Kimberly A Strassel writes in the Wall Street Journal:

And now, America, we introduce the Great Obama! The world’s most gifted political magician! A thing of wonder. A thing of awe. Just watch him defy politics, economics, even gravity! (And hold your applause until the end, please.)

To kick off our show tonight, Mr. Obama will give 95% of American working families a tax cut, even though 40% of Americans today don’t pay income taxes! How can our star enact such mathemagic? How can he "cut" zero? Abracadabra! It’s called a "refundable tax credit." It involves the federal government taking money from those who do pay taxes, and writing checks to those who don’t. Yes, yes, in the real world this is known as "welfare," but please try not to ruin the show.

Ken Fallin

For his next trick, the Great Obama will jumpstart the economy, and he’ll do it byraising taxes on the very businesses that are today adrift in a financial tsunami! That will include all those among the top 1% of taxpayers who are in fact small-business owners, and the nation’s biggest employers who currently pay some of the highest corporate tax rates in the developed world. Mr. Obama will, with a flick of his fingers, show them how to create more jobs with less money. It’s simple, really. He has a wand.

Next up, Mr. Obama will re-regulate the economy, with no ill effects whatsoever! You may have heard that for the past 40 years most politicians believed deregulation was good for the U.S. economy. You might have even heard that much of today’s financial mess tracks to loose money policy, or Fannie and Freddie excesses. Our magician will show the fault was instead with our failure to clamp down on innovation and risk-taking, and will fix this with new, all-encompassing rules. Presto! …

And just watch the Great Obama perform a feat never yet managed in all history. He will create that enormous new government health program, spend billions to transform our energy economy, provide financial assistance to former Soviet satellites, invest in infrastructure, increase education spending, provide job training assistance, and give 95% of Americans a tax (ahem) cut – all without raising the deficit a single penny! And he’ll do it in the middle of a financial crisis. And with falling tax revenues! Voila!

Moving along to a little ventriloquism. Study his mouth carefully, folks: It looks like he’s saying "I’ll stop the special interests," when in fact the words coming out are "Welcome to Washington, friends!" Wind and solar companies, ethanol makers, tort lawyers, unions, community organizers – all are welcome to feed at the public trough and to request special favors. From now on "special interests" will only refer to universally despised, if utterly crucial, economic players. Say, oil companies. Hocus Pocus!

And for tonight’s finale, the Great Obama will uphold America’s "moral" obligation to "stop genocide" by abandoning Iraq! While teleported to the region, he will simultaneously convince Iranian leaders to peacefully abandon their nuclear pursuits (even as he does not sit down with them), fix Afghanistan with a strategy that does not resemble the Iraqi surge, and (drumroll!) pull Osama bin Laden out of his hat!

Tada!

You can clap now. (Applause. Cheers.) We’d like to thank a few people in the audience. Namely, Republican presidential nominee John McCain, who has so admirably restrained himself from running up on stage to debunk any of these illusions and spoil everyone’s fun.

We know he’s in a bit of a box, having initially blamed today’s financial crisis on corporate "greed," and thus made it that much harder to call for a corporate tax cut, or warn against excessive regulation. Still, there were some pretty big openings up here this evening, and he let them alone! We’d also like to thank Mr. McCain for keeping all the focus on himself these past weeks. It has helped the Great Obama to just get on with the show.

As for that show, we’d love to invite you all back for next week’s performance, when the Great Obama will thrill with new, amazing exploits. He will respect your Second Amendment rights even as he regulates firearms! He will renegotiate Nafta, even as he supports free trade! He will …

It seems likely that the man who wins the presidential race gets the booby-prize. The new president’s task would daunt Hercules.

The difficulty of guiding and protecting America, leading the West, and keeping guard over the whole seething world at this point in human affairs should be too formidable for any man or woman of normal intelligence to think of tackling it.

Either both candidates have a measure of self-confidence in their capabilities amounting to almost lunatic self-delusion, or both are astonishingly blind to what they’d be undertaking.

America is in the grip of an economic crisis that no man and his dogs can save it from. Only time and free economic activity can eventually restore confidence and prosperity. But both candidates propose regulation: one of them full-blown socialism. Their remedies can only make the crisis worse. The winner will be blamed and damned for that, but even if he should decide not to regulate, blame and cursing is what he’ll get.

