goofy blame is wrong

We’ve heard wingnuts blame the government for making money easy and that a tiny sliver of wobbly borrowers crashed the world economy. Geesh.

Sure, we’ve all heard the arguments that the Community Reinvestment Act went a long way toward causing the meltdown, but there are three problems with that.

The first is that even if the CRA bore some responsibility, it was passed in 1977 – CRA or no CRA, there were years of tax cuts, cheap money coupled with low inflation, reduced regulation and a couple of semi-privatized wars. If the CRA was the problem and not lack of oversight, presumably the Great Recession would have happened during an administration that, say, did a less thorough job of deregulating and tax cutting.

A second problem with blaming the CRA is that the economic mess is due to banks loaning money to people who shouldn’t have borrowed or been allowed to borrow, and there was no policy or law that forced a single organization to make loans it shouldn’t have or any entity to borrow money it shouldn’t have.

A third problem is that the Great Recession struck many other countries as hard or harder than the US. One thing that was common about many of the worst hit countries is that they were high on the list of recent (say, in the past ten years or so) success stories as told by the same folks who like to blame the CRA for the mess.

All of which brings me back to where I started. The policies advocated by libertarians and economic conservatives not only tend to be accompanied by slower growth in general, but also tend to precede economic meltdowns.

Please let’s not forget “that although the deepest recession since the second world war has been blamed on the housing bubble and the financial problems of the American banking system, the problem was really global in nature, and it is not difficult to show the correlation with energy prices.”

You see, energy is an undertow. Speculative finance merely induces debt, selling money while extracting transaction margins, and that’s blood money any way you look at it.  If there’s a tax ahead, tax that.

And don’t worry about instability or threats of slow down or starved incentives. Brigands and pirates can easily bear the consequences of true growth and fairness.