25th October 2011
If you STILL believe that capitalism caused the financial crisis, then read this
For those who are still in denial about the MASSIVE GOVERNMENT FAILURE involved in the recent events in USA, please read this:
Letters to the Editor
260 Washington St.
Watertown, NY 13601
In his letter of October 23  criticizing George Will’s column on Elizabeth Warren, Mark MacWilliams of
repeats a number of fallacies about the recession and financial crisis that should not go unchallenged. Canton
MacWilliams refers to Congress deregulating the financial industries but offers no specifics. In fact, since 1980, Congress has passed four new sets of regulations for every one deregulatory act, and between 2001 and 2008, there were nine new sets of regulation and not one bit of deregulation. Those recent regulations included the Basel capital requirements, which created powerful incentives for banks to sell off the mortgages they originated and buy them back as mortgage backed securities, which they otherwise would not have done.
Contrary to MacWilliams, our current mess was not the result of “predatory capitalism,” but the predictable consequence of government intervention and crony corporatism.
Nowhere does he mention the Federal Reserve’s role in pushing interest rates so low that banks were being paid to borrow, nor does he have a word to say about Fannie Mae and Freddie Mac having privileged access to the Treasury to buy up all of the questionable mortgages that banks originated. He also ignores two decades of Congress’s role in mandating that banks lend to marginal borrowers.
If all the traffic lights in
were stuck on green, we’d hardly blame the drivers for the ensuing accidents. Watertown
When government distorts the signals and incentives facing producers and consumers, the blame for the resulting disaster should fall on government not the private sector. The crisis and recession are what happens when you put “people before profits.”
Finally, MacWilliams should learn who does assure that his toaster doesn’t explode by actually looking at it. He’ll find the stamp of not a government agency, but Underwriters Laboratory, a private firm that provides quality assurance for appliance makers and consumers. Unlike the government cartel of financial rating agencies that failed miserably last decade, the privately operated UL has decades of success behind it.
And don't forget to read my article here: http://www.sabhlokcity.com/2009/01/building-a-monetary-and-financial-system-for-a-free-society/