Walter Williams on the Market Correction

The bottom line is that Congress can only shift employment or unemployment but cannot create net new jobs.

This statement is nonsense, really. Williams might as well say that a capitalist selling capital to another capitalist can't create net new jobs, because the two capitalists are only shifting employment or unemployment.

Building roads certainly can create (or contribute to) more profitable organization. Some "private" system of road ownership and development might (or might not) create more profitable organization than road socialism, but that's a separate issue.

Actually, the government can create as many net new jobs as it wants. Most of us might be poorer as a consequence, since these jobs needn't add any value, but at least we'd all have a job.

I agree with Williams otherwise.

Walter E. Williams correctly says “These financial problems are not market failures but government failure”. He is quite wrong though blaming “The Community Reinvestment Act of 1977”, that seemingly worked all right for quite a while.

The blame lies instead, ironically, with the extreme risk adverseness of the financial regulatory wimps; who thought their only mission in life was to drive out the risks of default in the financial system; and arrogantly thought themselves capable to do so; and to that effect created minimum bank capital requirements based on risks, as measured by their outsourced risk kommissars, the credit rating agencies.

And then the credit rating agencies gave AAAs to securities backed by transparent and easily understood plain lousy mortgages to the subprime sector; and the markets followed those signs… and here we are.

And this time I believe, with the credit rating agencies substituting for the markets, even Cato was strikeout… didn’t even see the ball.