Tuesday, May 24, 2011

The government and the financial panic

The theme that the financial panic of 2008 and the recession that accompanied it were caused by a lack or regulation or by deregulation is common, especially on the Left. The counterargument is that the financial panic was the direct result of government regulation and policy, especially in the housing market. Joseph Lawler makes the case in The American Spectator:
[T]he financial crisis was not caused by weak or ineffective regulation. On the contrary, the financial crisis of 2008 was caused by government housing policies -- sponsored and promoted by many of the same people who framed and ultimately enacted the DFA.
Because his argument puts the blame on the government and not on the private sector, it has been attacked. He responds here.

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