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June 02, 2009

Personally, We Blame Wang Chung

In an opinion piece yesterday in the New York Times, Nobel Prize-winning pop economist, Paul Krugman identifies the real villain responsible for our current economic crisis:

Ronald Reagan

Ronald Reagan was president over 20 years ago during an era many younger readers may know better as “The Big ‘80s.” It was a time of big hair, big shoulder pads and big synthesizers.  It should be pointed out that the nuclear accident at Three-Mile-Island took place in 1979. 

Coincidence?

In the piece titled, “Reagan Did It,” Krugman cites the signing by Reagan of the Garn-St. Germain Depository Institutions Act as laying the foundation of all our present-day troubles.

We know what you’re thinking, “What happened to that Carrie Prejean story?  Because if you’re going to bore me to death, at least throw in some nudity.”

Also, “Ah yes, the Garn-St. Germain Depository Institutions Act, I knew that was trouble the moment I heard about it, which coincidentally was just now.”

While the Garn-St. Germain Act was of small consequence by itself and largely overtaken by later events, think of it as having a kind of butterfly effect, in which a butterfly flapping its wings sets into motion a series of events, each building on the one before until the next thing you know, Timothy Geithner is being laughed at by college students.  Okay, so he probably got used to that by the middle of his sophomore year, but he’s the United States Secretary of the Treasury now. 

And the students were Chinese.

Naturally, there are the naysayers who point out that Krugman’s argument consists of little more than the Nobel-Prize-Winning rhetorical technique of making bold assertions and then backing them up by repeating them.

A technique, we should point out, that is great for getting that first date.  Not so great for the second, though.  (Did I say I owned the car wash?...)

Of course, it would be easy for Krugman to simply point to clear and direct causes of the financial crisis, such as legislative and regulatory demands that encouraged and in many cases required the development of the sub-prime loan market, but those explanations are flawed in that they fall short of laying the blame on Republican administrations that ended decades ago.

As luck would have it, we have come into possession of an early rough draft of one of Krugman’s upcoming columns in which he continues his mission to seek out the true source of our problems:

OP-ED COLUMNIST
Blame Ford
By PAUL KRUGMAN

December 27, 1974, a day much like any other day with one important exception.  It was the day Gerald R. Ford sowed the seeds of our destruction with the signing of a bill creating the “Commission on Federal Paperwork.”

Would this temporary commission solve our federal paperwork problems?  To the contrary, it compounded them to catastrophic proportions, the ramifications of which we deal with to this day.

At the time reducing paperwork seemed like the right idea to the cabal with which Ford surrounded himself.  Paperwork reduction zealots like the execrable Stanley K. Hathaway and the deplorable John Albert Knebel, men whose names will continue to live in infamy so long as there are men to remember.  Yes, it found “flaws” in paperwork management, such as “the exemption of IRS and the bank supervisory agencies from the FRA’s requirements, and the shared jurisdiction of OMB and GAO over the reports clearance process.”

But who didn’t know that?

It was merely a ruse to continue the ideological obsession for paperwork reduction, to create a culture in which paperwork is derided as something that is somehow wasteful and useless.

We weren’t always a nation of limited paperwork. Prior to the Ford administration's ruinous jihad against paper, Americans were drowning in the stuff.  Paper was everywhere. Forms even had to be completed in triplicate.

Gerald R. Ford’s apocalyptic metaphorical suicide bombing of paper leads directly to the principle cause of our current financial calamity:

The no-doc loan.

Yes, there are related contributors, but Gerald R. Ford and his temporary commission on paperwork reduction will forever be known as the architects of our demise.

In my next column: Eisenhower's support for "Recreational Boating Appreciation Month" and the advent of Credit Default Swaps.

J.

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June 2, 2009 at 01:36 PM in Current Affairs | Permalink

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Comments

Well now, capitalistic freedom is what enables people to make bad decisions with their money. And we can't lose wealth unless it was created in the first place. So I think Krugman might have a point there with the blaming Reagan.

Posted by: Amarsir | Jun 2, 2009 3:04:08 PM

Way to go, Krugman. I suppose we should have kept Carter's stagflation and national abasement. What a weasel-faced idiot!

Posted by: Vernon | Jun 2, 2009 4:48:00 PM

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