I find it hilarious that Republicans, now in trouble in the polls, are trying to rewrite history. The claim that the fall of Fannie Mae and Freddie Mac are the cause of this whole financial crisis is simply false.
If you look at the root of this entire problem it started with Ronald Reagan’s tax plan. Reagan called for sweeping tax cuts across the board in the early ’80s to stimulate a struggling economy, and for his time he was correct. Unlike most Republicans before him, though, Reagan did not call for budget cuts to offset the dwindling tax revenue that would be trickling in because of the tax cuts. This was fine because foreign investors were so willing to invest in the American economy; we could afford to have sustained debt because our economy kept growing larger and larger.
Reagan, and John McCain, called for deregulating the markets as many were being stifled by too much government red tape, and this did help our economy grow to levels we had never seen before. Unfortunately, complete deregulation of the markets, as we are seeing now, cannot be trusted as many banks have made horrible investment decisions that boggle the mind (i.e. credit default swaps, high-risk mortgages, etc). Because of these horrible decisions, along with a lagging housing market, people stopped paying their mortgages.
Because of this, banks lost money, the institutions that were supposed to be “insuring” these mortgages did not have enough capital to cover all of these bad mortgages so they started going bust along with the banks. This coupled with a country that, under the President George W. Bush tax cuts, (let us not forget that Vice President Dick Cheney remarked to Bush that deficits don’t matter) had accumulated a huge national debt caused foreign investors to take their money out of the American economy and invest it elsewhere.
All of this, along with some other factors, is what is causing the current financial crisis. So let us not blame Democrats for the fall of the economy, it all goes back to a Republican ideology that deregulation is the key to economic growth. You need some oversight and we are seeing that now.
Furthermore, I’m glad McCain is telling people to respect Barack Obama now. But why then does he still link Obama to a terrorist in his political ads and why does his vice presidential pick still question where Obama’s loyalty lies? It’s like he is having
Palin associate Obama with terrorists so that he can say Obama is not a terrorist. It is very strange indeed.
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