The Financial Meltown

Unlike a lot of bloggers who comment on the state of our financial affairs, I do not pretend to be an expert on what led to our predicament.

However, as is usually the case, based on what I can glean from my better-educated friends, it seems that partisan talking points on both sides contain elements of truth.

Liberals cannot seem to accept the idea that many of the troubled mortgages that have helped lead to this crisis were the fault of the borrowers who signed on the dotted line. Everyone, regardless of their income or education level, has a responsibility to understand what they are getting themselves into. And as usual if you take the left's arguments at face value, somehow the poor were especially easy to dupe and deserve protection.

The right is just as bad, if not worse. What I find so interesting is that many on the right choose to blame government for the problem.

Blaming the government is a cop-out. That is because the biggest factor in the meltdown was the risky deals and over-borrowing made by investment banks and (I assume) hedge funds. Had bank managers acted prudently, low interest rates should not have mattered. If one is responsible for oneself, then the temptation of low interest rates would be avoided. Bad mortgages caused by government rules requiring lending to lower income folks will cause a problem, but it did not cause the constant repackaging of those mortgages into investment vehicles that helped create so many highly-leveraged deals.

A lot of people on the right like to advocate for market solutions and personal responsibility. That is why it's highly ironic that when the market fails because corporate owners do not act responsibly, so many conservatives choose to blame the government.