Sadly, most of us are so ideologically slanted that we are unable to see this as mere punditry and automatically buy into the mud that our side is slinging.
However, it needs to be said that there is plenty of blame to go around for this mess. The Economist writes,
“All evidence suggests that the current meltdown was built from layered irresponsibility. This financial crisis is a genuinely democratic one, with hard-working homeowners and billionaire villains each playing a role.”Both the Right and the Left are attempting to simplify this multilayered and complex problem by pointing the finger at the other. FactCheck.org takes on two ads– one from MoveOn.org and the other from the McCain campaign – and shows how shallow these quick swipes at the other party can be.
Joe Miller and Brooks Jackson of FactCheck.org write,
“The U.S. economy is enormously complicated. Screwing it up takes a great deal of cooperation. Claiming that a single piece of legislation was responsible for (or could have averted) is just political grandstanding. We have no advice to offer on how best to solve the financial crisis. But these sorts of partisan caricatures can only make the task more difficult.”
According to Miller and Jackson, here's a partial list of those who might need to share in the fault:
- The Federal Reserve, which slashed interest rates after the dot-com bubble burst, making credit cheap.
- Home buyers, who took advantage of easy credit to bid up the prices of homes excessively.
- Congress, which continues to support a mortgage tax deduction that gives consumers a tax incentive to buy more expensive houses.
- Real estate agents, most of whom work for the sellers rather than the buyers and who earned higher commissions from selling more expensive homes.
- The Clinton administration, which pushed for less stringent credit and downpayment requirements for working- and middle-class families.
- Mortgage brokers, who offered less-credit-worthy home buyers subprime, adjustable rate loans with low initial payments, but exploding interest rates.
- Former Federal Reserve chairman Alan Greenspan, who in 2004, near the peak of the housing bubble, encouraged Americans to take out adjustable rate mortgages.
- Wall Street firms, who paid too little attention to the quality of the risky loans that they bundled into Mortgage Backed Securities (MBS), and issued bonds using those securities as collateral.
- The Bush administration, which failed to provide needed government oversight of the increasingly dicey mortgage-backed securities market.
- An obscure accounting rule called mark-to-market, which can have the paradoxical result of making assets be worth less on paper than they are in reality during times of panic.
- Collective delusion, or a belief on the part of all parties that home prices would keep rising forever, no matter how high or how fast they had already gone up.