Opposition to the Bailout

Vote NO to the bailout. Stop the madness, and instead support real change in the governmental framework that has mucked up the financial system so that we eliminate (rather than intensify) the perverse incentives (e.g., moral hazard) and distorted information (e.g., risk analysis, and accounting practices) that GOVERNMENT INVOLVEMENT in the financial market has produced.

Let us be very clear --- our current problems are a function of government policies and mixed ownership forms. Government Sponsored Enterprises (GSE) are NOT market enterprises; Government jawboning and threats by powerful individuals (such as Senate Finance Committee Chair Barney Frank) for banks to lower mortgage requirements so that less qualified buyers could not receive a loan did move the mortgage industry away from pricing practices and risk assessment analysis that traditionally produced more prudent decision making; and the orgy of discretionary spending that has characterized the Bush Administration is NOT fiscal conservativism and free market ideology...

The divorce between rhetoric and reality among politicians with regard to the free enterprise system has been problematic since Reagan. At least prior to Reagan most politicians didn't claim they were unashamed defenders of the free enterprise system. Though I guess we should always remember that John Maynard Keynes is often portrayed as the "savior of the capitalist system", when in fact his ideas were a major justification for the expansion of the government's role in the economy...

Get government out of the financial industry, let businesses fail, let reallocation of resources and people take place, and lets build effective restraints on government so that we don't end up in this mess again...

We will get an even bigger orgy of spending backed by easy credit and imprudent and irresponsibility rather than wealth creation will characterize the US economy.
Government can throw money at this problem, but government planning cannot FIX this problem. Intentions do not equal results in economic policy, but that is what the administration is going with here. As my good friend Steve Horwitz so eloquently has put it "Ought presupposes can" in some many public policy discussions. But it doesn't. You have to demonstrate the "can" even if one for the sake of argument grants the "ought"...

read the full post