The world is threatened by the dark regressive force of militant Islam; by proliferating nuclear arms in the hands of evil men; by an aggressive Russia and the rising power of Communist China; and by the slow but steady pre-emptive capitulation of an ignominious Western Europe to all these threats. One candidate seems not to grasp the reality of the dangers, and might even have sympathy with the ideologies behind them. Neither candidate could bring himself to warn Islam, or the evil despots, or Vladimir Putin, or the Chinese potentates, that America is willing to use its military might to force them to change their ways. Without that threat and a manifest resolution to carry it out, nothing will stop them.

While we fall ever deeper into debt with China; while Russian warships cruise the Caribbean and Russian arms and technology strengthen our enemies in South America and the Middle East; while every day Islam advances further until it can overwhelm us; our Don Quixote in the White House will go to war against the weather. Some will praise him for that, no doubt, until real disaster ruins him and them.

In the light of all this, competing for the presidency looks very like competing for the captaincy of the Titanic.

If one of the candidates should suddenly see clearly what he will be confronted by if he wins, he might do everything he can to hand the victory and the burden to the other. Perhaps John McCain is doing just that. It’s the only plausible explanation for his failure to use the potent ammunition he’s got against Barack Obama, to defeat him in the contest for the dreadful job of leading us to shipwreck.

Jillian Becker

October 2008

 Thomas Sowell puts blame where it belongs: 

It was liberal Democrats, led by Senator Christopher Dodd and Congressman Barney Frank, who for years– including the present year– denied that Fannie Mae and Freddie Mac were taking big risks that could lead to a financial crisis.

It was Senator Dodd, Congressman Frank and other liberal Democrats who for years refused requests from the Bush administration to set up an agency to regulate Fannie Mae and Freddie Mac.

It was liberal Democrats, again led by Dodd and Frank, who for years pushed for Fannie Mae and Freddie Mac to go even further in promoting subprime mortgage loans, which are at the heart of today’s financial crisis.

Alan Greenspan warned them four years ago. So did the Chairman of the Council of Economic Advisers to the President. So did Bush’s Secretary of the Treasury, five years ago.

Yet, today, what are we hearing? That it was the Bush administration "right-wing ideology" of "de-regulation" that set the stage for the financial crisis. Do facts matter?

We also hear that it is the free market that is to blame. But the facts show that it was the government that pressured financial institutions in general to lend to subprime borrowers, with such things as the Community Reinvestment Act and, later, threats of legal action by then Attorney General Janet Reno if the feds did not like the statistics on who was getting loans and who wasn’t.

Is that the free market? Or do facts not matter?

His article also deals with how Obama benefited from Fannie Mae. He concludes: 

The country does not deserve to be put in the hands of a glib and cocky know-it-all, who has accomplished absolutely nothing beyond the advancement of his own career with rhetoric, and who has for years allied himself with a succession of people who have openly expressed their hatred of America.

 From today’s Investor’s Business Daily:

Here’s how James B. Lockhart III, head of the Office of Federal Housing Enterprise Oversight, described the two companies back in 2006, before the meltdown occurred:

"The result of (Fannie’s and Freddie’s) rapid growth unconstrained by market forces and a weak regulator was years of mismanagement, flagrant earnings manipulation, and systems-and-controls problems. Managements of both companies were forced out, earnings were misstated by an estimated $16 billion, fines exceeding one-half billion dollars were imposed, and remedial costs will exceed $2 billion."

Yet Congress did nothing. Fannie and Freddie continued to enjoy a virtual monopoly of the housing finance market, holding nearly half the nation’s $12 trillion in mortgage assets in 2007.

And what happened to Fannie’s and Freddie’s top executives, almost all with deep ties to the Democratic Party? Did they get perp-walked to prison like WorldCom’s Bernie Ebbers, Tyco’s Dennis Koslowski, Adelphia’s John Rigas, ImClone’s Sam Waksal, or any of the others who did time for corporate misdeeds in the early 2000s?

No. Jim Johnson, former Walter Mondale aide, became head of Barack Obama’s vice presidential search committee. Franklin Raines, who headed Fannie from 1998 to 2004, the years of its worst excesses, pocketed nearly $100 million in pay and bonuses from Fannie. He, too, became an adviser to Obama.

