What the GOP Needs to Do, Part CMLXVIII

Ralph Reed sez we must embrace the Pro-life cause which will gain minority adherents.

There seems continued movement toward more liberal immigration (Amnesty!)

Rep Ron Paul's followers know we'd win landslides with a Gold Standard.

The truth is that we need to withdraw the concession to "Damonomics" which states that greedy bankers, enabled by the famous Bush deregulation (stop laughing!!! this cost us the election!!) looted the system. And there was predatory lending! And the Republicans want to resuscitate those policies that the Brave Sir Obama and Wise Sir Biden hath smote. Or something like that.

Those assertions are ludicrous. Yet they went un-rebutted and allowed a president with a rotten economic record to win reelection against fear of something worse. Two stories down from Reed's guest ed, the WSJ Editorial Board reports that for all the suspected criminality, there are no successful prosecutions in the panic of '08

A persistent media-liberal lament--make that a cliché--is that too few financiers have been prosecuted for the financial crisis. But maybe that's because when the Obama Administration tries to prosecute a specific individual for a specific crime, it turns out there was no crime.

The government's latest embarrassments came this month, as one high-profile case collapsed and another was downsized by a federal judge.

Like Client #9 NYAG Eliot Spitzer, the charges get a lot of press, the settlements appear to be big news. But no due-process, right to trial, presumption-of-innocence cases ever end up in the prosecutor's W column. Where was all this crime?

The Federal Reserve created negative real interest rates and a net subsidy for credit expansion. Washington programs to encourage every American to own a home ensured that the bubble would be concentrated in residential real estate. Government-approved credit-raters, convinced that the U.S. housing market would never suffer a sharp decline, slapped triple-A ratings on bundles of risky mortgages. Federal rules encouraged banks, money-market funds, stock brokerages and other institutions to buy this junk.

The zeal to prosecute bankers is part of the politically convenient narrative that the financial crisis was all created on Wall Street. Bankers were greedy as ever and their risk management was faulty. But the fact that Washington can't find a real criminal should focus public attention back on the real crime. That was Beltway policy.

President Bush tried to rein in Fannie & Freddie, Chairman Frank went all in to defend them. Yet, by their concessions, Republican policies "own" the crisis.

By all means, we can debate abortion and immigration (though brother Keith points out the infield fly rule to be sacrosanct). But without standing up for economic freedom, I don't think it will make a great difference.

Politics Posted by John Kranz at November 26, 2012 10:53 AM