Getting the Facts Straight

In the latest issue of Vanity Fair, economist Joseph Stiglitz makes a simple point that historians everywhere will cheer: In order to craft the future economy, we need to really understand just what went wrong with the current one. His review of the five economic decisions that have gotten the U.S. to its present state is a must-read for anyone affected by the current recession (read everyone).

What I found interesting? Stiglitz doesn't blame what many on the right consider the usual suspects. He doesn't blame former-President Clinton's Community Reinvestment Act which ensured that banks made home mortgage loans to low income communities, and he doesn't hold Fannie Mae and Freddie Mac responsible for the credit melt-down, as they were "late to the subprime game."

Instead he concludes, "The truth is most of the individual mistakes boil down to just one: a belief that markets are self-adjusting and that the role of government should be minimal."

If Stiglitz is right, the current economic data indicates that the consequences of our long-held belief to the contrary will be quite painful.