Richard Salsman writing for The Objective Standard's Spring 2009 edition explains how we arrived at this economic abyss. And you probably won't believe the answer - but think about it and look back on history and you will see the truth. And President Bush helped this mess by giving it a big push. Here is an excerpt to wet your curiosity but go to the article itself it's free and accessible at www.theobjectivestandard.com.
...The above interpretations ignore the plain fact that America today does not enjoy a free-market system—let alone a free-market financial sector—nor has it enjoyed one for most of the past century. Only through a profound misunderstanding of what constitutes a free-market system could anyone honestly blame capitalism for the financial crisis. For decades the American politico-economic system has been a mixed system—a combination of some freedom of choice and action offset by large (and growing) coercive interventions. It was precisely these coercive elements—the regulation, taxation, and subsidization—that caused today’s financial crisis. Washington’s recent and massive interventions did not follow from free-market “failure”; they followed from the market distortions caused by prior government intervention in the economy. Government interventions have both instigated and aggravated the latest financial crisis.
By surveying the government interventions that caused the latest turmoil and wealth destruction in housing and banking, this article will demonstrate that the current financial crisis was caused not by a return to free markets or pro-capitalist policies in the past decade, but by a tragic progression toward socialism. More importantly, it will demonstrate that altruism—the notion that being moral consists in sacrificing oneself for the needs of others—is the basis for this government intervention, and thus the root cause of the crisis.
Of course, in order to recognize that capitalism is innocent of the latest charges against it, we must bear in mind what capitalism is. Capitalism is the social system of individual rights, including property rights, in which all property is privately owned.11 Capitalism upholds the rule of law and equality before the law, forbids government favors to any person or group (including businesses), entails the complete separation of state and economics, and thus leaves each individual free to act on his own judgment for his own sake. With that in mind, let us consider the relevant facts surrounding the financial crisis.
...Perhaps no single U.S. government intervention has destroyed more capital or wasted more taxpayer funds in recent years than the establishment of “Fannie Mae,” “Freddie Mac,” and “Ginnie Mae”—“government-sponsored enterprises” (GSEs) that for years have been used by politicians to secure campaign funds and votes by promoting artificially cheap home mortgages and “the American dream of home ownership.” The quaint, disarming nicknames for the GSEs actually stand for the Federal National Mortgage Association, the Federal Home Loan Mortgage Corporation, and the Government National Mortgage Association. Read more if you want to know the history and reason for why we are where we are today.
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