Clinton Democrats are to blame for the credit crunch

‘Let us be clear: this is a crisis caused on Wall Street,’ insisted Speaker Nancy Pelosi in her consensus-strangling speech on Monday, shortly before her fellow members of the House of Representatives voted to reject the President’s $700 billion bail-out plan. Out on the campaign trail, Barack Obama ventured that the root cause of the trouble in the markets was that ‘too many people in Washington and Wall Street weren’t minding the store’.

Pinning the blame for the crisis on greedy bankers and incompetent regulators may have seemed plausible enough during the turmoil of the past few days. Writing in The Spectator last week, the Archbishop of Canterbury noted how ‘we find ourselves talking about capital or the market almost as if they were individuals, with purposes and strategies, making choices, deliberating reasonably about how to achieve aims’. Not this week, we didn’t. We talked about the markets as if they were thoroughly unreasonable, out of control, perhaps even raving mad. Following Monday’s rejection of the bail-out plan, stock markets, impatient with Congress’s delay in tying up a deal, threw a massive hissy fit, which wiped billions off the value of shares. The next day, they made a partial bounce back, based presumably upon a belated recognition that talks to thrash out another bail-out plan were already in progress. Meanwhile, the sullen banks remained obdurate in their reluctance to lend to one another, let alone anyone else, despite a massive injection of liquidity from central bankers around the world. Not much there to inspire confidence in the system.

Consequently, this hardly seems the most appropriate moment to mount a defence of capitalism in general, and American bankers in particular, against the threats posed by meddlesome politicians and excessive regulation. But, what the heck. Unless we take advantage of this hiatus between the crashing of financial institutions to take an honest look at the origins of our current predicament, then today’s spin and myth-making will quickly harden into tomorrow’s firm conviction.