Friday, October 10, 2008

Debate with a conservative colleague

Enough of this gibberish about the "recklessness of free marketeers."
Let's get the facts correct.

Political correctness, not market economies, got us into this mess. Had
lenders been left alone, and had they believed failure would have fallen
on their individual heads they would never have floated the bad loans in
the first place. Bankers would have been the conservative, prudent
lenders of their long history.

But government inserted itself into the process. It became public
policy to give loans to people who couldn't afford them. The CRA under
Carter (and expanded by Clinton) offered the stick: lower your standards
to qualify bad risk borrowers or we will make life ugly for you. The
carrots: the government (e.g. Fannie and Freddie) will absorb your risk.
And for going along with this scheme we'll let you raise commissions and
sell mortgage-backed securities for huge profits. The result was a very
non-market-driven subprime housing bubble.

That "moron," "idiot," "stooge," "fool" Bush had been in office only a
short while when he first warned of the coming crisis and made the first
of several attempts to prevent it. Barney and friends fought reform
each time it was tried. Want to argue history with me? The bet is
dinner for four at Ruth's Chris.

And as virtually every economist will tell you, the very worst thing we
can do is raise tax rates on the production of wealth (i.e. the Obama
economic plan). You cut taxes and both tax revenues and GDP grow (e.g.,
Kennedy, Prop 13, Reagan, Clinton & W).

It's not that liberals don't have good intentions. They have the best
of intentions. Arguably better intentions than us conservative
Republicans. The liberal Democrat paving company is wonderful! It's
just that it is currently occupied with paving the road to economic

Thanks for reading

Val Smith

Dear Val,

Below is a speech given by President Bush in 2007. There is no mention of minorities, liberal lending practices, and/or political correctness here. If you have the chance Val, could you respond to this?

I never respond to this stuff, but I just have to this time.

As much as I read the Wall Street Journal, the Economist, and Paul Krugman, I still find discussing the economy very intimidating and for good reason it's insanely complicated! I do know, however that I respectfully disagree with many of the assertions that Val makes about "liberals" and even his overuse of the word. By liberals it seems like Val is referring to everyone that disagrees with him. This greatly oversimplifies the wide spectrum of individuals from truck drivers to public school teachers to corporate lawyers who disagree with Bush policies. (Many happen to be Republicans) Wouldn't Eisenhower from his tax codes to his support of unions be considered a flaming liberal by today's standards--even more so than Clinton? The word liberal is difficult to pin down these days it seems.

It has never occurred to me (centrist) to call the free market evil, but I do believe that we are seeing the ugly side of government deregulation of corporate profits. We now have an economy based not on real wealth, but on credit and I think that this has really lead to the "economic hell" that Val suggests can be the result of political correctness or liberal policy. Seriously did Clinton, Carter, and what the 90's ideology cause this crisis? Seems like a stretch.


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