Monday, December 27, 2010

The Bizzaro World

Seinfeld fans will remember an episode in which Elaine meets a group of characters who are exactly the opposite of Seinfeld's regular cast. The American Enterprise Institute (AEI)is an example of a bizzaro world. In the bizzaro world, government interference in markets is always the reason why markets seem to fail. They would always self correct if government would stay out of the way. They found an economist from the mid-west who makes the bizzaro case for the financial crisis. Most economists agree that the deregulation of the banking system was one of the major reasons for the financial crisis. In the bizzaro world it was government regulation of the financial markets that caused the crisis. In particular, Fannie Mae and Freddie Mac, which are government sponsored entities, were responsible for making the subprime loans that sank the system. This flies in the face of all of the evidence which shows that the Wall Street Banks provided the great majority of the securitized mortgage loans that required the government to take extraordinary steps to save the banking system from collapse.

The AEI is one of many conservative "think tanks", funded by wealthy conservatives, which provide a lot of the content that eventually finds its way to Fox News, The Wall Street Journal, talk radio and other outlets for conservative opinion. If you want to know what GOP politicians will be saying on the Sunday AM TV news shows you can source it at the AEI, The Heritage Foundation, The Cato Institute and numerous other GOP "think tanks" before it makes its way to the mass media.

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