How government mostly created the financial crisis

The alternative narrative dominates the media, which mostly follows the lead of Obama. The financial crisis was created on Wall Street by greedy rule-breakers who just weren't regulated heavily enough. Fortunately the benevolent government saved us from complete meltdown just in time and has the answer to preventing such disasters from happening again. Trust us -- and give us more power.

The truth is rather different, as Johan Norberg's excellent book, "Financial Fiasco," which I reviewed for the Sunday Register, explains in reasonably irrefutable detail. Yes, there was greed and excessive risk-taking and bad judgment in the private sector. But it was operating in the environment created by government -- mainly the Fed's expansion of the money supply, the rules created to put teeth in the Community Reinvestment Act, which pressured/mandated banks to hand out risky mortgagaes, the shenanigans of the government-sponsored enterprises Fannie Mae and Freddie Mac, Bush's fixation on the "ownership society" and much more.

Other books tell much the same story. Perhaps the best is Tom Sowell's "The Housing Boom and Bust," and Thomas Woods' "Meltdown." Economists and historians who understand the market got the story into print fairly quickly, but it may be that they have preached only to the converted. For anyone willing to probe a little, however, the story of how the mesltdown was almost entirely the government's doing is available. If only a few more people in the media were willing to probe that far.