Paul Krugman: Keeping them honest

Paul Krugman highlights a Republican talking point that emerged during Arnold Schwarzenegger's appearance on This Week yesterday.

He asserted, as a simple matter of fact, that "government created the housing bubble", because Fannie and Freddie made all these loans to people who couldn't afford to pay them.

This is utterly false. Fannie/Freddie did some bad things, and did, it turns out, get to some extent into subprime. But thanks to the accounting scandals, they were actually withdrawing from the market during the height of the housing bubble -- the vast majority of the loans now going bad came from the private sector.

Yet it's now clear that the phony account of the crisis -- that it's all due to Fannie, Freddie, and nasty liberals forcing poor Angelo Mozilo to make loans to Those People -- is setting in as Republican orthodoxy, part of what you have to believe to be a respectable member of the party.

That's almost as good as Krugman's appearance on the This Week roundtable discussion in which he repeatedly schooled George Will and the others. It was so nice to have someone who actually knows what they're talking about right there on the spot to correct the talking heads.