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The failure in capitalism here is a
regulation induced failure. I will probably slip into and out of
sarcasm without warning. With the CRA starting in the Carter Administration and the expansions to it under the Clinton Administration, co-opted by the "Ownership society" of the Bush Administration, we have the Freddie and Fannie messes. Freddie and Fannie were way stations on the path to selling mortgage backed securities. They would package up mortgages and sell them to banks and investment firms. As a quasi-private and quasi-government agency/corporation/what have you, they bundled these mortgages up and sold them. They also, together with private insurance (think AIG), insured them. So when the Adjustable rate mortgages adjusted and people could no longer afford their payments, the buyers of Freddie and Fannie mortgage packages were left holding the bag. This starts bringing down investment bankers and regular bankers who had bought those packages because suddenly they have two related problems: Decrease in revenue due to the defaults, and decrease in the worth of the mortgages themselves. So they really have double losses on their books. Some of these losses are insured, so the losses transfer to the balance sheets (now, the out-of-balance sheets) of Freddie, Fannie, and AIG, for a few. Banks who thought that this was spiffy, did not adequately insure (but the insurers went belly up anyhow), and they found themselves part of other banks (WAMU, Wachovia, BearSterns, Countrywide, etc). Instead of "deregulation" being the problem, the problem is instead NO regulation. Barney Frank and Chris Dodd fought regulation every step of the way, including regulations proposed by the cause of all of this deregulation, George Bush. Yes, Bush proposed regulation of Freddie and Fannie, as did John McCain. But this is now a newspeak world, up is down, black is white, and regulation is suddenly deregulation when proposed by Bush and McCain. Obama, Geitner, Franks and Dodd and the Lamestream Media tell me so. We must not forget the narrative: EVERYTHING is the responsibility of George W. Bush, even regulations that he couldn't get through Congress due to the obstruction by Franks and Dodd, two of the largest recipients of campaign cash from Freddie and Fannie executives. The other member of that unholy trinity is no less than.......Barack Obama. And they wonder why they have a credibility problem when they are the architects of the "fix" to this mess? Is there a working brain among them? I would have better faith in government regulating appropriately if they would, you know, actually regulate appropriately. But these guys are bought and paid for by the people they are regulating, and are so far an EPIC FAIL on regulation. Blaming it on Bush is a habit that the left as acquired for the last eight years. No surprise that they are still beating the dead horse. Oh, and that Bush deficit? Obama exceeded Bush's 8 year deficit in one year. Yeah, that's CHANGE all right. Right direction, not so much. David “There
is no difference between communism and socialism, except
in the means of achieving the same ultimate end: communism proposes to
enslave
men by force, socialism - by vote. It is merely the difference between
murder
and suicide.”--Ayn
Rand Dr. Ernie Prabhakar wrote:
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