The Wall Street Hangover

President Bush was caught on a cellphone camera last week making a candid remark about the collapse of the housing market: "Wall Street got drunk and now it has a hangover." The video of course is on YouTube and the viewer comments are vicious. Viewers angry over family members suffering from foreclosures and losses think the President's insult was targeted at them. But the "drunks," according to a Wall Street Journal columnist, were “thousands of traders and executives that pumped up the credit boom [and] made specific decisions to buy ever more collateralized debt obligations. They saw competitors making a mint and followed suit. If they were under the influence of anything . . . it was greed.”

It's so chic to hate the President these days, and I know it's too much to expect YouTubers to give up fashion for reason. Bush was right on about this, as was Chuck Colson in his follow-up today on Breakpoint:

"The problem was greed unchecked by any moral restraint. ... the cause of the market meltdown was moral failure. Free markets -- capitalism itself -- can thrive only when corporations and individuals exercise moral restraint. When those restraints fail, government regulation is sure to follow; which, in turn, makes free markets less efficient, and certainly less free."

The housing market crisis is a national tragedy that is leaving people displaced and disillusioned. I know families affected by it and it has put my own family's housing plans on hold. So if you're a lender or a buyer, look at it honestly and call it what it is: a failure of a market run wild with imprudence. A market based on moral relativity cannot remain free. It will be increasingly prone to bubbles and forced to rely on government intervention and control.

Jennifer Roback Morse said it simply, "A free society depends on the individual having a conscience." If individuals (and investors) will not govern themselves, government will have to do it.