The financial crisis: Assigning blame

“So this is the way cowboy capitalism ends,” said John McCarron in the Chicago Tribune. For decades, the slick wheeler-dealers of Wall Street and their conservative enablers have lectured all the little people that greed is good, while government regulation is bad. Free to invent “new ways to make something from nothing,’’ Wall Street’s “Masters of the Universe” peddled extravagant mortgages “like crack cocaine” to millions of people who couldn’t afford them, and then hid hundreds of billions of high-risk debt inside exotic financial instruments called “credit default swaps” and “collateralized debt obligations.” It was the government’s job to stop this madness, said Cynthia Tucker in the Baltimore Sun. But under President Bush and a Republican Congress, regulations were blocked or dismantled in the belief that free markets will magically regulate themselves. If there’s a bright side to the current catastrophe, it’s that the ideology of unfettered private enterprise has been exposed for what it is: “just another cult.”

Don’t use free markets as a scapegoat, said Jonah Goldberg in National Review Online. Blame the liberal Democrats who’ve made it their mission to, as they put it, “expand the American dream of home ownership.” These “self-proclaimed angels” wrote laws and regulations that subverted the free market, forcing banks to give loans to “people with poor credit, few assets, and little money for a down payment.” In the guise of creating more “affordable housing,” Democrats also used the government-backed Fannie Mae and Freddie Mac companies to buy up the bad loans and create a nearly limitless amount of bad debt; when Fannie Mae was caught up in an accounting scandal in 2005, the Democrats defended their favorite piggy bank from meanie Republicans who wanted to rein it in. If liberals now want to assign blame, I suggest they look in the mirror.

Perhaps we should all look in the mirror, said Dean Calbreath in The San Diego Union-Tribune. The real culprit in this American nightmare is not the conservative belief in free markets, or the liberal fondness for regulation. It’s our national addiction to spending money we don’t have. From Wall Street to Main Street and across the political spectrum, Americans long ago stopped believing in the importance of “living within their means.” We’ve grown to used to having whatever we want—cars, flat-panel TVs, flashy furniture, pricey clothing, and yes, houses—and figuring out ever-more creative ways to postpone the day that the bill comes due. That ugly day has now arrived.

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