Tuesday, April 22, 2008
Subprime Mess: Statist Policy Does It Again
Don't Blame The Markets is a good article by the New York Sun on the subprime debacle. Properly, it lays the blame at the feet of a "small army of hard left political hustlers who spent the early 1990s pushing risky mortgages on home lenders."
Labels:
Capitalism
Subscribe to:
Post Comments (Atom)
2 comments:
The government encouraged sub-prime lending. However, banks did not keep much of this on their books. They were securitized and sold to buyers. Government agencies like Freddy Mac and Fannie Mae bought some of these, but the better (AAA-rated) tranches. Someone else was buying the more risky stuff, without arm-twisting. This has to be accounted for when apportioning blame.
Fundamentally, the fault here lies with statist policies, of which the government is the primary agent. The victim here is freedom, specifically the bank's freedom to conduct business in accord with their rational self-interests.
Saying that the banks share in the blame is like saying that homeowners could have mitigated the severity of home invasion had they cooperated better with the crooks. No. An invasion is an invasion. The aggressor here is the statist policy and its enforcement.
Post a Comment