David Weidner from MarketWatch has dubbed former President Bill Clinton the Come Back to Haunt Us Kid for his role in the financial troubles at the core of our recession.

Weidner point to three Clinton missteps that helped sink America's economic boat:

·    Changing home sale taxes to encourage housing speculation.

·    Sitting silent when the New York Fed rescued the highly leveraged derivative trader Long-Term Capital Management. (Who knew the Fed has been playing the bailout game for so long?)

·    Repealing Glass-Steagall (a law that separated savings and investment banks).


This analysis takes the Barney Frank point of view that the financial crisis was caused by deregulation. That idea is valid inasmuch as we recognize that it was government that needed to be regulated.

We usually think of regulation as government dictating what risks the private sector is not allowed to take. In the case of the housing boom and bust we saw a new kind of regulation, where the government dictated what risks the private sector had to take, no matter the danger.

The kind of "deregulation" referred to by Weidner and Frank is tantamount to the label on the housing powder keg. The gun powder inside was made by the government over-regulating the housing market by forcing lenders to make bad loans. In that sense, Weidner's analysis carries a certain weakness.

The strength of Weidner's piece is that it blows a gaping hole in the incessant "because of last eight years" argument spouted by the president and his supporters.

During the presidential campaign, the polls hinged on Obama convincing voters that Bush (and by association McCain) caused the financial crisis through deregulation.
Exploiting a false but believable story for political gain...that doesn't sound like Obama, does it?