Upon first glance, House Republicans made a courageous move today in defeating the supposedly bipartisan bailout bill. After the bill failed, the Dow Jones index dropped nearly 800 points – the largest point (not percentage) drop in the index’s history.
But the real story is that House Republicans simply lashed out against Speaker Pelosi’s blame-placement speech earlier that day. They won’t show any backbone when the Democrats ask nicely. Pelosi faulted Republicans for the crisis, ignoring years of Democratic cries for “social justice” via subprime mortgage loans and Democratic resistance against stricter oversight for Fannie Mae and Freddie Mac.
Those two institutions went on to make totally irresponsible investments at the behest of Congressmen such as House Financial Services Committee chairman Rep. Barney Frank (D-MA). Those investments cost the taxpayer $200 billion. Now that the real estate bubble, created via the Fed’s artifically low interest rates, has burst, many subprime borrowers are losing their homes. What kind of social justice is this?
Unforunately, it is not likely that the House Republicans will vote against the bailout bill. Instead, they’ll vote with the Democrats to initiate a period of serious inflation that will only end when we reform our monetary policy.