Of all the annoyances to come out of the financial crisis, this one takes the cake: French intellectuals are mocking us.
According to the Los Angeles Times, finance officials, regular Joes and leftist intellectuals within Europe have condemned the perceived breakdown of America’s capitalistic system.
French intellectuals have been gloating about it. They are making “gleeful allusions to the stock market crash of 1929.” They are expressing nostalgia for “the good old days when bankers jumped out of windows.” They are criticizing government plans to bail out U.S. corporate giants who otherwise loathe government.
But they have entirely misunderstood the cause of the problem. America’s capitalistic systems didn’t fail. Our government did.
You see, the money-lending business used to be rigid in America. Bankers used to apply draconian measures: They demanded that applicants have jobs, decent credit histories and enough dough to make a down payment.
But some in our government felt such requirements were unfair. Some 31 years ago, they passed the Community Reinvestment Act into law — and turbocharged that law during the Clinton years. It requires lenders to extend loans to folks who would not otherwise qualify.
In the meantime, another government entity — the Federal Reserve — pumped easy money into the economy. Pretty soon, any old fool could get a loan.
And as every old fool did get a loan, the loans were packaged and happily sold to quasi-government organizations, such as Fannie Mae and Freddie Mac. The role of Fan and Fred is to buy up loans from lenders so the lenders can then lend more money to other home buyers.
But Fan and Fred started buying some loan packages that included “subprime” loans because they paid higher returns. The higher returns allowed Fan and Fred to show higher profits (on paper, anyhow). The higher profits allowed the government cronies who ran Fan and Fred to give themselves multimillion-dollar bonuses.
So long as the housing bubble was expanding — and Fan and Fred regulators were kept at bay — everyone was happy. Folks invested in Fan and Fred, because, as quasi-government organizations, everybody figured the government would bail them out if they ever went belly up.
Fan and Fred did go belly up and taxpayers were forced to bail them out.
But the financial mess the government helped create is now so widespread, the only way to head off an even greater mess is more government intervention — the borrowing of lots more taxpayer dough to keep the massive house of cards from collapsing.
Our government is just getting warmed up.
Negative economic news is benefiting the Democrat candidate. The more people panic about the financial markets, the more voters — for reasons that make no sense to me — think Obama’s ideas will lead to better economic conditions.
But his ideas will lead to more government meddling. He’s promised to raise a variety of taxes, such as the capital gains tax, even though his increases will hurt investment and damage the economy.
He’s promising billions in new spending to fund all kinds of new programs, which will divert even more money from the private sector to the government sector — and further slow the economy.
He’s promising to apply similar government philosophies — the same command-and-control meddling that has perverted our financial systems and led to the crisis we are in — to “fix” health care, the environment and a host of other challenges.
So, my French intellectual friends, don’t gloat over the demise of America’s capitalistic system. It is our government system that did most of the failing. And government failure always begets more government.
Which ought to make you happy. Where government intervention is concerned, America is becoming more like France every day.
If we keep it up, our economy will soon be as anemic as France’s. We’ll soon have lots more unemployed folks sitting around cafes complaining about the failure of American capitalism.