Americans take a long, hard look at themselves over the credit crisis, but even now are reluctant to commit to more government regulation

As the global financial crisis has deepened, the number of fingers pointing accusingly at the habits and practices prevalent in the USA has spiraled upward. If it is of any comfort to others around the world, many of those fingers reside within the perimeters of that same country.

The most recent – and surely most prominent – self-finger-pointer is, of course, none other than former Federal Reserve Chairman Alan Greenspan. The longtime apostle of free markets and minimal government interference admitted to a congressional panel on October 23 that he made a mistake in opposing tighter regulation of the burgeoning subprime mortgage and derivatives markets some years ago. But Mr. Greenspan is not alone in his regrets: A poll conducted earlier in October by the Pew Research Center for the People & the Press found Americans generally in a contrite mood.

The survey found an unusually broad consensus among Americans with regard to the primary causes of the current liquidity quagmire: Fully 79% said “people taking on too much debt.” And given Americans typically provincial outlook, it’s fair to say that the deadbeats they had in mind were primarily, if not exclusively, their own fellow citizens.

To be sure, almost as many (72%) blamed the nation’s banks for having made too many risky loans. But scarcely more than a third (36%) pointed either to an overly complicated financial system or to that often convenient scapegoat, globalization. Only 35% cited the growing interdependence of global financial markets as contributing “a lot” to the current problems.

Notably, fewer than half (46%) named weak government regulation as a culprit. Of course, Americans, rugged individualists as they may style themselves, have always had their doubts about the desirability and efficacy of strong government regulation, at least in the abstract. Still, one might have expected some up tick in support for federal intervention at a time when both Republican and Democratic political leaders have been wholeheartedly endorsing a stronger role for the government both in bailing out financial institutions and in controlling their future behavior. Instead, only half (50%) expressed the view that government regulation of business is needed to protect the public interest – essentially the same proportion who said so four years ago when times were good. Moreover, a solid 57% majority charged government with being “almost always wasteful and inefficient,” a 10-point increase over the number who said so in December 2004.

To the extent that many exporting countries around the globe depend substantially on the usually insatiable appetite of American consumers, the surveys findings on planned cutbacks in spending may be somewhat worrisome. On the bright side for those trading with the US, many of the targeted items – such as restaurant meals and housing purchases – impact most heavily on the home market. But automobile exporters, tourist-related enterprises and overseas financial institutions may feel an added pinch.

Indeed, half of Americans are now of the opinion that the country should tighten its belt (49% agree that “people should learn to live with less”). Still, their current trepidations and regrets notwithstanding, Americans have not abandoned their characteristic resilience. Nearly two-thirds (64%) express the belief that “as Americans, we can always find ways to solve our problems” – even more than took that view four years ago.

As for the choice of a leader to guide their way back to a land of plenty, at the moment the Pew poll finds a 47% plurality favoring Barack Obama for that particular task, compared with 33% who see John McCain as the better candidate for that purpose. And while nearly half of Americans credit Obama with doing a good or excellent job in explaining how he would handle the recovery, only 29% give McCain a high grade on this score.

Read the full report at pewresearch.org.

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