The current credit crunch has everybody scared.  During last night’s debate, you could see the fear in the eyes of the folks asking the questions. 

The stock market is in free fall, but the economists are paying attention to the credit markets–and right now there isn’t much credit on offer and the gears of business are seizing up. 

Like John McCain, I will freely admit that economics is not my forte.  I’m good at arithmetic, but when the Paul Krugman types trot out equations with funny letters my eyes glaze over.  The same can be said for 95% of us.  This is complicated stuff, and there is ample evidence that the folks who do understand the equations are just as confused as the rest of us. 

We should be thankful, therefore, for folks like Daniel Gross who call us back to basics.  

As Gross notes, conseratives are desperate to tie the financial crisis to the bad behavior of liberal politicians and the poor minority people they represent.  As Barack Obama admitted last night, there is plenty of blame to spread around.  The political establishment, right and left, was so thrilled with the Wall Street money machine that nobody asked the obvious questions.  Politicians on both sides of the ideological divide milked the money machine for every nickel it could churn out–good times are great for incumbents.

Pandering to greed is a lot like pandering to fear.  People are afraid, so you sell them prisons and legislation designed to fill them.  People want easy money, so you sell them complicated financial schemes that nobody understands.  When disaster strikes, who ya gonna blame?

Poor people!

The role of poor people in American politics is to take the fall for the rest of us.  If it wasn’t for those poor folks (especially those of black and brown complection) we’d be doing great.  But they keep breaking the law and defaulting on their loans and good people like us have to clean up the mess.  Why can’t they be like we are, perfect in every way, what’s the matter with trugs today?

Daniel Gross points us back to the obvious:

There was a culture of stupid, reckless lending, of which Fannie Mae and Freddie Mac and the subprime lenders were an integral part. But the dumb-lending virus originated in Greenwich, Conn., midtown Manhattan, and Southern California, not Eastchester, Brownsville, and Washington, D.C. Investment banks created a demand for subprime loans because they saw it as a new asset class that they could dominate. They made subprime loans for the same reason they made other loans: They could get paid for making the loans, for turning them into securities, and for trading them-frequently using borrowed capital.

In other words: “Lending money to poor people doesn’t make you poor. Lending money poorly to rich people does.”