Unfortunately, it appears the godawful socialistic bailout package will pass the House tomorrow morning. This has dire long-term consequences for the United States, not the least of which is that excessive government meddling in economic affairs doesn’t work.
A fair amount of pain can accompany a recession, but it’s not a bad thing ultimately. Companies that are not economically viable need to go bankrupt and the resources they consume need to be reallocated within the broader economy. The free market is the most effective mechanism to accomplish that.
The crazy scare tactics being pushed by George Bush are just that. If the big banks don’t have sufficient liquidity to lend money because they’ve been stupid enough buy billions in “illiquid” (aka worthless) investments, that doesn’t mean that other banks can’t continue lending. Indeed, small banks and credit unions who weren’t invested in exotic financial instruments like derivatives are doing just fine. If there is a need for liquidity in the market, someone will step up to fill that need. It’s called capitalism and it works pretty well.
The second half of this, of course, is that it is simply immoral to use taxpayer dollars to bailout companies and people who made poor economic choices. To do so not only sends the wrong message to people who make bad decisions, it punishes those who live within their means and play by the rules.
I am adamantly opposed to this bailout, and one of the biggest disappointments of this president campaign season has been to see Barak Obama in favor of it. As a community organizer, he is someone who recognizes the power of the people at the grassroots level and the policies he endorse tend to have bottom-up rather top-down philosophical underpinnings.
Why he’s abandoned that here I have no idea, but it is extraordinarily dismaying because this bailout is very likely to derail most of the economic policies he’s advocated. I think his presidency will greatly diminished as a result.