In case you haven’t seen it, the Washington Post ran a surprising and unexpected editorial yesterday. It basically explained that politicians, policy makers, and others shouldn’t get too much ahead of themselves but should instead consider that perhaps it was because capitalism was too regulated and monetary policy was too expansive that we are in the mess we’re in.
“…government interventions of all kinds, from the defense budget to farm supports, shaped the business environment. No subsidy would prove more fateful than the massive federal commitment to residential real estate -- from the mortgage interest tax deduction to Fannie Mae and Freddie Mac to the Federal Reserve's low interest rates under Mr. Greenspan. Unregulated derivatives known as credit-default swaps did accentuate the boom in mortgage-based investments, by allowing investors to transfer risk rather than setting aside cash reserves. But government helped make mortgages a purportedly sure thing in the first place. Home prices seemed to stand on a solid floor built by Washington.”
Strong economic upheavals such as the current crisis can bring unexpected fruits... What's next? Ben Bernanke and Paul Krugman understanding ABCT?