Causality, Inevitability, & I'd Rather Have Been Wrong...

There is now a commission to investigate the subprime crisis.

The chances of it actually coming up with the real causes - which I covered here in February 2009 (and earlier) - are fairly slim, but they aren't non-existent. After all, according to this, Peter Wallison, who did point out the slippery path we were all going down, is part of the commission.

Let's briefly review so that we can keep the thread clear: the government, in its infinite wisdom, decided that as a matter of policy home ownership was such a neat and dandy thing that mortgages should be issued to people who can't and couldn't afford them, and to ensure that money would be available, allowed these mortgages to be securitized, i.e. packaged up as a lie (that the mortgages were AAA quality) and sold to people who thought it was a great idea to own part of something that they did not understand anything about. People being greedy (especially foreigners) and believing the rating agencies, money was thrown at the industry to the point where the built-in faults and problems brought the whole house of cards down.

Again: this has nothing to do with rapacious bankers forcing mortgages upon the unwilling and greedy brokers, but rather everything to do with the government setting up the game in a way that, in the long run, no one could make money at it. Well intentioned senators and representatives voted to make it easier for people to buy houses, the President (Clinton) happily signed it into law, and the Democratic Party staffed the banks involved (Fannie Mae and Freddie Mac) with people whose primary interest was not obeying regulations and conducting business in a responsible way, but rather who were more interested in their bonuses, so much in fact that they were more than willing to falsify the books in order to do so.

I'd rather have been wrong about how the government screwed things up. I'd rather have been wrong about how it doesn't look like anyone has recognized this.


Let's hope that the commission - Financial Crisis Inquiry Commission - will actually be bipartisan and take down the clowns and fools like Barney Frank and Chris Dodd who got us into this problem and gets the facts out. It's the only way to actually save the system that is supposed to work, rather than saving the system that has, to date, really only served to make millionaires out of Democratic politicians as they punched their way to Fat Cat City.

I'd love to be wrong here. But knowing DC, the likelihood right now of that happening is about as likely as the Democrats lose control of both the House and the Senate in 2010.



In other words, increasingly daily.



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