American Madness

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Posted by Josh Friedlander | No Comments

Re: Obama Is From Mars, Wall Street Is From Venus

Heilrmann writes a great political piece here, but he betrays the general ignorance on the cause of the financial crisis that infects the media. Wall Street did not cause this problem. It may have exacerbated it, but this mess started in Washington and got accelerated on Main Street. Wall Street behaved like any business: it gave the people what they wanted. You want a cheap loan to speculate on housing? Done! You want to give poor people who can’t afford to own a way to get homes so Democrats and Republicans can claim credit for high homeownership? Done! Want us to find a way to help state pension funds make money while the Fed kept rates so low that there was no way they were going to meet their actuarial requirements? Hey, done on that too! Sure, the Street did stupid things. Lehman buying commercial real estate at the top of the market was dumb. AIG not setting aside capital for CDS was stupid. But the Street is getting vilified for giving everybody what they asked for. And the fact that the President and the Congress are focusing all their efforts on the private sector while Fannie and Freddie are not being touched shows us that the Administration is not “standing between the bankers and the pitchforks”. Obama has betrayed himself to be a narrow, left wing ideologue whose worldview cannot accept government’s complicity in the leverage binge we just went through. And in reality, by spending at a pace that makes Bush look responsible, he is setting us up for the ultimate disaster, the downgrade of US Treasuries. And I am sure Obama & Co. will try to blame the Street for that too.

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