NYT: Irresponsible Lending Caused Economic Crisis

An amazing admission from the official paper of the Democratic Party, the New York Times: Loaning money to people who couldn't pay it back caused the financial crisis. Of course they don't say it just like that. They faithfully lay out the facts, assign blame to the wrong people, then draw the wrong conclusions. This is why readership is dwindling at the Senile Old Lady.

They also admit that government is a guilty party. Of course, Barny Frank, Chris Dodd, and Chuck Schumer are never mentioned. No, in the Toilet Paper of Record's version, President Bush is the only villain.

The NYT propagandists start by weaving the fantasy that President Bush invented the idea of pushing homeownership on more Americans. He did not; this initiative was started by President Carter, greatly bolstered by the Clinton administration, and indeed enthusiastically embraced by President Bush.

Eight years after arriving in Washington vowing to spread the dream of homeownership, Mr. Bush is leaving office, as he himself said recently, “faced with the prospect of a global meltdown” with roots in the housing sector he so ardently championed.

There are plenty of culprits, like lenders who peddled easy credit, consumers who took on mortgages they could not afford and Wall Street chieftains who loaded up on mortgage-backed securities without regard to the risk.

But the story of how we got here is partly one of Mr. Bush’s own making, according to a review of his tenure that included interviews with dozens of current and former administration officials.

He pushed hard to expand homeownership, especially among minorities, an initiative that dovetailed with his ambition to expand the Republican tent — and with the business interests of some of his biggest donors. But his housing policies and hands-off approach to regulation encouraged lax lending standards.

The Bush critics go on to explain how the president and his staff failed to recognize what was causing the housing market to tank and why foreclosures were increasing. Then they pile on some tired rhetoric about not enough regulations. Note the lack of praise for the president's big-hearted generosity; that doesn't fit the storyline. No, helping poor minorities was a mere unintended byproduct of lining his political cronies' pockets and grabbing more power. Do these people actually believe the crap they write?

What this slanted piece of writing inadvertently shows is that by the time we recognized the housing bubble, the seeds of destruction had already been sewn. Government had already forced lending institutions to irresponsibly loosen time-tested standards. That's how unqualified borrowers ended up getting mortgages, which in turn explains the high foreclosure rates. The mortgage industry had previously done a good job predicting who could and who could not pay back a loan. Uncle Sam stepped in, made them lower the bar, and, just as night follows day, foreclosures increased. That's the deregulation that wrecked the market.

Missing in all of this drivel is the cautionary tale of government intervention, no matter how good-hearted or well intentioned, and the lessons we can learn from it.

Just as giving a society the trappings of democracy does not make it democratic, giving people the outward signs of financial solvency does not make them financially secure. Democracy and financial security cannot be imposed. They are outward manifestations of an inner attitude. Democratic institutions and thrifty homeownership are the tangible and beneficial fruits that spring from those noble inner motives.

But this type of inductive reasoning is beyond the New York Times, which is why they now find themselves on the ever growing junk heap of national failures. It is much easier to draw a "Bush is Stoopid" cartoon than it is to provide a balanced analysis that could actually educate people.

Blame Bush, blame congress. They all had a share in creating and crashing this economic lead balloon. More important than fixing blame (nobody in DC pays for their mistakes anyway) is to learn the right lesson. Presidents and legislators intervened in a previously-rational market and forced it to make irrational decisions, causing that market to fail. Now we are all paying the price.

You can pound a square peg into a round hole if you're the government and you have a big enough hammer. Just watch out for the splinters and the sparks.