No, not the Iraq War. I want to talk about the other Republican screw-up…the sub-prime mortgage mess. Paul Krugman covers it nicely today in his provocatively headlined column Blindly Into the Bubble: Ayn Rand, chainsaws, and the housing crisis. Krugman quotes Fed Chairman Ben Bernanke:
Market discipline has in some cases broken down, and the incentives to follow prudent lending procedures have, at times, eroded.
Krugman humorously compares this to Emperor Hirohito's famous 1945 declaration of Japan's surrender:
The war situation has developed not necessarily to Japan's advantage.
The sub-prime mortgage crisis is Alan Greenspan's parting gift to the American people. Voters should remember that this problem has occurred under a Republican president, a Republican controlled Congress, a self-proclaimed (Libertarian) Republican Federal Reserve Chairman Alan Greenspan, and is a prime example of the Republican economic policy of deregulation.
The way I see it, the free-market fundamentalists can explain this in only one of two ways:
A) This is one of those bitter pills that the American people will have to swallow on the road to economic freedom. Government must not intervene while the market corrects itself. You're on your own, even if 10 million of you lose your houses.
B) We were all wrong. We need a government bail-out. (This is Alan Greenspan's new position. Or, as Greenspan said recently, "Cash is available, and we should use that in larger amounts, as is necessary, to solve the problems of the stress of this.")
Somewhere, Ayn Rand is not very pleased with her sycophant.
Putting aside for a moment my dark angel of Schadenfreude for the free-market fundamentalist's dilemma, the sub-prime mortgage mess is a true public policy issue. Should the government intervene or not? If so, to what extent? My only hope is that if/when the government bails someone out, they will be at least as generous with homeowners as they will be with the investment class.
Notably, the sub-prime mess is a significant issue here in North Carolina. This from a December 18 article on WRAL.com:
Foreclosures have skyrocketed across North Carolina as part of the nationwide mortgage credit crunch. Statewide, 45,000 homeowners went into foreclosure this year, up 143 percent from a year ago. In Wake County, more than 4,000 people lost their homes, a 15 percent jump from 2006.
Since it is a presidential election cycle, a final note on Republican screw-ups. Voters need to recognize that the Republican presidential contenders do not even consider these mishaps mistakes. According to them, the problem is that America the Exceptional has used too little military force and has too much government regulation.
In other words, they are happily running campaigns to the right of George W. Bush. That's a campaign strategy that every Progressive will welcome as a holiday gift.
Speaking of which…happy holidays to all…time to go fight that war on Christmas!