Other Fannie-Freddie alumni did equally well. Rep. Rahm Emanuel has been front and center in crafting a new rescue bill. Ex-Clinton Justice official Jamie Gorelick careens from career catastrophe to catastrophe, and still gets top jobs. It pays to have ties.

Meanwhile, as previously documented, Rep. Barney Frank and Sen. Chris Dodd repeatedly thwarted reforms. Yet today they stand front-and-center as Democrats try to "fix" a problem they created.

As such, any investigation into Fannie and Freddie must include Congress, both current and past.

There’s lots of evidence that the two mortgage giants had become little more than taxpayer-guaranteed front companies for Democrats, who used them to reward supporters with cheap loans and to provide jobs for out-of-work politicians.

 Britain has been hit by economic crisis from the same causes as the US. The world’s anti-free-marketeers, Communists, Socialists, European haters of the Anglo-Saxon world, and a multitude of left-wing churchmen are gloating, calling the meltdown a ‘crisis of capitalism’.

Madeleine Westrop comments:

I know you are Atheist Conservatives: so, if you have any interest in your diametric (or dialectic?) opposite, consider for a moment the Church of England. It is advocating Karl Marx.

I don’t mean that the whole ecclesiastical edifice is daubed in Hegelian anti-God revolutionary anti-Capitalist slogans.  Most of the Anglicans I know are constitutionally unable to talk about politics, religion, money or even ideas at an English dinner party.   (I suppose if Marx had bred dogs or polyanthus…) Our dear old Anglican aunts go to the pretty parish church every Sunday and are true blue Conservatives from their charming hats to their patent shoes. 

But look further up.  Turn your gaze from the modest and crumbly foundations to the airy spires above.   The astonishing thing is that the Archbishop of Canterbury, the most senior figure in the Established Church, turns to Marx when the world is troubled.

An article in the Spectator this week was written by The Most Reverend and Right Honorable, his Grace Dr Rowan Williams, Primate of All England, Lord Spiritual in the House of Lords, overseer of the Anglican Communion (the third largest denomination in the world), Ordinary to the Chaplains in the Army, Navy and Royal Airforce, Visitor, Patron and Governor to hundreds of charitable trusts, President of the House of Bishops and the General Synod, Chairman of the Archbishop’s Council, Church Commissioner responsible for administration of the wealth and property of the Church (about £6 billion and hundreds of acres of land), resident and official host to many at Lambeth Palace, resident of the Old Palace at Canterbury, bishop of the Diocese of Canterbury, blesser of oils, annointer of the Monarch at each coronation.  I have counted how many have been enthroned as Archbishop of Canterbury and I think Dr Williams is about the 109th, since the first, St Augustine in 597 AD.

Dr Williams has decided to write about the economic crisis afflicting the world wholesale money markets, the banks and the stock-markets and ruination of all our pensions and savings to boot.  He says that unimaginable wealth has been generated by fiction and paper with no concrete outcome beyond profit for the traders.  He says the challenge is now to connect money to material reality.  And then it comes: “Marx long ago observed the way in which unbridled capitalism became a kind of mythology, ascribing reality, power and agency to things that had no life in themselves.”  He reminds us that “ascribing reality to what you have in fact made yourself” is idolatry. 

I agree there has been an “unreality” exposed because those debt obligations turned out to be worthless.  But this was not the work of a Monster Capitalist system.  Exposure is just what happens when you find out you have been stupid enough to deal in rotten wheat or quack medicine.  And there has been “unreality” in thinking such prodigal borrowing and spending was sustainable.  Again, this is not Monster Capitalism at work, but simply old fashioned bad business practice.

Was Dr Williams  thinking of the sorcerer in Marx’s Communist Manifesto?  In 1848 Marx and Engels wrote:

Modern bourgeois society, with its relations of production, of exchange and of property, a society that has conjured up such gigantic means of production and of exchange, is like the sorcerer who is no longer able to control the powers of the nether world whom he has called up by his spells. 

