No, Bush isn’t at fault for the subprime crisis

I’m still waiting for Dean Baker’s

blog entry on why the risk of a credit crunch means that we should start importing

more white collar professionals now. But in the mean time, enjoy this, from

the New

York Times leader column:

More than 20 percent of global private debt securities is now tied to housing

in the United States. That works out to $7.5 trillion — far larger than

the market for United States Treasuries. So if America’s mortgage market

heads south, the losses could be widespread.

The odds of a global financial crisis are still low, according to Mr. Zandi

and Mr. Licari, but they are rising. There is not a lot now that can be done

about the risks in the mortgage market. But the growing possibility

of hard times ahead is another argument for rolling back many of the recent

excessive tax cuts, so the government will have more resources available

to respond if a crisis comes.

Of course, the Times doesn’t mention that an enormous chunk of that $7.5 trillion

is made up of agency bonds from Fannie & Freddie, which are simply not at

risk. Why be honest when you’re taking a running jump at an anti-Bush punchline?

Bush has not been a great president, but I don’t think you can blame lax lending

standards in the subprime mortgage market on him. Hell, thanks to his fiscal

policy, interest rates are probably higher than they would otherwise

be.