The Law of Unintended Consequences is a Vicious *itch.

A few months ago I explained in this space that I was selling my house and getting completely out of debt because I believed things were about to get weird. Well, I think it’s safe to say that things have officially entered “weird” territory.

So how did we get here?

You can ignore most of the finger-pointing from the media and liberals. The current banking and credit crisis is a direct result of the most merciless of all historical forces–The Law of Unintended Consequences. This law dictates that whenever the federal government takes it upon itself to “fix” a problem, the fix will invariably produce effects (usually negative) that Congress never foresaw.

Stan Liebowitz explains it here.

Mark Krikorian summarized it along these lines: Back in the Clinton years, the federal government purposely began to equate sound lending practices with racism. That’s why he’s calling this “The Diversity Recession.”

Just as the depression was an unintended consequence of the disastrous Smoot-Hawley Tarriff Act (1930), which was a government response to the stock market crash of 1929; and just as that depression become “The Great Depression” as a result of the wrong-headed government attempts to “respond to the crisis”; so you can be sure that the current problems are a direct result of big government liberal social-engineers efforts to craft utopia a decade or two ago.

And you can be equally sure that any “fix” the Democratic leadership in Congress has in mind today, will blow back with a vengeance a few years down the line.

That lady standing in the shadows as Harry Reid and Nancy Pelosi craft a government response? That’s Ms. Law of Unintended Consequences. Look closely and you’ll see she’s smiling.