I was hanging out with some friends last night and didn’t get to comment on Bush’s speech concerning the financial crisis we face. So, I’m taking the opportunity to do that now.
My initial thought on this speech is how amazing I find it that Bush is able to ascribe blame for the crisis as far and wide as foreign investments infusing too much capital into the markets, yet can find no reason to blame his own administration or Party for anything. His speech left no stone unturned, no goat unscaped. He blames foreign investors, banks – Fannie and Freddie, in particular – studiously unspecified borrowers and investors on Wall Street and Main Street. . . . but nothing is mentioned about the deregulation practices that led to this problem; nothing about an administration asleep at the switch for even the minor regulatory duties it was still responsible for.
He blames foreign investors for investing too much capital in the markets, thus forcing American markets to begin reckless mortgage investing practices. This is a bit like saying “The Devil Made Me Do It.” For a politician from a party avowedly dedicated to the notion of personal responsibility, this is a remarkably flippant abandonment of that principle.
And speaking as a person who is committed to the idea of community and inter-personal responsibility, I have to say that it’s just crap. There was absolutely nothing forcing the hand of banks and lenders when they chose to commodotize mortgages – the real problem in the financial crisis. It was when mortgages got bundled up and sold off as commodities that things got bad; it was when commodities started getting used as “value stores” like cash that things got dangerous and it was when the values of those commodities fell that liquidity dried up, which is where we are now.