The way to fix the rating agency problem is to end government sponsorship of them. If Moody’s, Fitch and the S&P got paid on how accurate their ratings were instead of how much volume they did, the problem would quickly go away.

Just as workable economic arrangements are not, and cannot be, designed and imposed by a higher power, so too, Smith explained, workable morality itself is the product not of any grand design but of the everyday actions, reactions, observations, and practical assessments of ordinary people going about their daily business.

To me, the unsung villain of the mortgage crisis is the 30-year fixed rate self-amortizing mortgage with no prepayment penalty. This hothouse creature is beloved of liberals, who like any product that gives the consumer the power to shaft banks whenever it is to their advantage. And it is beloved of conservatives because it smacks of sober citizens taking on modest, stable obligations they can meet. But this product is about as stable as a nitroglycerine shot with a TNT chaser.

Wage rates are ultimately determined by the value the wage earner’s fellow citizens attach to his services and achievements. Labor is appraised like a commodity not because the entrepreneurs and capitalists are hardhearted and callous but because they are unconditionally subject to the supremacy of the pitiless consumers. The consumers are not prepared to satisfy anybody’s pretensions, presumptions, and self-conceit. They want to be served in the cheapest way.

As a consumer, are you anxious to keep Freddie and Fannie there to hold down costs for you? Well, you should be glad that the Securities Industry and Financial Markets Association is there to speak on your behalf. After all, they have no self-interest involved in steering the mortgage financing system through Wall Street. They just care about you. And when Congress votes to structure Freddie and Fannie along the lines that these helpful folks suggest, it is because Congress cares about you, too.

When I talk about risk and safety, I always like to point out that it’s easy to make sure that no one ever dies in an airplane crash: ban air travel. The fact that we don’t suggests that we really don’t want perfectly safe air travel.

Racism is a very bad thing. By the same token, false imputations of racism are a very bad thing. False charges of racism motivated by politics are particularly disgusting. They have devalued the charge, if not the offense. They have nevertheless become the stock in trade of the Democratic Party and its media adjunct.

Bernanke was pretty certain there would not be a recession, that housing was not in a bubble, that the unemployment rate would peak at 8.5%, that paying interest on reserves would enable the Fed to hold short-term rates above 2%. Bernanke was wrong on every count. At least now he admits he is guessing. Let’s recap the Fed Uncertainty Principle to see what it suggests may be certain or uncertain.