In This Case, Foresight Was 20/20

Wednesday 9 June 2010 - Filed under Economy + Government + Regulation

It has been maintained by the terminally libertarded that our current economic crisis in America is because of deregulated “Free Market Failures” which has spurned on legions of Demotards screaming for government regulation of the financial sector.  But even as far back as 1999 our current economic woes which started with the housing bubble were accurately predicted as a direct result of government regulation, not because Wall Street bankers were too greedy or a lack of regulations in the finance industry.  Steven A. Holmes via The New York Times in 1999:

In moving, even tentatively, into this new area of lending, Fannie Mae is taking on significantly more risk, which may not pose any difficulties during flush economic times. But the government-subsidized corporation may run into trouble in an economic downturn, prompting a government rescue similar to that of the savings and loan industry in the 1980’s.

”From the perspective of many people, including me, this is another thrift industry growing up around us,” said Peter Wallison a resident fellow at the American Enterprise Institute. ”If they fail, the government will have to step up and bail them out the way it stepped up and bailed out the thrift industry.”

When people government understands that artificially messing with free markets, such as mandating that the housing loan industry lend money to those who cannot afford said loan, generally leads to disastrous results perhaps we can better avoid future financial crises in the future.

2010-06-09  »  madlibertarianguy