Zakaria’s Capitalist Apologia
Fareed Zakaria takes to the cover of Newsweek this week to pass out his “Capitalist Manifesto.”
It’s not exactly stirring reading, unlike that other manifesto.
Few apologias are.
And that’s what this one is for the current crisis of capitalism: a big blanket of “Oh, it’s not so bad.”
Says Zakaria: “A few years from now, strange as it may sound, we might all find that we are hungry for more capitalism, not less.”
Here’s his argument.
First, he says, “When countries need growth, they turn to markets.” But not when the markets have capitulated, as they have now, and as they did in the 1930. In such circumstances, it’s much more prudent to turn to government for growth.
Then he piles on some “ifs” to arrive at the “then” that he prefers.
Hold on while I quote him:
“If, in the years ahead, the American consumer remains reluctant to spend,
if federal and state governments groan under their debt,
if government-owned companies remain expensive burdens,
then private sector activity will become the only path to create jobs.”
Well, he boiled the alternative right off that sentence.
And that alternative is federal deficit spending to create jobs and alleviate state budget crunches.
Having performed this sleight of hand, he all but says voila and then concludes: “capitalism remains the most productive economic engine we have yet invented.”
But the engine isn’t working right now. And it’s something serious, despite Zakaria’s sophistry.
His remedy for that is archaic and disproven: “We can ask that people steer themselves and their institutions with a greater reliance on a moral compass.”
Alan Greenspan has already pleaded guilty to believing in this myth that capitalists will be able to self-regulate.
But now Zakaria gives the myth another spin.
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Okay, folks, let's put Reagan and Carter and Clinton and the Bushes aside for a moment and concentrate on one of the ass-hats, Barney Frank, who put us in the predicament we're in, and how he's at it again:
(Reuters) - Two U.S. Democratic lawmakers want Fannie Mae and Freddie Mac to relax recently tightened standards for mortgages on new condominiums, saying they could threaten the viability of some developments and slow the housing-market recovery, the Wall Street Journal said.
In March, Fannie Mae (FNM.N)(FNM.P) said it would no longer guarantee mortgages on condos in buildings where fewer than 70 percent of the units have been sold, up from 51 percent, the paper said. Freddie Mac (FRE.P)(FRE.N) is due to implement similar policies next month, the paper said.
In a letter to the CEO's of both companies, Representatives Barney Frank, the chairman of the House Financial Services Committee, and Anthony Weiner warned that a 70 percent sales threshold "may be too onerous" and could lead condo buyers to shun new developments, according to the paper.
The legislators asked the companies to "make appropriate adjustments" to their underwriting standards for condos, the paper added.
In an interview with the paper, Weiner said the rules have "had a real chill on the ability to get these condos sold," at a time when prices of condos have fallen enough to attract potential buyers.
In addition to the 70 percent sales threshold, Fannie Mae will also not purchase mortgages in buildings where 15 percent of owners are delinquent on condo association dues or where one owner has more than 10 percent of units, as the firm sees these as signals that a building could run into financial trouble, the paper added.
Both Fannie and Freddie are preparing a response to the lawmakers, according to the paper.
Fannie Mae and Freddie Mac could not be immediately reached for comment by Reuters.