[Pen-l] How the Left Wing Created the Credit Crisis. Yes, Indeed!

[Michael Perelman <michael@xxxxxxxxxxxxxxxxx>]

James Grant is a knowledgeable student of the credit system, but today he 
goes off the rails, blaming the left wing for the credit crisis.  Here is 
the most striking passage: 

"By and by, the lefties carried the day. They got their 
government-controlled money (the Federal Reserve opened for business in 
1914), and their government-directed credit (Fannie Mae and the Federal 
Home Loan Banks were creatures of Great Depression No. 2; Freddie Mac came 
along in 1970). In 1971, they got their pure paper dollar. So today, the 
Fed can print all the dollars it deems expedient and the unwell federal 
mortgage giants, Fannie Mae and Freddie Mac, combine for $1.5 trillion in 
on-balance sheet mortgage assets and dominate the business of mortgage 
origination (in the fourth quarter of last year, private lenders garnered 
all of a 19% market share)."

Grant, James. 2008. "Why No Outrage?" Wall Street Journal (19 July): p. W 
1.
http://online.wsj.com/article/SB121642367125066615.html?mod=todays_us_weekend_journal

Would a publically owned agency have behaved the same way, lowering 
standards to increase share costs?



-- 
Michael Perelman
Economics Department
California State University
Chico, CA 95929

Tel. 530-898-5321
E-Mail michael at ecst.csuchico.edu
michaelperelman.wordpress.com
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