Reason.tv on the topic of economic stimulus (via Instapundit)
Here’s the thing. The root cause of the economic crisis is the credit crisis (sorry for all the ‘crisis’ – lack of a better word and all that) and the root cause of the credit crisis is mortgage-backed securities, where the mortgages in question are defaulted subprime loans. The answer is and always has been to put the bulk of these junk investments into federal receivership and get them off the banks’ books so they can start to lend to each other again. We didn’t, and don’t, need $1 trillion of pork projects to get the economy rolling again, but it’s easy to see why career politicians want this. Forcing cash to flow without fixing the underlying private credit problem moves the economic engine from the private to the public sector (at least until the expropriated money runs out) and becomes in effect a back door route to socialism. I know how that sounds, but think about it. The private sector remains immobilized and the government is the only entity that can spend money. Does that sound good or sustainable? Really?
Also, this is a government-made problem because the government made the rules that allowed – for the first time ever – mortgage lenders to package loans into securities and resell them. If you’re looking for whom to blame, it’s basically two groups: the mortgage brokers who wrote bad loans, knowing they’d be resold right away and become someone else’s problem (and their bosses who allowed the practice – not every bank partook) and the politicians and regulators who set up the system that allowed the abuses. For example, Chris Dodd and other ‘friends of Angelo’.