SEARCH BLOG: POLITICS and MARKETS
Politicians will blame recent gas price increases on the weather. While technically true, it hides the larger issue of government over-involvement in the marketplace.
- Decades of restrictions on oil extraction in the U.S. and offshore have contributed to global supply issues.
- Decades of restrictions on new oil refineries in the U.S. have led to an old and insufficient system for producing fuels.
- Forcing banks and mortgage companies to abandon good business practices in the name of "fair lending" to unqualified or marginal buyers helped create the housing, mortgage, and banking crisis.
- CAFE standards for automobiles and trucks that are creating significant cost for both buyers and manufacturers under the presumption that the market forces already in play would not happen.
- Restrictions and red tape in the development and construction of clean coal and nuclear power generating plants leaving many areas of the country on the verge of insufficient power... while pouring billions of taxpayer dollars into subsidizing uneconomical alternatives.
As pointed out at Reformedville:
So now we see unaffordable energy prices, collapse of the housing market, banks and Wall Street firms going belly up, automobile manufacturers dying, unemployment increasing and personal fortunes being lost.
In June 2004, Deputy Treasury Secretary Sam Bodman said, “ We do not have a world class system of supervision of the housing government sponsored enterprises (GSE’s), even though the importance of the housing financial system that the GSE’s serve demand the best in housing supervision.
Bush said “Congress needs to pass legislation strengthening the independent regulator of government-sponsored enterprises like Freddie Mac and Fannie Mae, so we can keep them focused on the mission to expand home ownership” in December and again mentioned it in his state of the union address.
How did Fannie Mae and Freddie Mac respond, flooding congress with campaign money. How did Congress react? Al Hubbard reports in the Washington Post:
Rep. Barney Frank (D-Mass.) said the following on Sept. 11, 2003: “We see entities that are fundamentally sound financially. . . . And even if there were a problem, the federal government doesn’t bail them out.”
Sen. Thomas Carper (D-Del.), later that year: “If it ain’t broke, don’t fix it.”
As recently as last summer, when housing prices had clearly peaked and the mortgage market had started to seize up, Dodd called on Bush to “immediately reconsider his ill-advised” reform proposals. Frank, now chairman of the House Financial Services Committee, said that the president’s suggestion for a strong, independent regulator of Fannie and Freddie was “inane.”
Don't worry, even though the government may have screwed things up, it will save you.