Posted by
Andrews on Wednesday, July 23, 2008 12:03:49 PM
After writing many, many articles about the housing and lending "crises" it is nice to see someone else, and someone I respect, making the same arguments. In his most
recent post, and the
one preceding, Thomas Sowell argues exactly the points I have. That the housing prices were inflated through government intervention (both building caps and artificially low interest rates) and that the "lending crisis" is largely the product of interest rate manipulation and programs to help "disadvantaged borrowers".
Of course, his agreement proves nothing, but it is nice to have someone of his stature saying the same things I have been saying.
And having had my little gloating moment, I will now return to my usual practice of throwing out intemperate opinions on a wide range of subjects, upon some of which I may even by qualified to comment.
POSTSCRIPT
For those interested, I commented on these subjects in the following posts:
And you got rich?
A Quick Thought On The Housing "Crisis"
Two Perspectives
Inventing a Crisis
Inventing a Crisis II
Inventing a Crisis III
And Here It Comes Again
To Correct Debra Saunders
Another Thought on the Housing "Crisis"
Hooray For Phil Gramm!
I may have missed a few details Dr. Sowell mentions (though I did mention in "
And Here It Comes Again" the absurdity that companies losing money are being blamed for "profiting" on the lending crisis), but I think I also hit a few he has yet to cover as well.
I also have a few posts which cover the arguments advanced for more regulation of lending in a more general way.
Consequences
How To Blame the Free Market
Beware Populist Deception
Man's Nature and Government
While they do not specifically deal with lending, they show how appeals to "protecting the weakest among us" lead to very bad results. And since that argument seems to be used often to change lending laws, I figure they should be mentioned as well. One also shows how partial deregulation inevitably leads to the blame being assigned to the free market rather than remaining regulations, as was the case in the lending market.
UPDATE
Townhall reader "Steve" (unfortunately no blog to which I can link), in his
comments on Dr. Sowell's article, provided a link to an
article by Dr. Lott, whom I also respect, which argues the same point, that the government, or quasi-governmental Federal Reserve, forced lenders to overlook normal credit criteria in giving loans to minorities, which in turn led to the whole subprime "crisis". In other words, the greed involved was for votes not money, and it wasn't on the part of lenders.
Interestingly enough, it also confirms
my own analysis a long while ago that the cause of the savings and loan crisis was largely the existence of deposit insurance. Of course, I always thought this was just a commonsense observation, but since so many deny it, obviously not. Which make sit nice to have an academic confirming it.