Froma Harrop argues that both parties are to blame for the Fannie/Freddie crisis. Her arguments are sound enough but seem to cut more against the Democrats than the Republicans. The case against the Republicans is that if they were really free market ideologues they wouldn't bail them out and that they were responsible for making the hedge funds and derivatives legal.
On the first point, so they aren't ideologues. Thank heavens.
On the second point, it is not the use of futures and hedge funds per se that is the problem but the fact that a "private" firm, headed by Democratic power brokers, was allowed to invest in them while being backed by an implicit government guarantee. No? There doesn't seem to be a great run on private firms--real private firms--that traded in such instruments. The only one that has failed so far, Bear Stearns, has apparently cost the tax payers little and private investors much, precisely as a free market ideologue would want it.
On the first point, so they aren't ideologues. Thank heavens.
On the second point, it is not the use of futures and hedge funds per se that is the problem but the fact that a "private" firm, headed by Democratic power brokers, was allowed to invest in them while being backed by an implicit government guarantee. No? There doesn't seem to be a great run on private firms--real private firms--that traded in such instruments. The only one that has failed so far, Bear Stearns, has apparently cost the tax payers little and private investors much, precisely as a free market ideologue would want it.
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