Sunday, December 21, 2008

Touchy, touchy

The White House is not happy with the very careful New York Times story noting the role that the Bush cocktail of housing ownership boosterism, sluggish income growth, and lax regulation played in producing the housing crisis. George Bush is not happy that he only gets one more month of defending his record on the taxpayer time. On January 21 2009, a statement like this will have to come from his Presidential library.

But anyway, it's a unintentinally funny and clearly written in a huff by someone on the Bush economics team. Just a few things --

For example, the President highlighted a factor that economists agree on: that the most significant factor leading to the housing crisis was cheap money flowing into the U.S. from the rest of the world, so that there was no natural restraint on flush lenders to push loans on Americans in risky ways.

A diagnosis that is correct in so far as it goes, but doesn't ask why there was a rush of foreign money into the USA. Because the answer would have to mention Bush's monster budget deficits, which were financed abroad. Tom Friedman was discussing this very issue today. It also absolves American lenders of any responsibility for their own actions: these rich furriners made me do it.

One other thing. The White House complains of the NYT's "failure to consider the impact of monetary policy". That can only mean the low interest rates that Bush appointees Alan Greenspan and Ben Bernanke have determined. Any chance that Bush will be taking back his claims about the miraculous power of tax cuts, now that he acknowledges there was too much stimulus from monetary policy during his time in office?