Ross Perot’s plain-speaking candor fits the times: “The deficit is like the guy that finds a rattlesnake in his pants. He knows he's got to shoot it, but he doesn't want to hit anything important.” No one’s shooting yet, but they sure know how to throw more of our money around! Money’s the talk of the town in Washington, and all that money seems to be saying is “Good-bye!”
The “final” bailout plan is yet to be fully dissected or passed, but Treasury Secretary Hank Paulson and Federal Reserve Chairman Fred Bernanke deserve kudos for trying to do something to get ahead of the problem! Unfortunately, ratcheting up the fear of a pending economic calamity to get action required politicians to produce some “cure” or risk creating an even greater economic panic! Whether their rescue plan will stabilize the market and provide needed loan capital, history will be the judge, but America will find a way to bounce back. But much can be learned from what helped create this crisis that should have a bearing on your presidential vote.
Democrats and liberal pundits are blaming the free market, the Fed’s easy money policy, deregulation, greed, and, of course, President Bush. Certainly, Fed Chairman Ben Bernanke’s monetary policy that has aggressively lowered interest rates helped drive down the value of the dollar and make loans overly attractive at unheard of rates. Certainly, unscrupulous financial institutions are also to blame for creating unsound and complex investment vehicles that fueled speculation and generated excessive profits without ever questioning the investments or the loans they created.
The administration is also not blameless, but an Opinion Journal column by Charles Calomiris and Peter Wallison documents the role of Congress in creating the current credit crisis. Accounting scandals at Fannie Mae and Freddie Mac surfaced as early as 2003 when Federal Reserve and Congressional Budget Office economists found that, despite their subsidized borrowing rates, Fannie and Freddie had not significantly reduced mortgage interest rates. Instead of making mortgages cheaper for borrowers, they were making excessive profits and thus creating greater risks for the taxpayers, the economy, and mortgage payment-strapped homeowners.
In response to their lapses, Fannie and Freddie used a commitment to increase financing for "affordable housing" to curry Democratic support. Rep. Barney Frank openly admitted at a committee hearing on GSE reform in 2003: "Fannie Mae and Freddie Mac have played a very useful role in helping to make housing more affordable . . . a mission that this Congress has given them in return for some of the arrangements which are of some benefit to them…."
Rand Paul on NSA: “I Believe What You Do on Your Cell Phone is None of Their Damn Business” | Daniel Doherty