Bailing On Liberty

It is maddening to listen to the many voices weigh in on the current banking “Crisis”.  It’s as if all reason has been abandoned.   Stike that.  Reason has been abandoned.  As the congresscritters writhe and moan like Pfleger and Wright at an Obama concert, it is, perhaps, instructive to “review what we’ve learned”:

1. This wasn’t caused by free markets or Capitalism.  It was caused by decades of government spending.  In particular, it was caused by government spending money it did not have.  It did so explicitly – via deficit spending – and implicitly, by forcing lenders to make bad loans and then promising them they’d be “protected” from the subsequent losses.  This is, after all, what the “Your welfare qualifies as mortgage income” scam was all about.  In other words, the last thing we had here was a “free” market.
2. Once government figured out it could no longer tax its way out of trouble, it retreated to the next ring of hell: it printed money, lots of money.  Well, more precisely, it lowered interest rates.  This devalued the currency, drove oil prices through the roof, and generally had the effect of being inflationary, even though the formal measure of inflation did not reflect this.  This, um, slowed the economy down further.
3. The banks in question do bear some responsibility, notwithstanding the predations of the government upon their lending practices.  In no case are they entitled to your money unless you’d like to donate it as a charity.  Using government to force you bail them out of their own mess is flatly communist … which is probably why Obama is particularly keen for it.  Laying off the risk to the public while retaining the rewards for oneself is the act of a despotic oligarch, hence the neo-cons, con-neo-cons, and just plain con men who support this.
4. This produced the perfect storm for the usual communists like Comrade Obama and oligarchs like McCain and Bush.  They are trying to terrify us into supporting a further violation of our wealth by “fixing” the economy with tax money.  They are wrong and they are profoundly evil for demanding this.  The way to “fix” this problem is to let the banking institutions in question go bankrupt and be reorganized under competent new managers appointed by whoever buys their remains.  Alternately, the banks might want to renegotiate the terms of their mortgages voluntarily with the borrowers.

There is no simple fix here.  Nothing we do will avoid massive pain in the short run.  But, if we allow the scoundrels in government to prop up the failing banks, we will pay for this forever.  Adam Smith’s “invisible hand” will not be held back.  It does not answer to Congress, it does not answer to the Obama communists, it does not answer to the oligarchs.  It answers to Reality – so should we.