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Just Who Is Protecting Whom from the Pitchforks?

Obama's got it wrong. It's the bankers who will pull his and the Democratic Party's chestnuts out of the fire.

by
Eric Florack

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April 10, 2009 - 7:12 am
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America’s bankers lack backbone.

Maybe I’m being unfair to the current crop of bankers. After all, the problem has always existed. It’s just that it has come to a head recently because we have a political power structure in place that clearly plans to take advantage of that perceived weakness. As a rule, financial types are not exactly noted for their bravery. And we all know that predators tend to attack where they see weakness — particularly if they anticipate some gain for themselves.

So it was recently when we saw a Democratic president of the United States suggesting that his administration was the only thing standing between the bankers and the pitchforks.

To anyone who has been watching the events unfolding recently and understands the causes of those happenings, the statement of the president was absurd on its face. The issue, of course, is that most people today really don’t have much of a grasp of economics. Thus, any Democratic Party propaganda offered to explain away Democratic/big government culpability in the current financial mess will have far more credibility than it would with people who do understand economics. Most Americans might say, “Well, I don’t know this stuff, but he must — it sounds reasonable.” So along comes President Obama trying to push the image of the bankers being the problem. And of course his supporters, who know little to nothing about economic matters, nod in unison like so many bobblehead dolls glued to the dashboard.

But it’s not true.

Very seldom do economic crises occur without government being at or near the root of the problem. So it is with this crisis.

This is not a failure of regulation of any kind, particularly of banking. Nor is it a failure of free markets. Rather, it’s a failure of over-regulation and a lack of free markets. In short, it’s a failure of government. Governmental interference in the market requiried bankers, for example, to make loans to people who couldn’t afford them. Fannie Mae and Freddie Mac — government-created entities — helped to create this artificial boom, and government also caused the bust by way of serious mismanagement.

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