IN FACT, IT'S THE RESULT IF POLITICIANS AND BUREAUCRATS AND THE LIBERAL INTELLIGENTSIA.
Dubya's Double Dip?
By PAUL KRUGMAN
Published: August 02, 2002
The basic point is that the recession of 2001 wasn't a typical postwar slump, brought on when an inflation-fighting Fed raises interest rates and easily ended by a snapback in housing and consumer spending when the Fed brings rates back down again. This was a prewar-style recession, a morning after brought on by irrational exuberance. To fight this recession the Fed needs more than a snapback; it needs soaring household spending to offset moribund business investment. And to do that, as Paul McCulley of Pimco put it, Alan Greenspan needs to create a housing bubble to replace the Nasdaq bubble.GEORGE BUSH TRIED TO REIN IN THE HOUSING BUBBLE BUT WAS PREVENTED FROM DOING SO BY THE DEMOCRATS IN THE HOUSE. HERE'S PROOF - FROM THE NYTIMES:
NYTIMES IN 2003: BUSH PROPOSED TIGHTENING OVERSIGHT OF FANNIE MAE AND FREDDIE MAC - THE DEMOCRATS OF CONGRESS BLOCKED IT
SEEING IS BELIEVING:
AND LIBERALS LIKE KRUGMAN.
MORE PROOF HERE AND HERE AND HERE AND HERE.
New Agency Proposed to Oversee Freddie Mac and Fannie MaeThe Bush administration today recommended the most significant regulatory overhaul in the housing finance industry since the savings and loan crisis a decade ago.Under the plan, disclosed at a Congressional hearing today, a new agency would be created within the Treasury Department to assume supervision of Fannie Mae and Freddie Mac, the government-sponsored companies that are the two largest players in the mortgage lending industry.The new agency would have the authority, which now rests with Congress, to set one of the two capital-reserve requirements for the companies. It would exercise authority over any new lines of business. And it would determine whether the two are adequately managing the risks of their ballooning portfolios.The plan is an acknowledgment by the administration that oversight of Fannie Mae and Freddie Mac -- which together have issued more than $1.5 trillion in outstanding debt -- is broken. A report by outside investigators in July concluded that Freddie Mac manipulated its accounting to mislead investors, and critics have said Fannie Mae does not adequately hedge against rising interest rates.... Among the groups denouncing the proposal today were the National Association of Home Builders and Congressional Democrats who fear that tighter regulation of the companies could sharply reduce their commitment to financing low-income and affordable housing.''These two entities -- Fannie Mae and Freddie Mac -- are not facing any kind of financial crisis,'' said Representative Barney Frank of Massachusetts, the ranking Democrat on the Financial Services Committee. ''The more people exaggerate these problems, the more pressure there is on these companies, the less we will see in terms of affordable housing.''Representative Melvin L. Watt, Democrat of North Carolina, agreed.''I don't see much other than a shell game going on here, moving something from one agency to another and in the process weakening the bargaining power of poorer families and their ability to get affordable housing,'' Mr. Watt said.
THE ENTIRE CRISIS IS THE FAULT OF THE DEMOCRATS OF CONGRESS.
AND GET THE GRETCHEN MORGENSON BOOK!