Who Created this Economic Mess?

Professor John Taylor of Sanford University thinks our government created the financial crisis and I think he has a very strong argument.

However, Mr. Taylor gives to much credence to the increase in oil prices, which were driven by speculators, and the public's reaction to TARP, which was a need jerk reaction to such large sums and not a studied and thoughtful response to Messrs. Bernanke and Paulson. In my opinion, Jay Leno's person-on-the-street interviews and John Ziegler's HowObamaGotElected.com suggest that the vast majority of Americans probably have no clue who either person is and what they did. So it is highly unlikely that their poor congressional performance elicited a strong response.

Artificially low interest rates and undervaluing the risk of mortgage back securities due to the wrong headed meddling of congress, lax oversight and partisanship where in my opinion the major forces. With stories everywhere about the steep increases in housing prices and a steep increase in the numbers of homes purchased by investors the Fed should have raised interest rates. Unethical relations with the industry like Senator Chris Dodd's with Countrywide and Representative Barney Frank's with his lover at Fannie Mae were probably unethical and diminished congressional oversight to the point that they became cheerleaders for new excesses in the housing mortgage market. And when President Bush and regulators complained, Democrats led by Dodd and Frank defended with partisanship rancor instead of investigating the complaint or providing a reasoned response.