1) The latest instance of the blame game comes from Howard Dean who somehow always gets press coverage despite losing his bid to run for President and currently holding no elected political office. He recently stated that the free market and capitalism was the cause of the recent economic meltdown and that regulations were needed to avoid future problems. His specific quote was "I think we had quite enough of capitalism." Blaming capitalism may get him points with his left leaning friends but this blame game does not stand up to any logic:
Consider a few Washington agencies: FDIC, SEC, Fannie Mae, Freddie Mac, HUD, House of Representatives committees on housing and banking, Senate committees on housing and banking, Treasury department, Federal Reserve Board and lord knows how many other Federal and state regulatory and oversight political entities exist. Given all of this oversight, no one in the political class had the smarts or the guts to stand up and say we had a banking and housing problem brewing. Howard Dean is wrong, capitalism did not fail and is to blamed, the political class and its associated government bureaucrats failed to see the biggest economic tsunami coming until it hit them in the face, they are to be blamed. We paid dearly for this extensive government oversight as taxpayers and got nothing in return except a deep recession. How Dean can blame the free markets when the markets were not free and were oversaw by everyone, show either a pandering to the left and its socialistic tendencies or just plan stupidity.
2) The market did exactly it was supposed to do so you can not blame capitalism. Over leveraged banks and overpriced real estate is not the blame, it was simply reality. It is a reality that many banking executives ignored. In a new book, "A Colossal Failure Of Common Sense", Lawrence McDonald, a former vice president at Lehman Brothers presents an insider's view to the crisis. According to McDonald, as early as 2005, some experts at Lehman's were sounding the warning about a coming crisis. These experts even correctly identified the companies that were likely to get pummeled when the market correction came. Despite their expertise, they were ignored and some were even fired for speaking up. If this was happening at Lehman, it was also probably occurring throughout the banking industry. Thus, these high paid executive are to be blamed for the horrible wreckage that occurred to their companies, some of which, including Lehman's, went out of business despite being told what was likely to happen. In this version of the blame game, these same idiots that ignored the warning signs, are rewarded with multi-trillion dollars worth of bailout money. Sometimes the blame game is not logical: everyone is pretty aligned with the fact that the bankers and such brought this on themselves and the country, i.e. they are to blame, but many of them are still in the same positions and enjoying their taxpayer fueled bailout.
3) The Democrats love to avoid responsibility for the economic downturn by blaming Bush. Now, I am not defending Bush. The origins of the crisis festered and grew during his time in office. However, let's remember that the Democrats controlled Congress for the two years before the crisis erupted and did nothing to address the pending disaster. The Democrats ran all of the relevant banking and housing committees in Congress and NONE of them saw the problem coming until it exploded in their face. The chairperson of the Senate Banking Committee, Chris Dodd (seems we heard his name in less than flattering circumstances in a previous blog) was the biggest recipient of campaign donations from Freddie Mac. A little conflict of interest here possibly? The very housing entity that he was supposed to oversee was paying him more than $100,000 for his re-election campaign. Despicable. By the way, Obama was the second biggest recipient of campaign funds from a Federal agency that he should have also been overseeing as a Senator.
Do not get caught up in the blame game. In "Love My Country, Loathe My Government". several steps would address all of these blame issues including term limits, campaign finance reform, and a severe streamlining of government since having a lot of government (see the list of failures in point one above) do0es not seem to work. By limiting the government and the political class to a much smaller set of duties and responsibilities, maybe they can get something right for once and avoid a future economic crisis.
Tomorrow: The Blame Game Part 2 - Who Knew What and When Did They Know It?
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