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« Supreme Court is right on Westboro Baptist case | Main | NPR Schillers itself -- they're all fired »

March 07, 2011



The boom and bust cycle we have experienced, very similar to the many we have seen before (most of them in the 19th century) has nothing to do with government spending or deficits.

N-o-t-h-i-n-g. Here's a clue: seen the price the government pays to borrow money via the bond market?

Its an unregulated derivatives market, no real oversight of bond rating agencies, and an SEC that was asleep at the wheel while Wall Street banks looted investors.

In the long term, sure, deficits matter. But this recession has nothing whatsoever to do with them.

Frank Warner

The derivatives market was fed directly by Fannie Mae and Freddie Mac's intentionally risky home loans, encouraged directly by members of Congress.

Congress had its eyes open. Its members -- principally its Democratic members -- repeatedly were warned they had forced Fannie and Freddie to make unsound loans, but they did it anyway, and those loans found their way bundled into all sorts of investments.

Congress is the prime regulator. It insisted on its way of regulating $1 trillion in home loans. Problem was, knowing full well they had marched into the reckless zone, they insisted on bad regulation.

It's hard to blame Wall Street for ridiculously risky lending and investing standards, when it was Congress who demanded those poor standards -- and worse.

Federal deficits probably aren't the immediate threat to our economy, unless we expect $1 trillion deficits every year. Uneconomical energy and unsound finances are the first problem. Unfunded federal liabilities and that pile of deficits come next.


And here I though these large deficits supported by printing more money was a bad thing to the value of the US dollar and the credit rating of the U.S.

Keep spending, drunken sailors !!!!

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