It's pretty clear that Chatham, like other cities and towns in Massachusetts and across the country, will have a tough time over at least the next year or two.

It all started with the collapse of the U.S. housing bubble fueled by the explosion in subprime mortgage loans to folks who couldn't afford them. When those defaults started showing up in the U.S. government-backed Fannie Mae and Freddie Mac securities sold to governments and other investors around the world it caused panic and triggered the worldwide credit freeze. As a result, securities markets tanked and hundreds of billions if not trillions of dollars in the life savings of Americans vanished. Job losses multiplied, As housing values also sank, Americans had good reason to feel poorer and began to dig in to start the long, hard process of cutting expenses to make ends meet.

What has happened is just another example of well-meaning, do-good Democratic policies that foul up the working of the economy. FDR's government programs turned a severe recession into the Great Depression with unemployment rocketing to 25% and staying there until the build-up for World War II got the economy moving ahead.

Mortgage loans for the neglected minorities had a nice ring to it when President Carter floated the idea and had the Community Reinvestment Act passed. Over the years pressure built to make riskier and riskier loans to those with questionable credit. Indeed, President-Elect Obama himself had a hand in that: In the early 1990s in Chicago he was teaching radicals in ACORN, the Marxist community agitator group, how to intimidate banks and banks into making mortgage loans they shouldn't.

The Clinton Administration turned the screws tighter by creating a scorecard for banks: Those who weren't "doing enough" found they couldn't get approvals for mergers and other normal business activity. Banks understandably didn't want to make bad loans and hold them on their books, fearing defaults. This is where Fannie Mae and Freddie Mac came in. Congressional Democrats on financial services committees like Massachusetts Congressman Barney Frank and Connecticut Senator Chris Dodd pressed these government-sponsored agencies to buy those subprime loans from banks and mortgage lenders eager to get rid of them. That they did, and packaged the risky paper into mortgage-backed securities and sold them to the regular buyers of U.S. government securities around the world.

With the new money from Fannie and Freddie, banks and mortgage lenders now could make ever more loans to iffy borrowers. Subprime loans as a percentage of total loans leaped from 2% to 30% from 2002 to 2006 and Fannie and Freddie were the biggest buyers of them. President Bush and Senate Republicans called for a reform of the madness in 2003, 2004, 2005 and 2006, but Barney Frank and Chris Dodd successfully led Congressional Democrats in blocking reform. Everything was fine, said Frank. Of course, when the subprime collapse came, Frank blamed Wall Street, which was just doing its job of selling what Fannie Mae and Freddie Mac gave them to sell. But it was government meddling that has created the mess in the first place.

Now the government is poised to do everything to solve the problem except let the economy sort itself out as it ultimately has to do. Past evidence, such as in the Great Depression doesn't support the idea that massive government intervention is the answer. Now Democrats argue FDR, who did a lot, just didn't do enough. So they will pump trillions into programs they think are neat and nifty, saddling taxpayers with massive debt for generations to come. But the world will be saved.

We can hope.