The Wall Street Journal

The Wall Street Journal is an interesting paper. The news inside the paper is generally first-rate, with often very insightful, original and well written articles. The opinion pages, however, are another story entirely. Given the Journal's reach, prestige, and audience, the editorial page occupies a preeminent position within conservative American political discourse. In this sense, it is intellectually interesting to read their stuff, to observe which issues are discussed and how, as well as the silences when issues are ignored or glossed over.

"Is This The End Of Capitalism", by Daniel Henninger, is a good example. That I generally agree with the point he is trying to make is ironic, but largely beside the point. What I think is interesting in this article is how it sets out a conservative view of the housing bubble and the resulting financial crisis.

This conservative view is interesting for a number of reasons. First, it glosses any involvement of conservative principles or actors in the creation of the crisis. Actual agency by the Bush administration, Congress, the US Federal Reserve Bank, financial banks and insurance firms seems to be missing. Instead, we have a housing "blob" that ate the world, with private banks and insurance as passive victims.

Further, the idea that conservative principles or financial deregulation may have played a key role is not even hinted at. There is something utterly disingenuous about this given the key role the Journal played in pushing these agendas. Instead we get pablum like this:

In a normal environment, the problems revealed by the crisis in mortgage finance would produce fixes relevant to the problem, such as resetting the ratios of assets to capital for banks and hedge funds, or telling the gnomes of finance to rethink mark-to-market and the uptick rule. More energetic reformers might consider Gary Becker's suggestion that as financial institutions expand in size, their capital requirements tighten, so that compulsive eaters like Citigroup can fit inside their capital base.

There are numerous other points that could be made in this paragraph, but Henninger chooses not to discuss the real reforms necessary and instead puts in some relatively mild points so as to not offend the sensibilities of his readers or his editorial page superiors. You can't critique the conservative brand too much I guess.

But the really galling thing for me is that the American citizens are the ones really being suckered here, yet seem to warrant nary a mention. After all, the US taxpayers are the ones who have to foot the bill for the stimulus package, to pay for the bailout of AIG, the recapitalization of the financial system as well as taking on prime responsibility for the toxic debt created by the financial system in the first place.