“No Man’s life liberty or property is safe while the legislature is in session”.

- attributed to NY State Judge Gideon Tucker

Tuesday, May 25, 2010

How The Left Lies

The Wall Street Journal carried an interesting editorial this weekend by Edward Epstein describing how economist Paul Krugman wrote a baldfaced lie concerning the government's suit against Goldman Sachs.

According to Epstein, Krugman asserted a false claim that the SEC accused Goldman of particular actions involving the Abacus CDOs which simply were not in the complaint. Specifically, Epstein wrote,

"On April 18, Paul Krugman stated in his New York Times column that "the S.E.C. is charging that Goldman created and marketed securities that were deliberately designed to fail, so that an important client could make money off that failure. That's what I would call looting." In fact, the SEC complaint never alleges that Goldman deliberately designed any securities to fail."

Epstein's editorial makes the point that much of the liberal press' rants regarding the SEC suit against Goldman have been purely to stoke misguided public ire in order to drive passage of the recent House and Senate financial regulatory bills.

On that score, Epstein wrote,

"The passage of this bill did not occur in a vacuum. The administration carefully laid the groundwork by inculcating public fear that the great financial houses betray investors by rigging securities to fail. Exhibit A" the SEC's recent fraud case against Goldman Sachs."

How right Mr. Epstein is. How long it will take for the truth to eventually win out, and these mistaken bills to be repealed or substantially rewritten, is anybody's guess. But, in the meantime, don't expect a robust economic recovery.

That would probably require a healthy US capital market and financial sector, which will be a challenge given the government's apparent desire to cripple both.

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