008
A good look at what happens when well-intentioned social engineers decide to promote a cause, such as universal home ownership. Some people who perhaps ought not to be taking on mountains of mortgage debt are induced to do so by deliberately created incentives. The culprits? The politicians who engineered the incentives that led to bad debt and who put the taxpayers on the hook for hundreds of billions of dollars? No! It must be that old standby villain, capitalism.
The current ‘crisis’ is nothing but bills coming due for poor judgment and greed on several fronts. Real estate agents after commissions urged people to buy as much house as they could get a mortgage to support, assuming the economy and salaries would grow. Banks offered subprimes with weird terms that presumed either improved salaries and home values or perniciously assumed that borrowers would at least pay the interest. And there were lots of ‘risky’ loans based on the 1990s economy of a growing Dow and decreasing federal debt. Basically, a lot of gambling, and Washington has no business bailing out gamblers.
The Amish certainly don’t have these problems.
Let’s see. The same generation that brought us nuclear proliferation, Vietnam, glorification of drug abuse, AIDS, whoring around in foreign policy, and trillion-dollar federal debt, now wants a blank check to further their childish and imprudent ways? I don’t think so.
Goldberg’s piece is good, but only part of the story. Without the Federal Reserve control over interest rates, there’d be no, or at least little, real estate bubble. This is at the heart of the mess.
David’s reply doesn’t make sense any to me, but I particularly take issue with his last paragraph. None of this was brought on by “a generation.” There are responsible individuals. Blame them, not a generation.
BTW, lumping all those things on one generation is historically off. Vietnam? Robt McNamara born 1916 planned that. Our real national bankruptcy will come from Social Security (FDR born 1882) and Medicare (LBJ 1908) Paulson was born in 1946, Bernanke in the 1953.
And anyway, it’s all the fault of Woodrow Wilson’s signing the Federal Reserve Act. So let’s blame his generation (born 1856)
More analysis that’s worth consideration. None of this is a full account, but these both make correct & important points:
Ron Paul says:
http://www.cnn.com/2008/POLITICS/09/23/paul.bailout/index.html
Kevin Hasset says:
http://www.bloomberg.com/apps/news?pid=20601039&sid=aSKSoiNbnQY0&refer=columnist_hassett
We are being told over and over that the whole mess is a result of a “lack of regulation,” but the pundits rarely ask whether the market was in fact “unregulated” or whether it might have been “overregulated” or “badly regulated.” Deliberate state policies to maximize home ownership created incentives for issuance of loans to those who would not otherwise have qualified; but with the taxpayer providing backup, why check so closely? Fannie Mae and Freddie Mac– Government Sponsored Enterprises, rather than private firms operating in a free market — are not part of a “free market.”
This is not a “crisis of capitalism,” but a Crisis of Interventionism.
By ‘the same generation’, I mean the basic age group of citizens (voters) who promoted and elected the officials (of various ages) who oversaw the most recent generation of foreign policy folly, increasing federal debt, and much greater willingness to live in constant debt while increasingly allowing the fed to do the same. The problems of fiat money and fed policy have been known for years. It most certainly is the fault of an entire generation for failing to apply the brakes to the shell game. Now, that huge jet is in the air, and it’s being hand-flown by idiots when it is supposed to be on auto-pilot. Thus we have market fluctuations of 4% a day, crude oil spikes of $25, nationalization of much of the mortgage market, and so forth. It is an unfolding disaster. 9/11 wasn’t the disaster. It was the distant early warning of the disasters now upon us as the two towers of assets and liabilities are in flames.
David, blaming a generation doesn’t make sense. There’s no such thing as “a generation” that makes decisions or bears responsibility. To say there is, is at best a metaphor, at worst collectivism. But mostly it simply serves to confuse the issue and protect the truly guilty.
No American voter has ever had any serious opportunity to do anything about fiat money, certainly not since 1945. Among tools you have for accomplishing things, your vote is about as weak as anything can be.
You should think clearly about which individuals have power, what powers they have, and what they can and cannot do. For example, I understand, at a fairly deep level, the problems of fiat money, and I have always voted as best I could to do something about it. My efforts mean nothing, no matter what I do I have no influence. I have no control. But by virtue of my birthdate, I’m sharing guilt, by the collectivist standard you propose.
Your post tends to sound like the cultural conservatives who rant against baby-boomers and blame them for everything imaginable. But this position makes no sense. (BTW, why don’t these crazy coots ever credit us with at least defeating Keynesianism, and outlasting the Soviets in the Cold War?)
The only reason I bother debating this is that the “blame the generation” argument is already being used in the Federal debt crisis (the current mess is the private debt crisis). And all it does it misdirect attention away from the guilty government officials and pit American citizens against each other.
This mess has been concocted in Washington, mostly by unelected officials, and behind the scenes. Voters are out of the loop. Now the Bush administration is trying to use the mess to make one of the greatest power grabs in history.
Don’t spend your effort replying to me, write your Representative and Senators and tell ’em to block the Bush/Bernanke/Paulson proposal. That’s more likely to accomplish something; at least you’ll be talking to someone with some power.
http://www.house.gov/
http://www.senate.gov/general/contact_information/senators_cfm.cfm
Oh, I did. Several days ago. The first time I’d bothered to formerly chime in about a legislative proposal in a long time. And you’re quite right. I do blame the collective, and I believe in collective punishment. Whether a group is passively harboring terrorists or harboring funny-money bankers, it’s all the same to me.
Good on you for contacting your reps re bailout.
Now that you have done that, go punish yourself. Americans are harboring crooked statists.
When terrorists (or freedom fighters, depending on your perspective) destroy skyscrapers, they steal wealth and peace of mind. When the federal reserve and politicians kite a scheme to destroy the dollar, they steal wealth and peace of mind. We have no choice but to terminate their command “with extreme prejudice”, if necessary.
I hope that David’s cryptic remark is not what it sounds like. The people who destroyed those skyscrapers destroyed much more than wealth and peace of mind. They took the lives of thousands of people and the peace of mind they destroyed was the security of life, not the security of the purchasing power of one’s currency. I would like to see the elimination of the Federal Reserve, as its positive functions can be fulfilled by private commercial clearing houses and other tried-and-tested institutions and its negative functions (attempting to control the economy) should be eliminated. But the comparison of central banks — as destructive as they can be — to terrorist cells is overwrought and unhelpful, especially when remedies are mentioned.
The line is a reference to the opening scenes of the movie Apocalypse Now, when Sheen is being sent to deal with Colonel Kurtz. There’s no cryptic threat, just bravado and the recognition that G-d and nature keep their promises, even if people don’t.
â??A faithful man shall abound with blessings: but he that maketh haste to be rich shall not be innocentâ? (Proverbs 28:20).
“If he has exacted usury or taken increase — shall he then live? He shall not live! If he has done any of these abominations, he shall surely die; his blood shall be upon him.” (Ezekiel 18:13)
Ok…. I think we’ve established that David is, um,
“differently enabled” intellectually. That line of “thought” is not worth pursuing.