Update 1/14/09 - In following up yesterday's post and in response to requests for specific help in explaining the financial mess we are in, John Hood suggests: " read, copy, and distribute University of Missouri Professor Lawrence White's briefing paper for the Cato Institute, published a couple of months ago. It's concise, straightforward, and persuasive. A key graf:
The actual causes of
our financial troubles were unusual monetary policy moves and novel
federal regulatory interventions. These poorly chosen policies
distorted interest rates and asset prices, diverted loanable funds into
the wrong investments, and twisted normally robust financial
institutions into unsustainable positions.
- (Original post) -John Hood posted important observations:
A likely feature of the political debate of the
next few years will look something like this. Conservatives will make a
specific argument about a specific public-policy dispute — say, NR's editorial today questioning
the need and wisdom of appropriating the second half of the TARP funds
— and liberals will then respond not with a meaningful rebuttal of the
specific argument but instead with a general attack on conservative
credibility. "Your free-market ideology led to the worst recession
since the Great Depression," they will assert. "Why should we believe
anything you say now?"
Getting ready for this tactic means mastering the details of the
bipartisan economic policy mistakes that have led us to the present
moment, including excessive money creation, coddling of Fannie and
Freddie, whipsaw imposition of post-Enron accounting rules, and
regulatory constraints on production and investment. But it also means
shoring up the intellectual defense of our basic conservative
principles. The process will need to include