MISSED IT BY THAT MUCH: “Are we at another Weimar moment now?”
The 2008 financial crisis and the subsequent global recession were nowhere nearly as painful as the Great Depression. But the effects are similar. The heady growth of the 2000s led Europeans and Americans to believe they were on firm economic ground; the shattering of banks, real estate markets and governments in the wake of the crash left tens of millions of people at sea, angry at the institutions that had failed them, above all the politicians who claimed to be in charge.
Why, voters ask, did the government allow so many bankers to behave like criminals in the first place?
The New York Times won’t like the answer, and the couple at the center of it:
Another answer the New York Times won’t much like — as Allan Bloom noted in the Closing of the American Mind, America’s been in a “Weimar Moment” for quite some time.
I believe that the Community Reinvestment Act is at the bottom of the crisis. Foisting loans on people who can’t afford them is evil. Then, those loans were hidden in packages, and sold and re-sold. Eventually those packages went bust.
The Community Reinvestment Act isn’t even necessary. In Canada, where the mortgage regulations are 180 degrees the opposite, and lending to unqualified borrowers will land you in jail, the home ownership rate is the same, and (outside of the Chinese money in Vancouver) there is no true real estate bubble.
Worse, the Community Reinvestment Act is still on the books, and the bubble is re-inflating. It was evil in the run-up to 2008, and it’s still evil now.