Meta-Blog

SEARCH QandO

Email:
Jon Henke
Bruce "McQ" McQuain
Dale Franks
Bryan Pick
Billy Hollis
Lance Paddock
MichaelW

BLOGROLL QandO

 
 
Recent Posts
The Ayers Resurrection Tour
Special Friends Get Special Breaks
One Hour
The Hope and Change Express - stalled in the slow lane
Michael Steele New RNC Chairman
Things that make you go "hmmmm"...
Oh yeah, that "rule of law" thing ...
Putting Dollar Signs in Front Of The AGW Hoax
Moving toward a 60 vote majority?
Do As I Say ....
 
 
QandO Newsroom

Newsroom Home Page

US News

US National News
Politics
Business
Science
Technology
Health
Entertainment
Sports
Opinion/Editorial

International News

Top World New
Iraq News
Mideast Conflict

Blogging

Blogpulse Daily Highlights
Daypop Top 40 Links

Regional

Regional News

Publications

News Publications

 
Watch as Democrats try to blame financial mess on "deregulation"
Posted by: McQ on Monday, October 06, 2008

The Heritage Foundation's "Morning Bell" points me to something Sebastian Mallaby said today in the WaPo:
[B]laming deregulation for the financial mess is misguided. But it is dangerous, too, because one of the big challenges for the next president will be to defend markets against the inevitable backlash that follows this crisis. Even before finance went haywire, the Doha trade negotiations had collapsed; wage stagnation for middle-class Americans had raised legitimate questions about whom the market system served; and the food-price spike had driven many emerging economies to give up on global agricultural markets as a source of food security. Coming on top of all these challenges, the financial turmoil is bound to intensify skepticism about markets. Framing the mess as the product of deregulation will make the backlash nastier.
You had better believe that the intended "bad guy" in government is going to be "deregulation" and thereby the Republicans. And given the probable outcome of the election, free markets will have no champion in the Oval office. The external "bad guy" has already been established - Wall Street (while Freddie and Fanny keep a low profile).

The internal "bad guy" has yet to be identified. But even Democrats understand that they can't side-step the fact that some of the responsibility for this has got to be pinned on government (since it is government on which most of the responsibility lies.). It is just a matter of picking the right victim (no pun intended).

So imagine the scenario - a Democratic House, a Democratic Senate and a Democratic president. Any chance the real reason for this debacle will ever see the light of day?

Of course not. So in anticipation, Mr. Investigations, Democrat Rep. Henry Waxman, has scheduled a whole month of investigations concerning the "financial meltdown". Any guess as to where they might be headed with this?

Well, let's see - on October 16, 2008 the topic is "The Regulation of Hedge Funds". That's when George Soros will tell Congress how he recommends they regulate Wall Street. On October 22, the topic will be "The Breakdown of Credit Rating Agencies". Obviously they need much stricter regulation, wouldn't you say? And finally, on October 23 - wait for it - "The Role of Federal Regulators" is the topic.

But as the Heritage Foundation and any number of others have pointed out, the failure here wasn't deregulation at all. And the claim that Republicans have led the charge to deregulate over the past few years simply doesn't hold water either.

I certainly wish it did, but as with much this administration has done, they instead tried to out-Democrat the Democrats:
First of all, by every quantifiable measure, regulation has increased under President Bush:

* Money spent by federal regulatory agencies is up to $44.9 billion in 2007 from $27 billion in 2001, a 44% increase.

* Total people employed by federal regulatory agencies is up to 244,000 in 2007 from 172,000 in 2001, a 41% increase.

* Total number of pages in the Code of Federal Regulations is up more than 4,500 pages since Bush took office.

* Cost imposed on Americans is more than $28 billion in new regulations since Bush took office.

In total, the federal government imposes a nearly $1.1 trillion regulatory burden on the American people every year. Many of these regulations are justified. Providing transparency and creating information are value-added government functions. Regulation is not per se inconsistent with market principles. Some reinforce property rights and market mechanisms.

But creating a massive government duopoly in the residential real estate market does not reinforce market mechanisms. It perverts them, and it perverts them to such a degree that some estimate that Freddie Mac and Fannie Mae purchased more than a third of the $3 trillion in junk mortgages created during the housing bubble. They did so because heavy government regulation required them to push as much money into questionable mortgage buyers as possible.
Yes that's right, the reason for the meltdown wasn't lack of regulation, but instead regulations and policy that forced a particular behavior contrary to how, if left alone, normal lending institutions would have behaved.

That's not a deregulation problem. That's a policy problem. But, that's not where these investigation will be pointed. To admit that is to admit that Democrats had a huge hand in the debacle.

Let me lay out that very probable scenario again for you - Democratic House, Democratic Senate, Democratic president.

So with that in mind and carrying it to its logical conclusion, what will be the "government problem" they discover as the "investigate" this?

Deregulation, of course.

And the solution?

I'm sure you can't begin to imagine even in your worst nightmares, but I can promise, you won't like it.
 
