(Concord Monitor, Nov. 30, 2011 –http://www.concordmonitor.com/article/295395/keynesian-failure)
What is truly astounding about Bruce Currie’s letter (“Astounding argument on climate change,” Monitor, Nov. 20) is that there might be someone who still believes that the solution to every problem is to put more power in the hands of politicians and bureaucrats.
Contrary to Currie’s protestations, the repeal of some New Deal regulations was beneficial. Some banks that did not take advantage of repeal, such as Lehman Brothers and Bear Stearns, failed badly. Other banks that diversified thanks to repeal, e.g. Goldman Sachs and Citibank, were able to survive.
Any honest accounting of the causes of the financial crisis would include the government entities, Fannie Mae and Ginnie Mae. They created the concept of mortgage-backed securities and then bought and sold trillions of dollars of these risky investments. They further compounded their risk by leveraging themselves as high as 60:1, much higher than any private bank. The triggering event for the financial collapse was a regulation, “mark-to-market,” which took effect in November 2007. When the government changes rules in midstream, it should expect that there might be bad consequences.
Far worse than the financial collapse itself has been the government’s handling of the economy for the past four years. Their policy is to spend more and more money, much of it borrowed from the Chinese, on TARP, bailouts, stimulus I, II, and III, “quantitative easing”, etc. All while they issue more job-killing regulations, now estimated to cost our economy $1.3 trillion every year.
A recent report from the Congressional Budget Office states that President Obama’s first stimulus cost more than expected, produced fewer jobs, and will hurt the economy in the long run.
All this has proven that Keynesian economics is an abysmal failure.