The Loudest Cricket

After yesterday’s disastrous events in the banking industry and its affects on Wall Street, the two presidential candidates had decidedly different reactions.  The great orator, Obama, was able to blame Bush without mentioning his name, while maintaining that fixing the economy involved “change” without actually saying the word “change” (and without laying out any specific details other than it involves more regulation).  McCain, on the other hand, pointed out that the government (ie, taxpayers) are not going to bail out or prop up the bank this time, unlike what we did for Bear Stearns, Fannie Mae, and Freddie Mac.  McCain promised “change” as well (this year’s presidential theme is obviously “change”), calling for updated regulation, specifically my favorite word – transparency.

The government needs to take a hands-off approach to the banking and housing crises.  Any government involvement will only make matters worse, extending the pain longer than necessary.  It will be painful, but the market play out.

Hopefully we can all learn some valuable lessons from this disaster.  Lessons I would have thought were common sense.  For potential home-owners, don’t buy a house that you can’t afford.  For banks, don’t give out mortgages to people who can’t afford them.

UPDATE: Here is why we’re in the trouble that we’re in now.