WALLISON WRONG: THE CRA AND FANNIE MAE WERE MAJOR FACTORS, BUT DID NOT CAUSE THE FINANCIAL MELTDOWN AND THE RECESSION

WALLISON -- (VIA GLENN):

WALLISON'S CONCLUSION:

PREVENTING A RECURRENCE of the financial crisis we face today does not require new regulation of the financial system. What is required instead is an appreciation of the fact--as much as lawmakers would like to avoid it--that U.S. housing policies are the root cause of the current financial crisis. Other players--greedy investment bankers; incompetent rating agencies; irresponsible housing speculators; shortsighted homeowners; and predatory mortgage brokers, lenders, and borrowers--all played a part, but they were only following the economic incentives that government policy laid out for them.

WRONG.

HERE'S PROOF:

Europe had a real estate bubble burst, too. And Britain's burst before America's. Theirs was not caused by FANNIE MAE or the Dems. And it led to a finicacial crisis there too. Even in Sweden and Denmark, and Spain.

This proves that the CRA and FANNIE MAE are not "the root cause" of the global financial fiasco, or of America's as Wallison concludes; ( "... U.S. housing policies are the root cause of the current financial crisis").

Certainly the derivatives based on FANNIE MAE and FREDDIE MAC paper contaminated the global banking system and were a "major factor" but they cannot be said to be "the root cause" as Peter Wallison concludes.

There were two other "MAJOR FACTORS":

• (1) the FED raised rates 17 times (every time it could) between 2004 and 2007 - and so did the ECB (they were INSANELY afraid of inflation and raising rates to prevent it; this was a COLOSSAL error);

• and (2) the oil bubble (which burst within a week of when I predicted it would on my blog - and I predicted it in MAY when it was at it's peak and "experts were talking about $200/barrel).

Greenspan's unnecessary and harmful rate increases and "the oil bubble" burst the real estate bubble in the USA - and this came AFTER the real estate bubble had already burst in Europe, for entirely different reasons.

To fully recover we must not only fix the financial system - as Wallison describes, but expand ALL energy sources so another energy bubble is much MUCH less likely.

The Obama Administration is doing the exact wrong thing on these fronts; it's closing vast tracts of US territory to oil exploration and borrowing vast amounts of money to spend on hole-digging/hole-filling pork-projects which will principally benefit the unions which supported Obama and the Chicago Machine - the SEIU and AFSCME.

This borrowing - and increases in taxes on small businesses/small business owners is going to worsen things - and severely slow the recovery.

The GOP Plan is far superior.

If Obama was 1/10th as smart as his comrades in the MSM think he is, then he'd pass a small targeted and REAL stimulus package now and table the leftist pork. But Obama and his comrades see this as their BIG CHANCE to get away with it - under the guise of protecting us from a depression.

It's pure 100% unadulterated BULLSHIT.