The dominoes begin to fall


Government sets out to destroy the economy
Well, the big news is the "seizure" of Fanne Mae and Freddie Mac and the pending bailout of the Big Three automakers.

While some say that Washington is "putting aside free market ideology," remember one thing. The Federal National Mortgage Association and the Federal Home Loan Mortgage Corporation were never about the free market. These "privately owned, government sponsored" entities were about exempting an ever-growing part of the mortgage segment from economic truths.

Of course the automakers want their turn at the public trough. So will the airlines. Then maybe the television networks. Then who knows? Professional sports?

Oops, too late. Thanks to the stadium scams, pro sports already are plugged into public money.

Nothing is ever "too big to fail." Government can't create money, it can only divert it. Without consequences, there's no cost to marginal behaviors.

It's not hard to see where this is going.

Instead of a series of jolts that the economy could withstand, chances are that the Treasury's actions will lead to a cascade reaction that be much bigger and much longer than it otherwise would be.

How can I say this?

Because history tells me so. Government attempts to control the price of gold were a major cause of the market destabilization in the 1920s. Government intervention prolonged a market correction into the Great Depression.

I think this will accelerate the collapse of the central state.

Don't you find it interesting that the candidates of both major parties are calling for more government intervention?

Let me ask another question.

Do you think that the behavior that led to this mess will change now that the FedGovs are officially "in charge?"

I can tell you now, it's going to cost a lot more than 200 billion dollars.

I wonder what the impact on Social Security and Medicare will be, not to mention all those Federally guaranteed pension plans. As the value of the dollar sinks lower and lower, there are going to be a lot of pissed off Baby Boomers who will want bigger payments to compensate.

That's what I mean by cascade reaction.

If you really want to see someone who is steamed by this, check out Fannie Mae: Where is the Anger? by Becky C. at Just A Girl in Short Shorts. Check out the comments too.

I really liked what Russell Roberts had to say over at Cafe Hayek.

One of the most depressing things about the current situation is that people will try and find different ways to "fix" the mortgage market when it was the very attempt to "fix" it that brought us to where we are today. The government should get out of the mortgage market. Let individual institutions arise that intermediate between home owners and sellers. Let those that do it well thrive. Let those that do it badly bear the costs and disappear.

But I have to have the last word.

Government can't make the right choices for a free people


Or maybe it is even simpler than that.



Government is not your friend.



Hang on to your wallets, the government already has control of your checkbooks.

— NeoWayland

Posted: Mon - September 8, 2008 at 01:59 PM  Tag


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