Wednesday, November 12, 2008

The economy

Interesting and scary article about the economy from the Washington Post. All Bush’s fault, of course. His failure to regulate European and Asian banks, which were more over-leveraged than even ours, really did us in! Seriously, everyone is to blame, Democrats & Republicans, Wall Street and banks worldwide, GM for not building cars people want, unions for making GM much less competitive, and consumers, especially those who financed debt for homes, cars, etc. that were more than five or ten times their annual income. Those of us who didn’t pile up debt now have to bail them out, so they can—sob—“stay in their homes,” even if the home cost $1M. Wonder if the new administration will repeal the Community Reinvestment Act, so banks won’t continue to be forced to give loans to people who can’t pay?

To understand why politicians of both parties do things short term that feel good, but screw the economy long term, I again recommend the excellent books Basic Economics and Economic Facts and Fallacies by Dr. Thomas Sowell. Many of the short term solutions to relieve the pain will make things worse long term, but both parties have their eye on the 2010 midterm elections, not the long term.

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