If capitalism is destroyed, blame Obama -- or Kudlow?
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Economist and blogger Mark Thoma, defending President Obama against the talking heads who say his policies will destroy capitalism, dredged up a 2005 gem from one of Obama’s frequent assailants, CNBC’s Larry Kudlow.
In a June 2005 National Review article titled, ‘The Housing Bears Are Wrong Again,’ Kudlow waxed bullish about home builders’ shares, noting that ‘all the bond bears have been dead wrong in predicting sky-high mortgage rates. So have all the bubbleheads who expect housing-price crashes in Las Vegas or Naples, Florida, to bring down the consumer, the rest of the economy, and the entire stock market.’
Whoa, Larry -- you nailed it, even though you weren’t trying.
Of course, every journalist and commentator (including yours truly) wishes they could take back at least a few of the things they wrote or said about markets leading up to last year’s cataclysm. Thoma’s point, however, is that it’s absurd to attack Obama for trying to rein-in some of the policies that sowed the seeds of the ongoing economic and market implosions.
As for making the financially better-off pay to help clean up the housing bubble’s aftermath -- well, who else is there to pay? The already poor? Anyone have a better idea that doesn’t involve trying to borrow even more money from foreigners?
Thoma notes that Kudlow concluded his 2005 piece by arguing that the same generous federal tax breaks that had long benefited home owners should be extended to new home buyers and to stock market investors as well. ‘If this were to come about, even more wealth would be created in America, leading to even more new business and job creation,’ Kudlow wrote.
Thoma’s post-mortem retort (it’s at the bottom of his blog post that leads off with Robert Reich, here):
‘Yes, too bad we didn’t make the bubble even bigger. If capitalism is destroyed, something that’s highly unlikely, it won’t be Obama’s fault. It will be the fault of people like Kudlow who . . . opposed any and all attempts to temper the housing bubble through regulation or any other means. ‘Capitalism may change, in fact it needs to change -- the excesses that allowed the housing bubble to develop need to be tempered through regulation and other means -- but if Kudlow and company have their way and continue to assert that what’s good for the rich is good for America, that regulation was the problem not the solution, and that tax cuts are the answer to every problem, the change that is needed won’t happen.’
-- Tom Petruno