Some interesting observations from Laurence Lindsey:

Politicians are also always cheerleaders on the way up. The late Federal Reserve Governor Ned Gramlich observed the bipartisan cheerleading for the housing bubble in a speech prepared for delivery at last year's Jackson Hole Conference, noting that both the Clinton and Bush Administrations were equally guilty. Gramlich, a Democrat, chaired the same committee on the Federal Reserve Board that oversees housing and consumer regulation during the Bush administration that I chaired as a Republican during the Clinton years.

Both administrations supported ever-easier standards for mortgage lending. Contrary to the claims last year of Sen. Barack Obama, it was never the financial services industry (in my experience) that lobbied for easier lending terms. Rather it was politicians who sought easier lending regulations so more constituents could borrow. Community activists (Mr. Obama's occupation before becoming an elected official) also put on the pressure.

In fact, Rep. Barney Frank (D., Mass.) is the only politician I know who has argued that we needed tighter rules that intentionally produce fewer homeowners and more renters. Politicians usually believe that homeownership rates should - must - go ever higher. The rarity of Mr. Frank's contrarian thinking is a reminder that when markets are committing excesses, we certainly should not expect Washington to act as a check on them.

... In the early 1990s, Congress had no sooner finished legislating highly restrictive lending standards (after cleaning up the Savings and Loan disaster) than it began demanding an easing of those standards so that more people could get mortgages. Most prominent of these was easier downpayment requirements for would-be home buyers with low and moderate incomes.

The current presidential candidates are playing this contradictory game today, even before we've fixed the mess we're in. John McCain called for a reconsideration of mark-to-market accounting, while also being a big proponent of more transparency. Hillary Clinton wants to encourage mortgage lending to break the housing log jam, while placing a freeze on mortgage interest rates and reducing the collateral value of housing by restricting the foreclosure option.

Mr. Obama wants to put a "floor" under housing prices by forced write-downs of mortgages so that people can stay in their homes. He doesn't mention how the resulting lost capital in the financial industry will be recouped so that the financial meltdown doesn't get worse. Because his plan also excludes vacant housing units, of which we have roughly three million too many, it cannot put a floor under the price of occupied homes. Nor can home values be preserved without a vibrant and profitable lending industry.

Reagan style deregulation coupled with Bush style asleep at the wheel governance pretty obviously has to shoulder what blame one can place on the government in a situation like the current economic climate. That said, I'm not sure how much regulation currently being tossed about is going to improve things, long or short term. In fact, I think the government prop-ups are intended to make things worse. Someone will be making money off this.

It is easy to buy small plaster models of what you think life is like.

How about Stiglitz? Tons of modern south american and african leaders have studied under the guy over the past 30 years.

It is easy to buy small plaster models of what you think life is like.