Free Market Economists Reject Bailout as Bad Policy that Could Prolong Slowdown

CNSNews.com ^ | October 01, 2008 | Matt Cover

[Man50D]

The federal government created the current financial crisis, and unless it does some serious housekeeping, no amount of bailout money is going to solve the problem. That’s what some free market economists and experts said when CNSNews.com asked them about the proposed bailout plan that was rejected Monday by the U.S. House of Representatives.

The problem with the plan is that "it was a bailout,” said Sheldon Richman, editor of The Freeman, a free market journal. “It’s the government swooping in and buying rotten loans from banks (that) made bad mistakes.”

The bailout’s proposed $700 billion price tag was only “a minimum,” according to Richman, who claimed the bailout failed because “the taxpayers were innocent in this and yet they were going to be forced one way or another to pay for these mistakes.”

Richman said that instead of bailing out failed financial institutions, Congress needs to end the bad housing policies that caused the crisis in the first place – a remedy that was echoed by other economists, including professor Jake Haulk of the Allegheny Institute for Public Policy.

“It wasn’t Wall Street that created these guaranteed mortgage-backed securities; it was Fannie Mae and Freddie Mac acting as adjuncts of the government – and they are to blame,” Haulk told CNSNews.com.

“You don’t get a crisis of this magnitude unless there was very heavy government involvement somewhere,” he said, adding that serious reforms are absent from the current proposal.

Another major problem with the bailout, Richman noted, was that it allowed the Treasury Department to assume up to $700 billion in debt at any one time, not just in total.

[Man50D]

“You don’t get a crisis of this magnitude unless there was very heavy government involvement somewhere,” he said, adding that serious reforms are absent from the current proposal.

Congress creates this situation with socialism, then pretends the sky will fall unless more socialism is imposed on the people and the two Presidential candidates both endorse this socialist scam. How anyone can vote for either one is hard to understand.

[screaminsunshine]

Unfortunatly Free Market economsts are becoming an endangered species. You know. Kill the messenger.

[paudio]

Have you seen economists who (allegedly) back 0bama? I came across this blog: Economists for 0bama. Many of them are UC Berkeley's professors, with several Nobel Laureates.

Don't believe the list that they have for McCain, as the campaign has many more economists that advise and support McCain.

[Skooz]

BUMP

[valkyry1]

Fannie Mae and Freddie Mac were not the villins, they did become pawns though, and for that they are culpable.

There should be no bail out for this mess IMO.

[mc5cents]

Thought I would post this as instructive for those who have no idea what a "sub-prime" loan is in the first place, like me.

Subprime Primer
Powerpoint presentation. Caution: crude language.

[Travis McGee]

"There is no means of avoiding the final collapse of a boom brought about by credit expansion. The alternative is only whether the crisis should come sooner as a result of a voluntary abandonment of further credit expansion, or later as a final and total catastrophe of the currency system involved."

---Ludwig Von Mises

[Grampa Dave]

Perp walk and then tar and feather any $inator or Congre$$it that votes for these terrible bailout plans!

Here is another poll that the $inators/Congre$$its might want to consider before they get tarred and feathered:

Ongoing AT&T/Yahoo poll on the bailout:

http://js.polls.yahoo.com/quiz/quiziframe.php?poll_id=39543

Do you want the $700 billion bailout to be passed? Results
Q. Stunned by a House defeat on Monday, supportive lawmakers along with President Bush are again warning that if the proposed $700 billion bailout plan to buy bad mortgages and other “rotten” bank debts is not passed quickly, America — and the world — is vulnerable to a serious recession. Critics and protesters say the current plan does not include sufficient oversight, and taxpayers should not be put on the hook for the staggering price tag.

What do you think? Should the $700 billion bailout be approved?

Yes. It may not be a perfect plan, but we must take action. 23%

No. I think we need a plan, but this bill still needs work so taxpayers can be protected. 39%

No. I don’t think we need any plan. The markets can right themselves without our intervention. 35%

Not sure/No opinion 3%

33347 votes