« More on manufactured homes | Main | Who's Qualified?» Don Boudreaux
September 29, 2008
No Bailout
Don Boudreaux
My friend Bob Gelfond has this nice lead letter in today's Wall Street Journal:
I'm dismayed to see the Journal's editorial page give up its strong free-market principles in supporting the Paulson Plan with some minor tweaks ("The Paulson Sale," Sept 24). You have led the way in exposing government actions through regulation and support of government-sponsored enterprises as being the major contributors to the current crisis. Yet how is it that when the crisis deepens, the solution is for more government?
The lesson of past financial inflection points is that we must let the markets reallocate capital from less efficient to more efficient uses. The sad fact is that we need to go through a brutal process of resizing down our financial and real-estate industries. Actions to try to recapitalize doomed financial companies only postpone the day of reckoning, which will make matters worse as the Japanese learned in the 1990s.
Bob Gelfond
New York
Indeed so.
Posted by Don Boudreaux in Current Affairs, Financial Markets, Government intervention in housing, Reality Is Not Optional | Permalink
TrackBack
TrackBack URL for this entry:
http://www.typepad.com/services/trackback/6a00d834518ccc69e2010534e034b1970c
Listed below are links to weblogs that reference No Bailout:
Comments
Preach it, brother! So get off the stick, call your legislator and give 'em what-for.
Posted by: Russ Nelson | Sep 29, 2008 8:58:12 AM
Yes, NO BAILOUT... but I thin we are too late
Posted by: muirgeo | Sep 29, 2008 10:38:30 AM
There is one thing republicans can do to save their Congressional seats: vote against the bail out. It will be good for the economy in the long term, and they will be voting with the "majority".
Posted by: Oil Shock | Sep 29, 2008 12:39:45 PM
This works out perfectly for the oligarchy.
The government is portrayed as the knight to the rescue and the finance industry gets bailed out of the problems caused by political management of credit/money supply (and regulation of finance), and the citizens are made all the more dependent on the state.
Posted by: Sam Grove | Sep 29, 2008 12:43:14 PM
re-posting:
What we are witnessing in the current financial mess and proposed bailouts is the approach to the endpoint of the goal of the past 70-80 years of progressive government, to render virtually nil, the citizens' input on the management of the corporate state.
Through constant control of the message, the blaming of markets for all economic ills, the people are being inexorably into total dependence on the corporate state.
This year it's the finance industry, next up is health care.
Posted by: Sam Grove | Sep 29, 2008 12:43:49 PM
I don't agree with Ron Paul on all issues, especially on immigration, but I don't think there 1 other person in the D.C gang 535 that I agree with more than 90% of the time. But you won't see his statements quoted in the so called bastions of free market. Here he is again, doing his bit to stall the bail outs.
Dodd, Frank are some of the worst crooks in the Senate & House. They are stealing our money, to protect us.
Posted by: Oil Shock | Sep 29, 2008 12:49:40 PM
Professor: Do you have any thoughts on what legitimate steps the Feds could take to ease this financial panic? Specifically, I'm wondering about normal cash management operations of large companies, both financial and non-financial.
Posted by: Kurt Brouwer | Sep 29, 2008 2:00:54 PM
A Magnificent Victory for Freedom
Posted by: Oil Shock | Sep 29, 2008 2:21:31 PM
the people are being inexorably led into total dependence on the corporate state.
Posted by: Sam Grove | Sep 29, 2008 2:22:20 PM
"Yes, NO BAILOUT... but I thin we are too late
Posted by: muirgeo | Sep 29, 2008 10:38:30 AM"
Just how thin would that be, muirduck? About as thin as your intellect?
Posted by: vidyohs | Sep 30, 2008 7:53:42 PM
The bailout gives me the creeps. I am much in agreement with the open letter to congress sent by Hazlett, Bittlingmayer, Acemaglu and other economists who find fatal flaws with the Paulson proposal. I am also in agreement the need for “bold action to ensure that the financial system continues to function.”
Government created structural faults need government solutions. At a minimum, the government should kill Fannie, Freddie, the Farm Credit System, and any other GSE I have forgotten. They should also repeal the Community Reinvestment Act. Government created externalities, a major source of the contagion in our financial markets, may well need government correction.
Letting the old system burn and a new system rise spontaneously out of the ashes like the phoenix may be impossible.
Posted by: Brooks Wilson | Oct 2, 2008 4:03:57 PM
The bailout gives me the creeps. I am much in agreement with the open letter to congress sent by Hazlett, Bittlingmayer, Acemaglu and other economists who find fatal flaws with the Paulson proposal. I am also in agreement the need for “bold action to ensure that the financial system continues to function.”
Government created structural faults need government solutions. At a minimum, the government should kill Fannie, Freddie, the Farm Credit System, and any other GSE I have forgotten. They should also repeal the Community Reinvestment Act. Government created externalities, a major source of the contagion in our financial markets, may well need government correction.
Letting the old system burn and a new system rise spontaneously out of the ashes like the phoenix may be impossible.
Posted by: Brooks Wilson | Oct 2, 2008 4:04:21 PM
The comments to this entry are closed.
