A nation that doesn't know history is destined to repeat its serious mistakes. People swayed by carefully crafted political propaganda relentlessly repeated and effectively delivered can easily lose their freedom and way of life.

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How many times have you been told by soaring, almost hypnotic oratory that "the direct causes of our financial crisis and subprime real estate loan mess were the greedy banks, big corporations and the failed economic policies of George Bush"?

It's common to blame the one in power. This time, however, it's 100% wrong.

Bottom line: This whole mess was another Big Government program created, designed and run by Democrats. It started with great intentions but resulted in typically awful unintended consequences that materially hurt the very people they were supposed to help.

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The latest manifestation of media bias was a bizarre Associated Press "analysis" claiming racism in Sarah Palin's warning over the weekend about Barack Obama's long association with Bill Ayers, founder of the Weather Underground terror organization.

AP reporter Douglass K. Daniels claimed that Palin's questioning of Obama's association with the white radical child of privilege was "racially tinged." The verbal stink bomb keyed off Palin's statement that Obama "is not a man who sees America like you and I see America. We see it as a force of good in this world." To Daniels, this was the same as saying Obama is "not like us."

It was the latest instance of increasingly undisguised media efforts to act as an unofficial branch of the Obama campaign.

The more we observe media bias in action, the more we're amazed by its new ways of distorting and concealing news. When it takes a Hollywood actor to call them on it, we know there's a problem.

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It's been said that history is a lie agreed upon. Democrats are trying to rewrite history by blaming the Bush administration for the current crisis and claiming that the rescue bill is necessary to save the economy from Republican mismanagement.

Last Thursday on Fox News, when Bill O'Reilly tried to suggest that both parties might share the blame, House Finance Committee Chairman Frank, in a not atypical meltdown, disowned any responsibility for his lack of oversight over the last two years and his complicity before that.

Frank also claimed: "The fact is, it was 1994 that we passed a bill to tell the Fed to stop the subprime lending. We tried to get them to do it." In other words, those rascally Republicans did it all when they took control of Congress that November.

The legislation he spoke of was the Homeowners Equity Protection Act. It was supposed to empower the Federal Reserve to set the rules on mortgages. Problem was, the Clinton administration had its own ideas of what the rules should be.

In 1995, as Howard Husock pointed out eight years ago in City Journal, "the Clinton Treasury Department's 1995 regulations made getting a satisfactory CRA rating much harder. The new regulations de-emphasized subjective assessment measures in favor of strictly numerical ones. Bank examiners would use federal home-loan data, broken down by neighborhood, income group, and race, to rate banks on performance."

Creditworthiness and due diligence no longer mattered. As a 1999 New York Times editorial observed: "Fannie Mae, the nation's biggest underwriter of home mortgages, has been under increasing pressure from the Bill Clinton administration to expand mortgage loans among low- and moderate-income people and felt pressure to maintain its phenomenal growth in profits."

On Frank's and Clinton's watch, the Community Reinvestment Act was changed to force the issuance of bad loans. Banks would be rated on the number of loans, not on their soundness. Fannie Mae and Freddie Mac were then encouraged to buy them up. It was all about affordable housing, even if the housing was unaffordable.

In the vice presidential debate, Sen. Joe Biden said that "what we should be doing now — and Barack Obama and I support it — we should be allowing bankruptcy courts to be able to re-adjust not just the interest rate you're paying on your mortgage to be able to stay in your home, but be able to adjust the principal that you owe, the principal you owe."

Those paying their mortgages on time don't get that break.

Section 110 of the rescue legislation has the Orwellian title of "Assistance to Homeowners" — but only for the deadbeats.

It describes somebody called a "Federal property manager" who "holds, owns or controls mortgages, mortgage-backed securities, and other assets secured by residential real estate."

Section 110 speaks of "modifications" that this manager can make to these mortgages including not only the reduction of interest rates but the reduction of loan principal.

The vast majority of homeowners who pay their mortgages on time get the shaft. They're the ones who'll take up the others' slack.

