Pat Buchanan: Slyly re-framing the question, but otherwise getting it right
A friend of mine sent me the link to Pat Buchanan’s latest op-ed on the systemic collapse of the world economy which, Buchanan says, is caused by the biggest failure of leadership in a generation. My friend asked me if I agreed with Buchanan’s observations.
Well, no I don’t agree — not with all of it. Buchanan starts out framing the question as a failure of Fannie Mae, et. al. They were not the root cause. They were institutionally mandated to require anything BUT zero down mortgage loans.
Also, banks were not “morally pressured” by politicians. Banks were guided by old-fashioned greed which trumps morality every time. They didn’t need the politicians to make those loans. They had plenty of incentive to make them.
The rest of Buchan’s narrative I agree with. The banks made the loans quite happily because they believed they could make a ton of money by securitizing these financial instruments. They sliced them and diced them to a fare-thee-well. The Moody’s of the world put their stamp of approval on them and the AIG’s of the world insured them — all in the name of making a buck.
Make no mistake — just like the fiasco with the auto industry, there’s plenty of blame to go around.
Buchanan:
In short, this generation of political and financial elites has proven itself unfit to govern a great nation. What we have is a system failure that is rooted in a societal failure. Behind our disaster lie the greed, stupidity and incompetence of the leadership of a generation.
I think that just about says it all.
Buchanan asks (paraphrasing): Is Obama the one to fix it? I wish I knew. But at least he understands the problem and is willing to propose the tough solutions.
And get this: I hear that the the CBO is projecting a $2 trillion-with-a-T deficit for the coming fiscal year. Buchanan calls it tax-and-spend, but the reality is that it is print-and-spend — with our kids on the hook for the payback.
But here’s the thing: at least, if it’s done right, our kids will have something to show for it. Not only that: if the economy expands because of investments in infrastructure, green energy, and education, we shouldn’t have as tough a time paying it back as people think.
Like I always say: borrowing for bridges is always better than borrowing for bombs.
