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Miscellaneous meanderings and philosophical ramblings. The title from a spiral notebook I used to jot down my thoughts on religion and other matters some years ago. I like to write, think and express my views on various issues. Robust discussion is welcome.

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I will not submit. I will not surrender.
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Saturday, September 27, 2008

As our markets burn the Democrats fiddle

Nancy Pelosi sure knows how to help the situation when she says House Republicans are unpatriotic for not showing up for bail out negotiations. From HotAir we see who was responsible for that. Playing politics while claiming we are in danger of a credit and economic disaster? I wonder how long it will take Obama to man up and criticize her for that?

It's hardly surprising that Democrats would fiddle during this crisis as they've had some practice as this disaster was looming.

Thanks to Freeman Hunt, who also has additional links worth perusing. Be sure to also go here and  note who received the most money from Fannie Mae and Freddie Mac. What does it say of Nancy Pelosi that she is not ashamed to still have Chris Dodd and Barney Frank involved in negotiations and trying to lard up this bail out with provisions that will cost tax payers billions?

Some have tried to lay this at the doorstep of deregulation, specifically the Gramm-Leach-Bliley Act. IBD addresses this claim here:

First, that bill didn't make regulation go away. It modernized the rules to fit the realities of the financial markets. Washington doesn't always get the rules right, but in this case it did.

Also, Gramm-Leach-Bliley didn't take down the firewalls between deposit-based banking and investments. Banks can't play the stock market or trade credit default swaps with your savings account. Investment and banking operations run under one corporate roof, but otherwise stay separate.


In this respect, Gramm-Leach-Bliley has turned out to be smart policy indeed. By repealing the rule against banks owning investment firms, it has led to at least two crucial mergers — JPMorgan Chase absorbing Bear Stearns and Bank of America merging with Merrill Lynch. Morgan Stanley may be the next investment house to find shelter in a well-capitalized commercial bank.

You can spot the theme here: By taking down an outmoded firewall, the law is helping the financial industry cope with a once-in-a-lifetime crisis. Far from being the cause, this instance of deregulation, or whatever you call it, is part of the cure.

Be sure to read it all to gain a bit more understanding of how we got here.

Overall, it is a near perfect storm of multiple causes that are to blame. Good intentions with government mandated distortion of the markets helped make the housing bubble and magnified it greatly. Corruption was encouraged by this government interference and resulted in bought politicians resisting proper regulation of the businesses government created. While this doesn't exhaust the list, it should be clear that people like Chris Dodd and Barney Frank should not be involved in negotiating a bail out.

It is highly disputed and doubtful that Nero actually played the fiddle while Rome burned. What is beyond dispute is that Democrats are very much the reason for this disaster and that Nancy Pelosi would rather play politics as if she thinks she's a musical virtuoso, rather than do what's right for the country.


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