This is nuts. Dr Williams can’t just say the problem is that we have created a Capitalist Monster and idolised it. For a start, here in England the problems have not occurred where old-fashioned capitalist values have prevailed.  The Northern Rock Bank lent out 110% mortgages to people who couldn’t make repayments and the bank went bust.  The taxpayer now has to pay a Bishop’s ransom for this failure. But Northern Rock was not a single-minded profit-mad selfish Capitalist Monster.  If it had been a bit more selfish it might have been more prudent. It gives 5% of its profits to ‘tackle disadvantage’ in the North East of England through a charitable foundation. It was a Labour Party pet and it was lending improvidently while the Labour Government was also borrowing like crazy to fund its socialist “transformations” (spending).  Northern Rock shared basic Labour Party socialist values. The bank employed Deborah Mattinson, Gordon Brown’s focus group guru, to advise it about social responsibility.  The Northern Rock charity gave money to the left wing think-tank the IPPR, which the Labour Government has used to outsource its own policy making.  In fact 17 departments have outsourced to the IPPR over the last 10 years.  And the inclusion and acceptance of the market system in a movement for social justice was part of the plan set out in Tony Blair’s New Labour movement.

Dr Williams also accepts private enterprise to some extent.  He writes,

“Of course business is not philanthropy, securing profit is a legitimate (if not a morally supreme) motivation for people…It’s true as well that, in some circumstances, loosening up a financial regime to allow for entrepreneurs and innovators to create wealth is necessary …But it is a sort of fundamentalism to say that this alone will secure stable and just outcomes everywhere.”

Which brings me to the second reason that the Shelleyesque Capitalist Monster, or the ungovernable sorcerer’s powers, are both inappropriate ideas.  Securing profit is a morally supreme motivation.  And while it is true that profit may not alone secure stable outcomes, the waste of wealth always produces unstable outcomes. True wealth (as contrasted with inflated speculative bubbles of paper wealth) is a sine qua non of stability, along with peace, the rule of law and liberty.

The problem is that Dr Williams has chosen a scoundrel unemployed insolvent misanthropist who sponged off his dying father and friends and couldn’t afford to bury his own child, for his lessons in morals and economics.  He chose Marx.  Instead he should have chosen a prudent, kindly, careful man who worked hard and made a meticulous study of how the wealth of nations can be increased and warned us against the very problems that have arisen in our economies: Adam Smith.  (It seems hardly worth mentioning in this Atheistic context, but it strikes me that an Archbishop might also have taken advice from Smith who believed, at least, in ‘a beneficent Providence’ over the anti-Religious Marx.)

Moreover, Marxism doesn’t really help to explain our predicament. The Communist Manifesto says that economic crises occur because of over-production:

“It is enough to mention the commercial crises that, by their periodical return, put the existence of the entire bourgeois society on its trial, each time more threateningly…. In these crises, there breaks out an epidemic that, in all earlier epochs, would have seemed an absurdity – the epidemic of over-production. Society suddenly finds itself put back into a state of momentary barbarism; it appears as if a famine, a universal war of devastation, had cut off the supply of every means of subsistence; industry and commerce seem to be destroyed. And why? Because there is too much civilization, too much means of subsistence, too much industry, too much commerce.”

But but but! Our present ills arise because we have unrealistically overestimated our wealth.  Dr Williams pointed this out himself.  We are not in trouble because of over-production!  It is truer to say that we have spent more than is justified by what we have produced.  National debt in the United Kingdom is high: the Government says it is about £650 billion but if you add in the hidden debt obligations – Northern Rock, public sector pensions, Public-Private partnership commitments, decommissioning of power stations – the figure is at least doubled.  In other words, to claim the official figure for debt,  about 37% of our gross domestic product, is to make a wild underestimate.  And where Government led, we followed.  Personal debt amounts to about £1.4 trillion.  Adam Smith would not have approved:

Whatever we may imagine the real wealth and revenue of a country to consist in, whether in the value of the annual produce of its land and labour, as plain reason seems to dictate; or in the quantity of the precious metals… in either view of the matter, every prodigal appears to be a public enemy and every frugal man a public benefactor. 

It is true that the economic crisis has been made worse by the obscurity of the real state of things. But how like a priest to say that the problem is, in the end, idolatry of an unknowable, ineffable dark thing.  We should shine light on the problem rather than condemn it to the shadows. Obscurity and superstition is our enemy here. 

