Well, it has certainly been a week, hasn't it? Here's the Register's take on it in today's editorial, for which I owe a great deal (not everything in it, but a good bit) to Bill Niskanen, chairman of the Cato Institute. I always find that Bill sees the big picture much more clearly than most, and brings a certain wisdom to his assessment of economic events. He was gracious enough to talk with me while lunch was being served at a Cato donors event, and he laid out his views in the most concise and organized manner possible.
The three big mistakes by government? Keeping Fannnie and Freddie in business with their inherently flawed business model, creating the market for subprime mortgages, which it did with the Community Reinvestment Act, and especially allowing Fannir and Freddie to securitize subprimes, and the Federal Reserve keeping interest rates too low from 2002-2005, creating the bubble that rather pridictably has burst.In the private sector, besides those who gamed the system, the various credit rating agencies failed completely, which has not been widely enough acknowledged, and they have not suffered any consequences for their failure.