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Tuesday, October 9, 2012

Democratic Myth No. 3: They want to return to same practices that got us into this mess

Editor’s Note: This analysis is the third in a five-part series on Democrats’ mythical sound bites by Andrew Puzder, an economic adviser to Mitt Romney and CEO of CKE Restaurants, which employs about 21,000 workers.  The second installment was entitled “Democratic Myth No. 2: Those Who Have Done Well Should Pay Their Fair Share.” The first installment was “Democratic Myth No. 1: GOP Is to Blame for Failure of Obama’s Job Policies.”

President Obama has often asserted that “there are some [people] who seem to be suffering from a kind of collective amnesia. After all that’s happened, after the worst economic crisis, the worst financial crisis since the Great Depression, they want to return to the same practices that got us into this mess.”

In one form or another, the President and his surrogates often echo this myth with great enthusiasm, apparently believing that repetition and zeal can give a false statement both substance and veracity. By any rational standard, they’re wrong. Yet, as previously noted, in the wrong hands an oft-repeated myth can become more effective than the truth.

This “return us to the same practices that got us into this mess” mythical sound bite raises two questions. First, what were the “practices that got us into this mess”? Second, which of the candidates wants us to “return” to those practices?

A truthful answer reveals quite clearly that President Obama is the one suffering from amnesia on the cause of our continuing economic crisis and that he is either unaware of or consciously misrepresenting Gov. Romney’s policies. Contrary to the myth, the “practices” that led to the 2008 economic crisis were, in large part, a byproduct of government-centered policies similar to those President Obama advocates and antithetical to Gov. Romney’s free enterprise-centered policies.

So, what caused the 2008 economic crisis? As most people are at least somewhat aware, there was a real estate bubble and in 2008 the bubble burst, bringing our financial system to its knees. Understanding how this real estate bubble came into being, why it burst and why our financial institutions were so vulnerable goes a long way towards explaining the cause of the 2008 economic crisis.

Sub-prime home loans

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