Take the South Sea Bubble problem of three hundred years ago. The south Sea Company bought a monopoly of trade with South America.  The company underwrote the National Debt for interest Payments from the Treasury. This all seemed rosy. Share prices soared and other companies were founded in a frenzy of speculation. People had no idea what they were buying or risking: for example, one to fire square canon balls, and one just for an unknown undertaking of ‘great advantage’. Ladies’ maids and porters bought carriages on supposed mountains of wealth. When the value of the stocks crashed, investors were made destitute overnight and suicides and arrests followed.  Isaac Newton lost money and said “I can calculate the movement of stars but not the madness of men.”   

Smith discusses, years later, the South Sea company itself in The Wealth of Nations:

The directors of such [joint stock] companies, however, being managers rather of other people’s money than their own; it cannot well be expected that they should watch over it with the same anxious vigilance with which the partners in a private company frequently watch over their own. Like the stewards of a rich man, they are apt to consider attention to small matters as not for their master’s honour, and very easily give themselves a dispensation from having it.  Negligence and profusion must always prevail… in the management of the affairs of such a company.  

How apt this basic analysis seems today.  Risk takers must be responsible and face moral hazard. And responsibility, like charity, is best applied close to home.  England has had some marvellous institutions, the building societies, owned by their depositors whose only purpose was to provide finance for buying houses.  They were prudent and profitable, on the whole and allowed multitudes to buy their own house by slow and careful saving.  However, in the last twenty years or so they have ‘de-mutualized’ and become publicly owned banks, dealing in the wholesale markets and lending to the inflated ‘buy to let’ investment market.  Since they have stopped being owned by their depositors, many have had disastrous losses and only this week, the biggest ‘buy to let’ lender, the Bradford and Bingley bank (building society that was) has been nationalised.

There is no Monster. In fact there is no capitalist system. There are frugal habits that build wealth and wasteful or irresponsible habits that destroy it.  It is terribly dangerous to condemn the market for failings in ourselves and our Governments.   When you go to bed tonight, you might look under the bed: pessimists might check on a hoard of gold coins rather than trust banks; Marxist revolutionaries might simply turn in; but let us hope only the Prelates  are looking for Monsters.  

  

 Thanks to our commentator Dan W. for directing us to this series of cartoons. 

It tells the sorry tale of ‘why the collapse?’ for bitter laughs, and we think accurately enough (though it doesn’t deal with how the ideology of the left made it all possible).

 The moment of decision has arrived.

Crunch time.

Is the economic crisis to be solved by a capitalist free-market solution, or made worse by a socialist ‘solution’?

Make no mistake about it – it was caused by socialism: by political correctness, by multiculturalism, by government interference in the market.

It was NOT caused by the Bush administration, by the Republican Party, by capitalism, as the Democrats who did cause it are now alleging to cover their guilt.

Among the most guilty men are Jimmy Carter, Barack Obama, Bill Clinton, Barney Frank, Chris Dodd, Harry Reid.   

Jimmy Carter.  1977. The Community Reinvestment Act. Banks must make loans to high-risk borrowers.  Opened door for ACORN (see earlier posts) to force banks to make sub-prime loans to uncreditworthy borrowers.

Barack Obama.  Trained staff for Madeline Talbott, ‘key pioneer of ACORN’s subprime racket’ as Stanley Kurtz calls her, to run her ‘subprime-loan shakedown racket’.  ACORN employed him as its lawyer. And he funded it through the Woods Fund and indirectly through the Chicago Annenberg Challenge. In three years in the Senate, Obama received more contributions from Fannie Mae and Freddie Mac than anyone else save Dodd, who got his contributions from them over eleven years.   He appointed two Fannie Mae CEOs as advisors to his campaign.  

Bill Clinton, devotee of multiculturalism, pressed for more home-ownership by those who could not afford it, minorities and in effect even illegal immigrants, and Fannie Mae and Freddie Mac responded, buying up hundreds of billions of dollars of the bad loans and sellng them on the world markets. 

Harry Reid. In 2005 when John McCain sponsored a Fannie-Freddie reform bill,  he led the  Democrats in crushing it.  Fannie and Freddie were created by Democrats and Democrats are most responsible for their failure.

Barney Frank and Chris Dodd who ran Congress’s banking panels, vigorously and persistently opposed Republican Party efforts to regulate Fannie and Freddie.

