It’s certainly quite strange that Krugman would pick the extremely un-libertarian policy of a government cap on tort liability (a regulation) to take a shot at libertarianism. After all, it’s the exact opposite of what Milton Friedman would have supported.

What is going on is actually rather simple. Big corporations have done what they love to do with big government; get in bed together. Unfortunately, it’s us, as the common taxpayers, who will have to foot the bill for this love affair.

Here’s a very interesting article in the New York Times from 1999. Steven Holmes discusses how Fannie Mae was reducing its lending standards and increasing the issuance of subprime loans. This was a big cause in our current financial crisis, however, back then, everyone thought it was just dandy:

What this whole mess elucidates is, as far as politics (and subsequently, economic policy) are concerned, actual positions are of little importance. All that matters is that you root for your team, be they Democrats or Republicans. Thus, we see Fox News begin to attack every push for increased state power, while MSNBC defends such policies. Under Bush, it was the opposite.