It's a Wonderful Crisis

In a very long post, Dafydd at Green lizards traces the roots of the current financial crisis to the history of sub-prime lending.  (The Karl he cites is not me.)

His "take-away" bullet points are:

Starting three decades ago, Democrats have used every parliamentary trick in the book to construct exactly the system we have today, where banks are bullied into making bad loans to borrowers who cannot afford them; then they sell those bad loans to Freddie Mac or Fannie Mae; and when a borrower defaults, taxpayers pick up the bill for the defaulter's nice, new house. This amounts to housing welfare for Democrats;

Republicans have tried repeatedly to kill that program, warning that such an anti-capitalist practice can only result in a complete, diastrous collapse;

Democrats "denounced" those warnings as "exaggerated." Because of the arcane rules in the House of Representatives and especially in the Senate, Democrats have repeatedly managed to squash those attempts at real reform -- whether they were in the majority or the minority;

Now that the warnings are proved prescient, and the collapse is underway and impossible to conceal any longer, Democrats point their fingers at President Bush, John McCain, and Republicans in general -- "Look what you made us do!"

Democrats pretend that the collapse was caused by a lack of regulation and government control -- when it was actually caused by overregulation, amounting to quasi-nationalization of mortgage lenders, vigorously pushed by Democrats in 1977, 1999, 2003, and 2005 -- the It's a Wonderful Life provision;

Democrats pretend that John McCain was pushing for complete deregulation of Fannie and Freddie, when in fact he was pushing for greater oversight -- but favored the rescinding of the particular Democratic provision that has now led to the collapse. Barack Obama and Joe Biden have consistently supported this provision -- and now blame McCain when its inevitable, predictable, and predicted consequences come crashing down upon us.

He also has some advice for what McCain should do right now.