McCain has repeatedly called for reforming Fannie and Freddie. President Bush – whose administration is being blamed for the crisis by Frank, Dodd, Reid etc – urged their reform 17  times this year. The irony of Bush and the Republicans being blamed now for the catastrophe the Democrats’  so insistently brought about!   

The cure now is not more socialism, not more government control of the market, not the election of the most socialist-minded candidate for the presidency ever – Barack Obama. 

If America elects Obama, it will be choosing socialism, and socialism has failed wherever it has been tried.

America needs to choose capitalism at this moment in history, to save itself and to give hope to the wider world. Otherwise this crisis will be turned into an American and world-wide disaster from which there may be no foreseeable return. 

 With emotions running high on Capitol Hill, Charles Krauthammer, in Townhall, makes a constructive suggestion for solving the economic crisis, or at least alleviating some of the strong feelings about it: 

For decades, starting with Jimmy Carter’s Community Reinvestment Act of 1977, there has been bipartisan agreement to use government power to expand homeownership to people who had been shut out for economic reasons or, sometimes, because of racial and ethnic discrimination. What could be a more worthy cause? But it led to tremendous pressure on Fannie Mae and Freddie Mac – who in turn pressured banks and other lenders – to extend mortgages to people who were borrowing over their heads. That’s called subprime lending. It lies at the root of our current calamity.

Were there some predatory lenders? Of course. But only a fool or a demagogue – i.e., a presidential candidate – would suggest that this is a major part of the problem.

Was there misbehavior on Wall Street? The wheels of justice will grind. But why wait for justice? If a really good catharsis will allow a return of rationality to Capitol Hill – yielding a clean rescue package that will actually save the economy – go for it.

Capping executive pay is piffle. What we need are a few exemplary hangings. Public hangings. On television. Pick a few failed investment firms, lead their CEOs in chains through the canyons of Manhattan and give the mob satisfaction. Better still, precede the auto-da-fe – fire is highly telegenic – with 24-hour reality-TV coverage of their recantations, lamentations and final visits with the soon-to-be widowed. The ratings would dwarf "American Idol," and the ad revenue alone would make the perfect down payment on the $700 billion.

 

 Investor’s Business Daily believes that this time government is intervening in the right way to help solve the economic crisis: 

Like so many others, we believe that government should largely remove itself from functioning markets. But in a case such as this, where a market has been seriously damaged due to regulatory excess, an obligation exists to help undo the damage.

That’s the case now with the subprime crisis and housing collapse, both largely due to decades of congressional incompetence.

With world credit markets seized up and little to show for piecemeal U.S. efforts to deal with the growing financial panic, Paulson and others on the Bush financial team late last week shifted course, crafting a systematic answer to the markets’ meltdown.

This was leadership writ large… 

His controversial decision to create a new financial entity, modeled broadly on the 1980s-era Resolution Trust Corp., may just spell an end to this financial crisis. Congress, which has mostly sat on the sidelines during this crisis, should approve it right away.

Unlike the RTC, which owned actual properties, the new agency that Paulson’s Treasury is creating will buy up the impaired mortgage-backed securities and hold them for resale when the market turns favorable again.

For ailing financial markets, this was welcome tonic. At this point they care less about details of the agency than limiting the contagion of the subprime crisis so it will no longer contaminate global banks and investors’ balance sheets. Mission accomplished.

That’s why markets rallied so strongly Thursday and Friday, with the Dow industrials ahead 779 points, or 7.3%, and the Nasdaq up 175 points, or 5.8%. Bourses in London, Paris, Frankfurt, Tokyo and Hong Kong, among many others, also rebounded sharply.

Paulson’s move will have deep, and perhaps lasting, impacts on global markets. Foreign central banks had virtually thrown their hands up in despair over their inability to deal with the crisis. But in just three days, Paulson and other top finance and regulatory officials in the Bush administration cobbled together a world rescue.

In addition to Paulson’s new entity, Bernanke’s Fed extended $180 billion in credit to practice that had contributed to the growing financial crisis.

These U.S. moves should erase the doubts that existed both in the suites of global market makers and in the kitchens and living rooms of Main Street, U.S.A., over whether the American government would fiddle while the world economy burned.

Just this week, Germany’s Der Spiegel headlined a story: "The World As We Know It Is Going Down." Well, it isn’t. Thanks to Paulson and Co., America has reasserted global leadership at a time when many thought it was lost.

