Posted by
Andrews on Tuesday, September 30, 2008 1:53:24 PM
It is a shame that the collapse of Fannie Mae came during an election year. Nor is it a good thing that it happened during a Republican presidency. Both of those things tend to make economic problems worse.
Now, before you think I am saying that Democrats handle the economy better, let me explain.
When the administration is Republican, or when a Republican is running for office, the press tends to blow up the significance of economic crises. Things that would be minor "readjustments" in the middle of a Democrat presidency suddenly turn into the sign of an impending recession during a Republican administration. And that tendency to talk down the economy causes real repercussions as panicked investors pull out their money, causing the market to drop.
We can see it in the market today. Every day the market opens on a sudden drop, followed by a recovery as professional investors notice how undervalued most stocks have become. Without the press talking everyone into a panic, the market would not be half as volatile.
So, I have to say, had Fannie Mae been destined to collapse, it would have been much better for the economy had it collapsed soon after Clinton instituted his foolish lenient lending rules, rather than waiting until the Bush administration. At least then the press would have swept it under the rug and spared us all the hysteria and the very real collapse that hysteria is starting to create.