For half a century our liberal friends have lived off the story that FDR saved the USA with his New Deal and his jobs programs like the WPA and the CCC. Occasionally conservatives have pushed out an analysis or a screed that picks holes in it. Most recently, Amity Shlaes in The Forgotten Man has walked all over it. But the narrative is still alive and kicking.
Now the Democrats are trying to tell us that the meltdown of 2008 was all the fault of greedy bankers. Reports Maya Jackson Randall in the Wall Street Journal:
A blue-ribbon panel investigating the 2008 financial crisis blamed failures in financial regulation, flaws in corporate governance and excessive borrowing as key elements leading to the meltdown, Financial Crisis Inquiry Commission Chairman Phil Angelides said Thursday.
That's the story of the six Democrats on the panel, and they are sticking to it. It's the story that liberals and the New York Times have been selling. The Republicans split in their dissent. Peter Wallison, for the conservative American Enterprise Institute:
Instead of pursuing a thorough study, the commission's majority used its extensive statutory investigative authority to seek only the facts that supported its initial assumptions—that the crisis was caused by 'deregulation' or lax regulation, greed and recklessness on Wall Street, predatory lending in the mortgage market, unregulated derivatives and a financial system addicted to excessive risk-taking[.]
Wallison fingered the two GSE mortgage twins, Fannie and Freddie as the main cause of the crisis.
Three Republicans, led by former House Ways and Means Committee Chairman Bill Thomas came up with ten reasons for the crisis:
The three commissioners narrowed the causes of the crisis down to 10, faulting, among other things: credit and housing bubbles; nontraditional mortgages; failures in credit-rating and securitization; financial firms' massive housing risk; firms holding too little capital; the ease at which losses spread through the system; bad bets on housing; and market shock and panic.
In my view, Thomas and his co-dissenters go too light on Fannie and Freddie. And, for that matter on the Fed that stoked the fires in the early 2000s.
But the bigger problem is the problem for Democrats. Their failure to realize that the mess in 2008 was not going to be solved with a quick Depression-style stimulus means that high unemployment will continue for years. Despite their valiant effort to blame greedy bankers and deregulation, the American people will blame the chaps in charge for the last four years. At the end of it, the Democratic economic narrative that has stood strong and tall for half a century is going to collapse.
It's about time, because the liberal governing strategy of administrative centralism is bringing the US to the brink of national bankruptcy. The liberal administrative state is cruel, corrupt, unjust, wasteful, and deluded. The sooner we send them back to their universities and their think tanks the better for the prosperity of all Americans.