Date: Tue, 2 Jun 2009 21:07:09 -0700 (PDT) From: Gilbert Lawrence <[email protected]>
Yesterday was a red-letter day for American industry. General Motors, the largest private company in the USA, and perhaps the world, filed for bankruptcy. Mario responds: All GM has done so far is to file for legal protection from bankruptcy while it reorganizes its business. Gilbert wrote: As in any failure, there are multiple factors at work. And these factors are usually at work over a long period of time. Here are two articles from the New York Times that reviews the villains of the financial mess. Mario responds: Paul Krugman is a far left wing economist whose Nobel Prize was in a very narrow field, "for his analysis of trade patterns and location of economic activity". In opining on the financial crisis he has used selective analysis as he often does in his advocacy of socialist propaganda and his own preconceived agenda. He has been a critic of conservative economic philosophy for decades and has been wrong much of the time. In fact, the kind of economic policy he advocates, which includes massive government regulation, has failed in virtually every country in the world that has tried it. As an example, the current financial crisis has extended to countries like Britain and France, which did have the kind of massive government regulation that Krugman advocates, but still developed the financial problems that evolved in the US. However, Krugman conveniently ignores this in his column. In fact, it was coercive government regulations which were pushed by the Clinton administration under the Community Reinvestment Act that pressured many banks, mostly big banks in the larger cities, to lower their credit standards in order to make loans to low income people and set the stage for the current financial mess. American banks were doing fine until being pressured to lend to risky borrowers. Those that did not follow risky lending practices continue to do fine. There are over 9,000 banks and credit institutions in the US and only a few hundred who have had major financial problems. Krugman argues that the lifting of other regulations on the banks and thrift institutions was the cause of the current financial crisis. Thus, a) he ignores the vast majority of banks that have not had problems, and b) he implausibly argues that certain government regulations that he supported could have prevented what other government regulations forced the troubled banks to do. Thus he is trying to have it both ways, which is not unusual for him. The title of Krugman's column in the NY Times, "Reagan Did It", is also as false and misleading as many of Krugman's highly biased opinion columns. This title is pure left wing propaganda and distorts how the US is organized. A President is no more powerful than the Congress and the Supreme Court. A President cannot do much without Congressional approval. Right enough, the act that Krugman blames Reagan for was passed with broad support in Congress from Democrats and Republicans alike, as detailed in the following link: http://en.wikipedia.org/wiki/Garn_-_St_Germain_Depository_Institutions_Act Here is another view of the Reagan era by the respected Heritage Foundation, complete with verifiable facts and sources of information, unlike the selective and biased analysis of Paul Krugman with his well known pre-conceived agenda: http://www.heritage.org/research/taxes/bg1414.cfm Conclusion: No matter how advocates of big government try to rewrite history, Ronald Reagan's record of fiscal responsibility continues to stand as the most successful economic policy of the 20th century. His tax reforms triggered an economic expansion that continues to this day. His investments in national security ended the Cold War and made possible the subsequent defense spending reductions that are largely responsible for the current federal surpluses. His efforts to restrain the expansion of federal government helped to limit the growth of domestic spending. If Reagan's critics had been willing to work with him to limit domestic spending even further and to control the growth of entitlements, the budget would have been balanced five to ten years sooner and without the massive tax increase imposed in 1993. Today, Members of Congress from across the political spectrum should stand on the evidence and defend the Reagan record. [end of excerpt]
