Megan McArdle of The Atlantic tears Obama a new one for pandering to the populists by criticizing the Bush administration for the credit crunch:
What, specifically, should the Bush administration have done, Senator? Don't tell me they should have beefed up SEC enforcement, since this is not a criminal problem (aside from minor lies by Bear execs after the damage was already done). Perhaps he should not have reappointed Greenspan, or appointed Ben Bernanke? Both moves were widely hailed at the time. Moreover, to believe that a Democrat could have done better is to assert that a Democratic president would have found a Fed chair who would pay less attention to unemployment, or a bank regulator who would have tried harder to prevent low-income people from buying homes. Where is this noble creature? And why didn't Barack Obama push for him at the time?
Indeed, I ask the Senator to name one significant thing that Bush has done to create this crisis that couldn't also be laid at the feet of St. William of Little Rock. If Democratic policy is so good at protecting the little guy from asset price bubbles, how come the stock market crashed in 2000?
It drives me nuts when so-called liberals are quick to blame capitalism and free markets whenever something goes wrong. Guess what--maybe the folks who were taking out "ninja" loans should have showed some restraint. It's called judgment, people.
Matthew Yglesias also jumps on the panderwagon by blasting the Fed for intervening in the markets:
If you happen to have some financial problem in your life, the Federal Reserve doesn’t care. At all. No matter how bad the problem is. Your personal desires and interests will have absolutely no bearing on the Fed’s thinking about interest rates or anything else. If you’re an extremely rich executive at a financial services firm, however, things look different. Even in circumstances where a taxpayer funded bailout isn’t undertaken — as with Lehman Brothers — the Fed still steps in in a variety of ways to ease the pain. Lehman will be given some time to unwind its assets in a patient way so as to try to minimize the extent to which it needs to sell at firesale prices in a way that undermines the portfolios of other firms. Needless to say, if bad economic times strike your town a very similar type of problem could emerge — it’s hard to sell your house for anything if half your neighbors are also selling — but Ben Bernanke’s not going to step in and save you.
I was going to despair that a seemingly intelligent young fellow actually believes this tripe, but the quality of the comments pointing out Matt's mistakes restored my faith in humanity. I particularly like this one:
Matt has a little bit of a valid point here, but the way he expresses it is likely to tarnish the image of progressives among economically sophisticated centrists.
The reasons to minimize the financial consequences of cataclysmic events like the Lehman failure have nothing to do with the rich people who benefit directly from that safety net. When the financial system collapses, it hurts everybody, and it tends to hurt poorer people more, because they have the least resources to cushion the blow. If the Fed had provided a “safety net…for [m]illionaires” (since there were no billionaires yet) in the early 1930s, it would have made things a lot better for poor people in the subsequent years.
It’s also true that a stronger safety net for the poor and middle class has some benefits for the economy generally. That’s where Matt has a valid point. A wise set of policies should include protection for the non-rich.
But I would say there is somewhat less urgency about that. A safety net for ordinary people would help, but the economy can get by without it — “get by” in the sense of avoiding a disaster like the 1930s. If the financial system collapses, on the other hand, the safety net for ordinary people will cushion the severity of the resulting disaster, but it probably won’t be enough to prevent it. Much of the New Deal was an attempt at a safety net for ordinary people, but the New Deal had only limited success in bringing about a recovery. By most accounts the Great Depression was still going on during the late 1930s.Finally, Clive Crook, who is fast becoming one of my favorite bloggers, rips into the Democrats for once again trying to snatch defeat from the jaws of victory. Crook, who is an Obama supporter, just brutalizes the Democrats (who deserve the rough treatment):
For Mr McCain to win the election against the odds that faced him pre-Palin - with the economy in the tank and the incumbent Republican president setting records for unpopularity - would be sensational enough. For this to happen because of his vice-presidential pick, a decision that is usually of next to no consequence, beggars belief. The Democrats had to bring all their resources to getting themselves into this fix. They proved equal to the task.
As I argued last week, Mr Obama's own initial reaction to the Palin nomination was exactly right. All the party had to do was follow his lead. Mr Obama, in effect, would give her enough rope; her inadequacies would reveal themselves in due course; it cost nothing, in the meantime, to be courteous, and to keep pressing on the issues, where the Democrats still enjoy an advantage with most voters. Ms Palin's first television interview last week, an adequate but far from stellar performance, affirmed the wisdom of that course.
But the Democratic talking-heads had to exult in their disdain for Ms Palin and all she represents - namely, a good part of the electorate whose support Mr Obama needs. In the space of a few days, they irreversibly damaged Mr Obama's candidacy and transformed this election.
As a capitalist, I instinctively distrust the Democrats. One some level, their constant blundering should be reassuring to me, given the socialist tendencies of their left wing. But the practitioner in me simply can't abide the incredible incompetence and inability for them to play the game with a modicum of skill and common sense.