Please stand for this month's reading from The Gospel According To Saint Thomas....
Economist Thomas Sowell, the smartest man in the world now that Milton Friedman is dead, has given us new insights into those "who drove the car into the ditch", as our president keeps claiming has happened.
Another political fable is that the current economic downturn is due to not enough government regulation of the housing and financial markets. But it was precisely the government regulators, under pressure from politicians, who forced banks and other lending institutions to lower their standards for making mortgage loans.
These risky loans, and the defaults that followed, were what set off a chain reaction of massive financial losses that brought down the whole economy.
So it doesn't matter who was driving the car when it inevitably went into the ditch? Perhaps we should question those who dug the damn ditch that was running across the middle of the interstate? Give us more, O Saint Thomas, give us more....
Was this due to George W. Bush and the Republicans? Only partly. Most of those who pushed the lowering of mortgage lending standards were Democrats-- notably Congressman Barney Frank and Senator Christopher Dodd, though too many Republicans went along.
At the heart of these policies were Fannie Mae and Freddie Mac, who bought huge amounts of risky mortgages, passing the risk on from the banks that lent the money (and made the profits) to the taxpayers who were not even aware that they would end up paying in the end.
However, anyone who reads the scriptures of Saint Thomas would've seen this coming from afar. As the good Doctor Sowell has pointed out many times, the stated goals and objectives of any policy do not matter. All that matters are the incentives that are created. In this case, Fannie and Freddie were incentivized to take insane risks because they knew that someone would be there to bail them out if things went badly. That someone would be....you.
You have their undying gratitude.
Let us continue with the next verses:
When President Bush said in 2004 that Fannie Mae and Freddie Mac should be reined in, 76 members of the House of Representatives issued a statement to the contrary. These included Barney Frank, Nancy Pelosi, Maxine Waters and Charles Rangel.
If we are going to talk about "the policies that created this mess in the first place," let's at least get the facts straight and the names right.
The current policies of the Obama administration are a continuation of the same reckless policies that brought on the current economic problems-- all in the name of "change." Fannie Mae and Freddie Mac are still sacred cows in Washington, even though they have already required the biggest bailouts of all.
Why? Because they allow politicians to direct vast sums of money where it will do politicians the most good, either personally or in terms of buying votes in the next election.
The man has spoken.
Thus endeth the reading from The Gospel According To Saint Thomas.
You may be seated.