Wednesday, June 3, 2009

Krugman, Reagan and Clinton

Lately, Leftists are giddy over Paul Krugman disingenuously blaming Reagan for the current housing debacle.

But, even the Huffington Post knows Krugman is full of purely partisan crap.

My observation is that Robert Scheer -- author of that Huffington Post piece -- correctly blames Clinton, but for the wrong reasons.

What Scheer describes as “derivatives scams” were more of a symptom than a cause. The single biggest cause of this mess was when Clinton dictated -- in 1999 -- that lending standards (not just down payments) must be lowered. Without that dictate, the “derivatives scams” would have lacked both the volume and the inherent risk required to produce the fiasco we now see.

The “derivatives scams” were merely a perverse response to Clinton’s perverse dictate. They were nothing but a way to make a fast buck off of a perversity created by Clinton. When idiotic politicians create perverse incentives, perverse responses will ALWAYS FOLLOW!

Side Note: Krugman falsely asserts that Reagan “broke with longstanding rules of fiscal prudence”. Click here and here to belie that particular Leftist myth.

Click here to read the primary post on this topic (and all the rest).
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