A.J. DiCintio
Who's to blame for the bad economy?
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By A.J. DiCintio
August 14, 2010

For the election season that will kick off in earnest after Labor Day, the state of the economy is certain to be the most important factor affecting how voters will cast their ballots.

And because Democrats, with President Obama leading the charge, have decided to address the issue of the economy by playing a simplistic blame game, one of most important decisions voters will have to make is to accept or reject the argument that the policies of G.W. Bush represent the entire cause of the Great Bust of '08, the Great Recession that followed, current economic problems, and prospects for a grim economic outlook going forward.

My take on the campaign theme concocted by the self-anointed intellectual giants among us is this:

Just as "only Clouseau could pull the wrong tooth!" (when the famously incompetent Chief Inspector assumed the role of dentist), only the pompous, incompetent deceivers called politicians could come up with such a perfectly dishonest strategy doomed to failure.

Why? Well, for this basic reason:

We the People (now living in a continuously burgeoning Age of Information) are a whole lot smarter than the arrogant elites of the political left will ever admit.

And armed with our common sense smarts and a mountain of information that includes facts about the mad Democratic spending, borrowing, and increasing of federal power to a dangerous, federalism-destroying degree since '08, we know that both parties are to blame for the nation's economic suffering.

Interestingly, this truth is supported by Barry Ritholtz's (ritholtz.com) discrediting of the notion that ultra low interest rates had nothing to do with the housing boom and bust, an analysis whose implications shed light upon the state of our politics.

To make his argument, Ritholtz lists 20 causes of the boom and bust, linking the low cost of borrowing to each.

However, for the purpose here, I'll mention just two, beginning with #5:

"Starting in January 2001, the FOMC began lowering rates, eventually taking them all the way down to 1% by June 2003. Rates were kept below 2% for 36 months, and at 1% for over a year. This was unprecedented."

Now, how many Democrats expressed concern about those low rates, especially as they might encourage irresponsible lending on the part of the mortgage industry and irresponsible mortgage borrowing on the part of individuals?

What a rhetorical question that is as Democrats were indistinguishable from GW Bush and his Pollyannaish "ownership society" or Alan Greenspan, whose stunningly foolish idealism led him to call lenders "financial innovators" whose greed would be constrained by their interest in protecting their companies and shareholders.

Next, I'll jump to #18:

"John Dugan, head of the Office of the Comptroller of the Currency (OCC), (with the blessing of the Bush White House) issued its doctrine of 'Federal Pre-emption.' This [ordered] . . . States [with strict lending laws] to step out of the way of . . . lenders [who were making irresponsible loans]."

Ah, when a Republican is certain he can wave a magic wand to create an "ownership society" but finds the boorish denizens of the states standing in the way of his dreamy schemes, how quickly he joins with Democrats in worshipping the notion of federal preemption!

But to return to the issue at hand, not even one Democrat stood before TV cameras to rail against the federal government's role in promoting (actually, ordering lenders to grant) mortgages so self-evidently irresponsible that they could lead only to disaster for individuals, financial institutions, and, ultimately, the nation.

What Democrats did, however, was to drool over the idea of the free lunch ownership society, so much so, in fact, that they put pressure on Fanny and Freddie to see to it that new, more dangerously exotic offerings were added to the "sub-prime" buffet.

Let's see. Isn't Chris "Starving Senators Deserve Special Mortgage Deals From Their Friends in the Financial Industry" Dodd a Democrat?

How about Congressman Barney "All's Well at Fannie and Freddie" Frank?

And what about Maxine "No Crisis at Fannie and Freddie" Waters and other House members who excoriated mortgage professionals appearing before the House to warn of the danger that lay ahead? Isn't every last one a Democrat?

Then there's Democrat Bill Clinton, who signed the Gramm-Leach-Bliley Act into law, thereby repealing the Glass-Steagall Act without a whit of a worry about the consequences of allowing banks to grow to a couple of trillion dollars in size.

Apparently Bubba and his Republican friends believe this:

"If a bank gets itself into trouble, neither bailing it out nor allowing it to go belly up will cause the nation an iota of harm."

Oh, really? With Bank of America's assets standing at $2.3 trillion, JP Morgan Chase's at $2.0 trillion, and bailed out Citigroup's at $1.9 trillion?

Some economic "thinking" we see in Washington, isn't it?

The same kind of thinking that creates trade that is anything but "free" as it destroys good jobs by the millions.

The same kind of thinking that has instituted a de facto open border with Mexico, thereby supplying the nation with a huge force of cheap labor that has significantly suppressed wages in lines of work that encompass a lot more than jobs "Americans won't do."

And as the middle class continues to suffer and shrink, politicians from both parties brag, "Look at how well we have kept prices down and inflation under control!"

No wonder, then, that with recent economic history in mind, including the absolute fiscal madness exhibited by Obama's Democrats, the public is rejecting the blame game in favor of giving Republicans another chance to institute genuine government of, by, and for the people.

No wonder, too, that entrenched, special-interest-serving big shots on both sides of Washington's political aisle suffer the double pains of a blinding migraine and raging heartburn every time their smug lives are rudely jolted by the phrase "Tea Party."

© A.J. DiCintio

 

The views expressed by RenewAmerica columnists are their own and do not necessarily reflect the position of RenewAmerica or its affiliates.
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A.J. DiCintio

A.J. DiCintio posts regularly at RenewAmerica and YourNews.com. He first exercised his polemical skills arguing with friends on the street corners of the working class neighborhood where he grew up. Retired from teaching, he now applies those skills, somewhat honed and polished by experience, to social/political affairs.

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