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Bailout Crack

By Dan Edge     Oct 9 2008 - 1:03 pm

In a knee-jerk reaction to panic and fear over the current financial crisis, the government issued a $700 billion dollar bailout bill last week. Rather than considering the cause of the "toxic loans" at the heart of this crisis, Congress decided that it had to immediately do something—anything.

What politicians fail to realize, however, is that they are the ones that got us into this mess, and this bailout will only further exacerbate the problem. It is government meddling in the economy that caused the mortgage meltdown. Fannie Mae and Freddie Mac, the U.S. Department of Housing and Urban Development, the Community Reinvestment Act, and the Fed's ability to manipulate interest rates each have contributed handsomely to the disaster. These government policies are the primary cause of the financial crisis, yet our president and both houses of Congress agree that still more government intervention is the only solution.

It is as if a man went to the hospital with low blood pressure and a low heart rate, and the doctor prescribed crack cocaine to treat his symptoms. After all, crack will raise the patient's heart rate and blood pressure for a while, and even give him a temporary feeling of euphoria. But over the long term, using crack will severely weaken his heart and mind, making him an easy target for any infectious disease that comes along.

This is exactly what the Bailout Bill will do: temporarily treat the symptoms while allowing the disease (government intervention in the economy) to metastasize further. The only way to preserve long-term economic health in America is to attack the disease at its source. End Fannie Mae and Freddie Mac, neuter the U.S. Dept of Housing and Urban Development, repeal the Community Reinvestment Act, and take away the Fed's power to tamper with naturally functioning markets.

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4 Comments

Comments

[...] for AIG’s financial mess. Or maybe politicians are trying to distract us from their own incompetence and shift the blame of the failed economy onto the “greed and recklessness” of these traders. [...]

Submitted by The Undercurrent | AIG Executives and Mob Rule (not verified) on 27 March, 2009.

It’s a quite difficult decision for any politician choosing between more bailout packages or letting the free market economic principles take care of the failed businesses, whether it is the financial institutions or automakers. The main focus should be defending the interests of middle-class Americans and creating a stable economic system that will guarantee long-term stability and sustainability. But here we also can face more challenges, since right now the Washington politicians are talking about the second large bailout package. If we bailout financial institutions and other industries again, when are they going to ask for the third bailout package? Or fourth? Maybe this is a time to let free market economy work rather than keep bailing out large, failed corporations? After all, it is the small and medium size businesses that create vast majority of middle-class jobs in America, not the large corporations. Maybe the government is better off to replace banks in lending practices and directly give loan packages with low interest rates to small and medium size businesses? That might work better and have a direct, immediate impact on economy and the middle-class America…

Submitted by David Dzidzikashvili (not verified) on 17 January, 2009.

good article.
Toss your TV into the trash and read the web news.

Submitted by Clarence Dember (not verified) on 8 December, 2008.

Mr. Edge has presented a case against the bailout and, by implication, for capitalism, the political system that creates a free market.

How should advocates of any rational position go about presenting their case when their opponents are mostly emotionalists? If Mr. Edge presents a case, premise by premise, and his opponents respond with a metonymic false dichotomy such as "Main Street, not Wall Street!"--then how can proponents of reason win against such tactics?

History shows they can win--sometimes. They have in fact won on particular issues and in general ways too. Otherwise, we would not be as well off as we are today--economically, technologically, and even politically (as bad as things look for the near future).

How did past advocates of reason--in broad and narrow issues--manage to win?

Submitted by Burgess Laughlin (not verified) on 10 October, 2008.