Friday, October 03, 2008


Alex Tolley

Let me fdisagree with teh WSJ. Firstly, there is ample evidence that Fannie and Freddie were not to blame. The WSJ has consistently wanted to remove these agencies from government and privatize them.

As to who was to blame?
Firstly the Greenspan Fed with its policy of very low interest rates and refusal to prick asset bubbles.
Secondly there was lots of predatory lending, so that is also a factor.
Thirdly, let's not forget all those realtors who wanted to get in on the game, egging on consumers to buy houses and driving up prices.
Finally, yes, the stupidity of the people to buy houses at ridiculous prices. However, I blame them least because when prices are rising steeply, there is a fear that they will be forever priced out of a market, especially as landlords keep raising rents in the the face of stagnant wages.

So far no-one has pointed the blame at realtors, no doubt the very same 'soccer moms' that Palin glorifies.

But let's be very clear here. The game was very much perpetrated by those who took transaction fees - realtors, retail banks, loan packagers, wall street banks. All of them stood to make money doing transactions, none of them were putting their own assets at risk in the bubble conditions. Thus they had every incentive to egg on the punters.

Obviously the country (the world?) will shake it's collective head in disbelief at it's own gullibility, but let's not try to deflect the blame from the primary movers.

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