Sunday, March 30, 2008

A Short Guide to How the Bush Administration Reacts to Crisis

The New York Times (via Naked Capitalism ) comments on Paulson's financial industry "regulation" proposal:

While the plan could expose Wall Street investment banks and hedge funds to greater scrutiny, it carefully avoids a call for tighter regulation.

The plan would not rein in practices that have been linked to the housing and mortgage crisis, like packaging risky subprime mortgages into securities carrying the highest ratings.

......The bulk of the proposal, however, was developed before soaring mortgage defaults set off a much broader credit crisis, and most of the proposals are geared to streamlining regulation.

Basically they are continuing the pattern of proposing something they wanted to do anyway as the answer to the crisis of the day (see "Bush Tax Cuts", "Bush Tax Cuts II: Grandchild's Woe", and "Rambo IV: Operation Iraqi Freedom"). Style points as well for spinning "non-regulation" as "regulation" and for scrupulous avoidance of effectiveness.

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