Tom Sowell explains, as only he can:
Fannie Mae and Freddie Mac do not deserve to be bailed out, but neither do workers, families and businesses deserve to be put through the economic wringer by a collapse of credit markets, such as occurred during the Great Depression of the 1930s.
Neither do the voters deserve to be deceived on the eve of an election by the idea this is a failure of free markets that should be replaced by political micro-managing.
Nothing about this makes me more angry than the continued lies by the collectivists that this was a failure of the free market.
I dunno. All the money those guys in DC took from the FMs makes me pretty angry too.
Not a failure of free markets, but certainly failure of a free press.
Failure of regulation and regulators but not just on loans.
Anyone that only talks about mortgages in all of this mess has no idea how widespread the rot is. The mortgage stuff is a dog & pony show off to the side of what’s really going on.
This mess has been thoroughly enabled by both of the major parties, and participated in on a global scale. Any finger-pointing between the two major parties is just distraction and misdirection when they are both completely culpable.
Breach of contract issues are for the Courts, not Congress.
The real crisis is that they are about to make our money worthless. Hyperinflation of central currencies might fulfill some bible prophecy concerning the last days.
Obama, whether elected or not, seems like a false messiah, also a sign of the last days.
Ken,
The example you use to demonstrate the problem is excellent AND Scary as hell.
And I should add, if I understand Ken correctly, could have been avoided with significantly more regulation.
WTF.
Well, and there’s also the question of in what sense and to what extent is this a “failure”? For example, it isn’t for me. My company doesn’t borrow money to operate, never has, probably never will. We buy stuff
out of last year’s receipts. If we have a bad year, we don’t buy stuff and we don’t hire people. We’re a small company, and we have grown slowly but steadily, to match our revenues.
I’ve seen the alternative approach, talked to people who say Gee why don’t you just borrow $50 million, hire a bunch of people, and implement all these plans you have for the next decade in the next 6 months? You’ll grow like crazy, pay the money back, and all be rich in two years.
Or maybe not, huh? Now anyone who took that route is selling their office furniture while their employees glumly scroll through the craigslist job ads. Works for me.
Is it a failure when the market punishes greed and a lack of judgement? I’m not sure I’d say yes. Indeed, the willingness of the market to ruthlessly punish bad decisions is what makes it far more flexible and powerful than any imaginable central planning. Getting government massively involved is akin to unionizing all of us, so that our welfare depends more on time served and appropriate political connections than the sheer plain quality of our decisions. Turns the entire US into the equivalent of GM (or for the TT crowd, NASA): lousy products, zero accountability, great wages — at least until the Chinese or Poles or Indians, or some other hungry humorless striver, eats your lunch and dumps you unceremoniously on the ash-heap of history, still clutching your Obama flag, and nattering on about how the big problems of the day are racial sensitivity, “equal pay” legislation, and other such deck chairs on the Titanic frivolity.