The markets need regulation. They will screw up again without any. Follow-up -
There are many "myths" surrounding the great depression and the two presidents involved.
Herbert Hoover and FDR were not nearly as far apart as people believe - they both contributed to (and exacerbated) the Great Depression through manipulation of the money supply and interfering with the market. It is these actions, and not "free market capitalism", that leads to "boom-bust" market phases. Plain and simple, the GD was caused by government and central bank interference (i.e. expanding the money supply beyond gold reserves) in the market.
This occured during the Bush administration as well. Under Bush, the Federal Reserve distributed a booklet to mortgage lenders called "Closing the Gap: A Guide to Equal Opportunity Lending" - and reminded lenders that fines and jail terms were possible for lenders that did not comply with lending to those less than credit-worthy. The booklet labels all of the following as "arbitrary, unreasonable, and discriminatory"...
- a 20 percent down payment (or loan-to-value ratio of 80 percent)
- an above-par credit score
- a history of paying bills on time
- steady job with enough income to make monthly mortgage payments.
Later, many banks were aggressively penalized if they were not found boosting their subprime loan volumes
There is plenty more. Here is a direct quote from George Bush, your so-called captialist, in 2002:
An ownership society is a compassionate society. Two-thirds of all Americans own their homes, yet we have a problem here in America because fewer than half of the Hispanics and half the African Americans own the home. That’s a homeownership gap. It’s a gap that we’ve got to work together to close for the good of our country, for the sake of a more hopeful future. We’ve got to work to knock down the barriers that have created a homeownership gap. I set an ambitious goal. It’s one that I believe we can achieve. It’s a clear goal, that by the end of this decade we’ll increase the number of minority homeowners by at least 5.5 million families Bush went on to say that he would "use the mighty muscle of the federal government” to increase ownership to “underserved” minorities, by pressuring or subsidizing lenders to lower credit standards - stating that “corporate America has a responsibility to work to make America a compassionate place.”
These are direct quotes....had I never mentioned Bush by name....you never would have believed that came from a president who allegedly favored a "free market".
Bottom line, the politics of need and altruism, enforced by the government, led to much of the mess we have today. These are NOT attributes of a free market system. Simply because they occur during Republican administrations doesn't make them "the result of capitalism". It has been the politics of NEED...not GREED....that has led to the issues we face today.