TrackBacks
Return to Main Blog Page
 
 

Previous Comments to this Post 

Comments
What we’ve done so well in the past, and must continue to do in the upcoming election is keep people away from the polls who might vote the wrong way. These people do not realize that voting is a privilege, not a right. In voting the wrong way for our country, they lose that privilege.
Negros and young people will be the objects of this year’s “Republican Voter Challenge” program. Send in suggestions to your local Republican Party headquarters and blog way that you think will be effective in keeping these undesirable elements away from the polls on Election Day!

One thing we can all do is join the Republican Guard! The uniforms are just $20, and there’s a lot you can do to keep "undesirables" away from the polls!

All Hail McCain/Palin!
 
Written By: JP Stephens
URL: http://
Even their calling it "deregulation" is dishonest. They can’t point to any particular rule relaxation that they didn’t endorse (FMsquared’s adoption of complex risk formulas rather than simpler standards for giving loans, for example) and explain exactly how that caused the problem. What they are actually saying if you listen closely is that there has never been enough regulation.
 
Written By: Terry
URL: http://
mk? Is that you?
 
Written By: jpm100
URL: http://
mk? Is that you?
It does have that university village idiot je n’est ce quoi about it.
 
Written By: capt joe
URL: http://
"Watch as Democrats try"

?????


WHERE HAVE YOU BEEN?!?!?!?

I only wish McCain had gotten on board on this sooner. The blame for this rests squarely with the Dems, but they’re not the ones gonna pay the electoral price.

 
Written By: shark
URL: http://
The financial crisis is the greatest thing to ever happen to the Democrats. The public blames Bush and the republicans, which helps the challenger party win the upcoming election. The Democrats will have a mandate to control our financial institutions even more, while their responsibility for the subprime mortgage meltdown goes down the memory hole.
 
Written By: Jimmy the Dhimmi
URL: http://
So imagine the scenario - a Democratic House, a Democratic Senate and a Democratic president. Any chance the real reason for this debacle will ever see the light of day?
I think if Barney Franks keeps making The O’reilly Factor hitlist he could become a sacrificial lamb for the dems sometime after the election.
 
Written By: mac
URL: http://
as I always say, people get the leaders they deserve
 
Written By: capt joe
URL: http://
Don’t forget "Democratic Press".

Without that, the whole "Blame the Republicans for Everything" plan would fall apart.
 
Written By: Jeremy Bowers
URL: http://www.jerf.org/iri
You’re a real winner there, JP Stephens. No matter what your mother says.
 
Written By: MichaelW
URL: http://qando.net
I see Barney Frank is now saying criticizing the Dems over this whole mess is somehow "racist" - I don’t even care to check what his "logic" is.

Enjoy 4 years of this sh*t America.

 
Written By: shark
URL: http://
pedro is always reminded of a line from ’a river runs through it’ when he visits his free market compadres. it’s the description of methodists. i feel the same way about the free market wing of the wingnut party. pedro will leave the precise quote as an exercise to the reader.
 
Written By: pedro the illegal alien
URL: http://
Pedro, your opaque commentary not withstanding, the democratic party (your party) is responsible for this. Take responsibility
 
Written By: capt joe
URL: http://
"mk? Is that you?"

Nope. It is actually more creative than the stuff mk writes, even somewhat amusing in a lunatic sort of way, and not nearly as shrill. Still cr*p, though.
 
Written By: timactual
URL: http://
Take responsibility
You are asking a Democrat to
take responsibility
? Seriously?
 
Written By: Don
URL: http://
Terry (second comment) above is indeed correct. The issue was not the relaxation of prior regulation by the failure to implement new regulation. Although much of the Democratic critique is centered on the Gramm, Leach, Bliley Act, which formally allowed banks to engage in investment and brokerage after the government had allowed them to acquire their way back in, this legislation had no more to do with the current financial mess other than to allow more players to engage in it. The real problem was that the securitization of bad loans and other exotic derivatives were allowed to proliferate without any regulatory oversight either from the government directly or from rating agencies (i.e., the private market solution). While the Clinton Administration was among the first to reject oversight, the Bush Administration and Republican-dominated Federal Reserve were at least as dogmatic in their resistance to reining in these markets even after experts (including Warren Buffett) warned them of the dangers. While it is unfair to lay the blame entirely at the feet of the GOP, it is predominantly true that this crisis is the result of lax regulation of these fairly new instruments. To blame the crisis on other things like Fannie and Freddie or CRA loans is to display at once extreme ignorance of the underlying causes of the crisis and shameless partisan distortion of the facts.
 
Written By: dg
URL: http://

 
Add Your Comment
  NOTICE: While we don't wish to censor your thoughts, we do blacklist certain terms of profanity or obscenity. This is not to muzzle you, but to ensure that the blog remains work-safe for our readers. If you wish to use profanity, simply insert asterisks (*) where the vowels usually go. Your meaning will still be clear, but our readers will be able to view the blog without worrying that content monitoring will get them in trouble when reading it.
Comments for this entry are closed.
Name:
Email:
URL:
HTML Tools:
Bold Italic Blockquote Hyperlink
Comment:
   
 
Vicious Capitalism

Divider

Buy Dale's Book!
Slackernomics by Dale Franks

Divider

Divider