It finds fault with Barack Obama’s analysis and his 4-point remedy. His would be the wrong way.  

And what would Obama do instead? We’re beginning to find out. In a four-point action plan Obama presented on Friday, he goes beyond "hope" and "change" oratory and moves on to what really matters to him: the big-government spending he’s been selling all election.

And here’s what Obama proposes:

• Point one, Obama calls for subsidies to "working families" to beat high food and energy prices. The problem: High food and energy prices won’t be helped by subsidies, but by more supplies. The real solution is to force a Democratic Congress to allow domestic drilling for oil. Thus far, Obama isn’t even "present" on that one.

• Point two, dubbed "mutual responsibility and reciprocity," calls for banks to subsidize bad borrowers to "protect homeowners and the economy." This would eliminate personal responsibility. Demagoguing false details — such as about bankers getting golden parachutes, instead of 25,000 of them losing their jobs — Obama insists the solution is simple: Banks shouldn’t foreclose on delinquent home buyers. Obviously, he hasn’t heard of how bad loans drained Japan’s economy of its vitality for a decade.

• Third, Obama seeks "new oversight and regulations of our financial institutions." That means forcing new bureaucracies and regulations into the private sector, the very phenomenon that has made navigating our health care industry such a delight.

• Fourth, Obama seeks to empower unelected foreign entities to the same "globally coordinated (rescue) effort." But Bernanke and Paulson have already done the heavy lifting, as the rest of "the world" has done next to nothing. One more global bureaucracy won’t make America’s financial system any healthier.

Obama makes a final point by blasting the failure of "common-sense regulation and oversight," to the financial system.

He ought to bring this up with fellow Democrats in Congress. In the 1990s, Rep. Barney Frank blocked key reforms even as he took campaign cash from banking interests. In 2004, President Bush attempted to revive the reforms, but Democrats blocked them.

Today’s bank crisis isn’t due to the inherent evil of the private sector, as Obama claims. It’s due to Democratic leaders who were bought off by political donations and hostile to reform.

Obama, curiously enough, is one of the top recipients of cash from Fannie Mae and Freddie Mac. Small wonder, then, that his main election argument would expand the scope of government by using the banks’ subprime woes as leverage.

 

 Neal Boortz confirms that the economic crisis was caused by socialist politicians, like Barack Obama, not by an ‘unregulated’ free market.

Political correctness won the day. Washington made it clear to banks and other lending institutions that if they did not do something .. and fast .. to bring more minorities and low-income Americans into the world of home ownership there would be a heavy price to pay. Congress set up processes (Research the Community Redevelopment Act) whereby community activist groups and organizers could effectively stop a bank’s efforts to grow if that bank didn’t make loans to unqualified borrowers. Enter, stage left, the “subprime” mortgage. These lenders knew that a very high percentage of these loans would turn to garbage – but it was a price that had to be paid if the bank was to expand and grow. We should note that among the community groups browbeating banks into making these bad loans was an outfit called ACORN. There is one certain presidential candidate that did a lot of community organizing for ACORN. I won’t mention his name so as to avoid politicizing this column.

These garbage loans to unqualified borrowers were then bundled up and sold. The expectation was that the loans would be eventually paid off when rising home values led some borrowers to access their equity through re-financing and others to sell and move on up the ladder. Oops.

Right now this crisis is being sold to the American public by the left as evidence the failure of the free market and capitalism. Not so. What we’re seeing is the inevitable result of political interference in free market economics. Acme bank didn’t want to loan money to Joe Homebuyer because Joe had a spotty job history, owed too much money on his credit cards, and wasn’t all that good at making payments on time. The politicians told Acme Bank to figure out a way to make that loan, because, after all, Joe is a bona-fide minority-American, or forget about opening that new branch office on the Southside. The loan was made under politicial pressure; the loan, with millions like it, failed – and now we are left to enjoy today’s headlines.

So … why aren’t you reading the whole story in the mainstream media? Come on, are you kidding me? Do you really expect the media to blame this mess on deadbeat borrowers and political interference in the free market when it is so easy to put the blame on greedy lenders and evil capitalists? Remember … there’s an election going on. One candidate is decidedly anti-capitalist. Do the math.