Worldview Item of the Day
One of the claims of the leftist camp is that the current financial crisis is the result of the lack of government regulation of Wall Street. An objective evaluation of the facts underlying the crisis seems to reject that notion.
Succinctly, government entities–Fannie Mae and Freddie Mac–caused this crisis by creating the impression that they would continue to buy up subprime loans extend both under and outside the Community Reinvestment Act with the implicit guarantee that the government would bail the whole system out if it failed. This impression artificially inflated the value of commodities based on those subprime loans, thereby encouraging investors around the world to buy up assets that had values a fraction of their stated worth.
In many, important ways, the problem here was not insufficient regulation of Wall Street but insufficient regulation of the government. Now, with the passage of the $700 billion bailout, there will be even more government intervention in the markets than there was before. The precedent of such intervention will encourage more risks however much regulation actually takes place.
The differences between John McCain and Barack Obama on this issue are stark. Granted, both of them voted for the bailout, but their actions before and their promises for after paint a picture of radically different views on the economy and government regulation of business.
McCain called for the regulation of Fannie Mae and Freddie Mac more than two years ago. He has been a consistent champion of removing the government from the private sector for the very purpose of preventing the kinds of implicit promises that led to the current crisis. He supports lower taxes on businesses and business owners. Specifically, he understands that the reason so many businesses continue to move their operations overseas is because the government continues to create a hostile environment due to over-taxation and over-regulation here in the United States.
Meanwhile, Obama believes that the solution to everything is increased government regulation. He wants to regulate Wall Street. He wants to regulate banks. He wants to regulate health care. He wants to regulate the rich. He wants to regulate businesses that make a profit. He wants to regulate businesses that do business overseas. All told, he wants a trillion dollars in new regulation on top of the $13 trillion that the government has already done. Replacing regulate with rule might be an even better description of Obama’s solution.
The history of the world shows that overgrown government regulation is the death of many economies. In 1991, the Soviet Union collapsed under the very kinds of regulations Obama promises to bring to our own economy. McCain, on the other hand, promises to eliminate as much of that regulation as possible, paving the way for the kind of economy the Founding Fathers envisioned when they limited the power of the federal government in the Constitution and its amendments.
Once again, the choice is clear. If you want businesses and the economy to grow, then your only choice is to vote for McCain.