Quoting from an IMF report, Neil Reynolds is busy arguing that the shockwaves we are now experiencing are actually global in their origins and not at the feet of poorly planned, questionable practices in the US market.
Canada fared well in these (and other) comparisons. But the much-maligned U.S. didn't fare all that badly. (The United States, the IMF report concluded, was among the middle-ranked countries in “vulnerability” to a bubble-busting correction.) Most European countries are decidedly worse off. Some confront the prospect of catastrophic house price crashes; some apparently confront the prospect of bankruptcy.
Really what this speaks to is the sheer size of the US economy, not the policies and practices that led to the housing bubble in the first place.
George Bush's economics (or lack of them) focused the US economy on two things - war and consumer spending. Ill-planned and misguided, the wars in Iraq and Afghanistan have driven the US government into record levels of debt and deficit.
What economic growth has occurred has depended primarily on consumer spending, not exports or manufacturing growth. This has allowed the US economy to hollow itself out from within - literally stripping it of its ability to fill the needs of its own citizens, much less produce meaningful growth. Worse, US consumers were encouraged to contribute to this growth by increasing their levels of indebtedness.
Short sighted is about as polite a characterization as I can come up with for 'Bush-o-nomics'.
An approach to economic policy by Alan Greenspan that is clearly based on the "everyone for themselves" thinking of Ayn Rand (If you haven't read Atlas Shrugged, I urge you to do so, it will give you a sense of insight into the policy and ethos we have seen among the so-called 'neoCons'.) hasn't exactly helped either.
In the last fifteen years (or more), the ethos of greed has come to characterize the US-based marketplaces. Ever more obscure "investments" were created to attract money, and obscure the investor's view of what was behind the investment. "ABC Paper" was used to bury the risks that lending institutions were taking on with Sub-Prime mortgages; NINJA loans (No Income, No Job or Assets) started to be made - purely to increase bank revenues. Both sub-prime and NINJA loans were written on terms that I can only politely call disastrous for the borrower. Interest rates that were ridiculously low to begin with would escalate well beyond the ability of most to pay - forcing people to either move, or dramatically refinance their homes constantly.
These are not mechanisms rooted in any reasoned, balanced sense of caring for those around you. They are mechanisms built to foster greed and are built upon the hubris of short term success. Banks were able to disconnect themselves (somewhat) from the consequences of making loans to people who couldn't pay them back; investment banks bought up those loans, and poisoned themselves in the process.
There were signs of this imploding two or even three years ago, as the lending practices became even more aggressive and predatory. Did the US Treasury step in and take steps to settle things down? No. Could they have? Yes, of course - but for an ethos of 'not touching the sacred free market'. The IMF is acting, as it so often has, as an arm of the US government in this report - and is attempting desperately to minimize the consequences of that government's economic policies.
I'm sorry, but Mr. Reynold and the IMF's apologetics for a failed laissez-faire, every man for himself, economics in the United States ring hollow.