Frank: Criticism of Congress is now racist, too

Let’s keep score.  Criticizing Obama means we’re racists.  Criticizing Congress means we’re racists.  Getting angry at Congress for pushing Fannie Mae and Freddie Mac into buying bad loans and infecting the entire financial system with essentially fraudulent paper — at a cost of up to $700 billion in taxpayer money and potentially trillions in lost investments — means we’re racists.

The CRA was only a small part of the cause of the collapse.  It affected loans only at the margins.  The Clinton administration opted for more aggressive enforcement, and “community organizers” like ACORN used that to file nuisance complaints that could keep banks from merging and acquiring other banks.  That may have pushed lenders into lowering standards on a handful of loans, but only to enough of an extent to avoid government sanctions.

In that sense, the CRA is a bit of a red herring.  The real cause of the collapse was the Congressional push for Fannie and Freddie to support subprime lending by purchasing the paper from lenders, which is related to the same policies that generated the CRA but isn’t the CRA itself.  Lenders make money one of two ways: keeping the paper themselves and getting the interest over the term of the loan, or selling the paper to someone else for a guaranteed short-term profit.  When Fannie and Freddie began buying all of this paper, they created a huge demand for subprime loans — and lenders responded by offering easy money to almost anyone who applied.  They threw out income requirements and equity thresholds (such as down payments) and generated tremendous short-term profits for themselves … while Fannie and Freddie assumed all the long-term risk.

Had the risk remained at Fannie and Freddie, the problem would never have gone beyond their collapse.  Unfortunately, Congress also pushed the GSEs to securitize the debt in order to spread the risk.  Investors considered those mortgage-backed securities a safe bet, backed by the US government.  That’s the direct cause of the financial collapse, along with the collapse of housing prices that resulted from the sudden deflation of demand.

Congress — and specifically Frank himself — had plenty of warning that this would happen.  The anger generated from that information has nothing to do with racism, and everything to do with the breach of trust between Congress and its constituents.  Frank, Chris Dodd, and others like Lacy Clay and Maxine Waters tried the racist meme out on regulators who tried to warn Congress of the pending collapse.  They have to smear their critics.  They certainly can’t admit that Congress failed spectacularly.   Racism is the last refuge of scoundrels in 2008, and not surprisingly, we find most of those scoundrels in the Democratic Party.

Barack Obama's chief strategist, David Axelrod, claims Obama did not know that Bill Ayers was a domestic terrorist. You can see the claim here.

I think that is fatuous nonsense. Why? Let me lay it out to you:

Barack Obama, at Bill Ayers' behest, began work in 1995 at the Chicago Annenberg Challenge.

If you e-mail only one video this year to your undecided family and friends, let it be this one. Or, I guess, this one.

Buzz up!

McCain blasts Obama, Democrats for Fannie Mae meltdown

Joe Biden, meanwhile, produced a blizzard of misstatements, distortions and outright lies.

The most irritating and most seriously misleading involved the relative cost of the wars in Iraq and Afghanistan. Three times, with great earnestness and passion, he cited a mysterious statistic claiming that we spend more every three weeks in Iraq than we have invested in the Afghan War for its duration.

Actually, statistics from The Congressional Research Service (posted on the website of the Center for Arms Control and Nuclear Non-Proliferation) show that our biggest Iraq expenditure came in Fiscal Year 2008 and reached $158 billion – or $3 billion per week. This means that Biden’s “three weeks in Iraq” would cost $9 billion at most.

And what about our commitment to Afghanistan?  Has it really been $9 billion over seven years, as Biden suggested? The truth is we’ve spent $177.5 total in Afghanistan (compared to $661.1 billion in Iraq). This means that Biden either over-stated the cost of our war in Iraq TWENTY TIMES, or else understated the cost of our war in Afghanistan by a factor of twenty. Either way, the jerk is wrong by a distance equal to the width of the State of Delaware, and he delivered an Alaska-sized blooper three times in one evening.

Israelis dispute pro-Obama video