Lessons Not Learned from the Past Regarding Government Bailouts

[BigBearJohn]

I am continually amazed at the numbers of people - even ones who profess to being broadly read in history - who do not recognize this latest financial fiasco in the US as another and expectantly major example of increasing government interference in the marketplace over the past more than 100 years. The major economic consequences now seen have only been repeatedly delayed (but not prevented) by prior government finagling in the economic interactions of individuals (the marketplace), otherwise referred to as "stimulating" or "fine-tuning" the economy. Now, however, the cracks are visible and the chickens are headed for the roost. The government's presence in all phases of the marketplace took a marked increase in the early 1930s when major supposed "rescue" measures by FDR actually deepened and lengthened the economic downturn that resulted from earlier government banking regulations, as I've explained previously.

The most current measures being pushed by politicians to "rescue" the US financial markets are more of the same kind of regulations and "overseeing" that brought this situation about. How do you think the economic "bubble" came into being...?? This happened via government stimulation of the housing markets through the central banks (highly government controlled) and GSEs Fannie and Freddie, and also regulations against many practices that in the past would have eliminated poor risk loanees/mortgagees. (Avoiding claims that "civil rights" are being "violated" when someone is denied a loan has been a goal of many financial institutions to minimize legal involvements.)

So don't expect anything more than additional difficulties from whatever "oversight measures" and additional taxes lie ahead with a government "bail-out" if you own a business, work for someone else, are seeking employment or new business opportunities, care for your children and home, or are retired. Hmmmm...... that pretty much includes everyone but likely those under 16, who these days can't even get (if they bother to search for) a part-time job babysitting, mowing lawns, delivering newspapers and the like due to the government required tax-related paper work for anyone wanting such services.

Pertinent to the entire sub-prime mess that began this latest fiasco, Henry Hazlitt wrote in a subsequent revision of his book, Economics in One Lesson c. 1979, :

"Government-guaranteed home mortgages, especially when a negligible down payment or no down payment whatever is required, inevitably mean more bad loans than otherwise. They force the general tax payer to subsidize the bad risks and to defray the losses. They encourage people to "buy" houses that they cannot really afford. They tend eventually to bring about an oversupply of houses as compared with other things. They temporarily overstimulate building, raise the cost of building for everybody (including the buyers of the homes with the guaranteed mortgages), and may mislead the building industry into an eventually costly overexpansion. In brief, in the long run they do not increase overall national production but encourage malinvestment."

SOURCE: http://www.opednews.com/articles/Lessons-Not-Learned-from-t-by-Kitty-Antonik-Wakf-080929-284.html

[lapfog_1]

1. I take it then that the author would also be for

eliminating the interest deduction for mortgages, seeing as how it is an ongoing and massive "government interference in the marketplace".

[2speak]

2. Good idea

Let all homes be government funded at 0% interest.

[Mojorabbit]

3. I disagree

with what is posted here. Regulations are good. I was a nurse. I took boards and passed them to be certified. I was licensed. All this protects the public. I bought my house with no down payment but I am very comfortable and the payment is within my range.

Regulations on international investment bankers is also good. It prevents people from having their money ripped off whether directly or via exotic financial securities.
Central banks who run countries indirectly by controlling the money supply. Not so good. After all in the end, who regulates them?

I agree with Jefferson.
"The central bank is an institution of the most deadly hostility existing against the Principles and form of our Constitution. I am an Enemy to all banks discounting bills or notes for anything but Coin. If the American People allow private banks to control the issuance of their currency, first by inflation and then by deflation, the banks and corporations that will grow up around them will deprive the People of all their Property until their Children will wake up homeless on the continent their Fathers conquered."
That was one smart man.

[calmblueocean]

4. This is the line conservatives are pushing all right.

They see this not as a failure of their ideology, but as an opportunity to finally follow through with Grover Norquist's long held fantasy of "drowning" the government.

[lurky]

5. So, they claim "civil rights" caused the subprime crisis,

the New Deal caused the Great Depression, and too much oversight is what is causing the banking collapse. Quite a source you have there. :eyes:

[Vincardog]

6. Makes you wonder if spouting that much shit leaves a taste in their mouths.

[ROakes1019]

7. Huh?

This sounds like Repub propaganda to me.

[BigBearJohn]

8. I was wondering how others saw this.