ENOUGH

This am we have a program from Treasury that appears to be constructive, and will go a distance in finding a home for the garbage on banks’ balance sheets. Next, to the broader picture.

We are forced to take much on trust. The band aid put in place by the G-20, Q4, prevented a world credit meltdown, or so we are told. We believe that is true. Now we are told that firms like AIG or Citi, or GM are too big to fail. But where do we draw the line, and how? When do we say "No" to further bailouts; when do we resist further government intervention in our marketplace? Or should we? How can we become empowered? How can we acquire a handle?

Two schools of thought come to mind, residing at opposite ends of the spectrum: 1) Socialists avow gov’t ownership of productive resources. Their answer is "Always", the more the better. Most Americans reject that premise. 2) The so-called Austrian School of Economics would answer "Never", not in any circumstance. Leave the economy alone, it is self-correcting. Certainly the process of creative destruction has placed the American free market first in the world; it is that process which Treasury Sect Andrew Mellon once said means, "Liquidate labor, liquidate stocks, liquidate the farmers, liquidate real estate. It will purge the rottenness out of the system. Values will be adjusted, and enterprising people will pick up from less competent people." In other words, once the bust comes, the only cure is to let it run its course; allow the malinvestments to go bankrupt and let the market reallocate the capital to productive uses. Certainly this should apply to most portions of our economy today, our view, including the likes of GM. Anything else - simply a delay of the inevitable.

The glitch unfortunately, something neither Mellon nor the Austrian School’s von Mises nor others of this persuasion could have foreseen - the interlocking of the world’s financial/credit markets. Thus for some of these institutions (as detailed in earlier sketches) we need to bite the bullet, at least for now. But past that it is key that each and every one of us hold our legislators’ feet to the fire and say "Stop", enough is enough. First, turn these deals back to the private market as soon as possible. Next, do not nationalize resources such as medicine, energy and education; stop as soon as possible overriding contracts; above all, stop taking assets from competent people and giving them to incompetent people.

We have a right to be pissed. And we have an anchor in judging just what we will accept, and what we will not. It’s called common sense. We may not all be financial engineers nor have ever encountered a swap but so what? It is our $ being tossed around. We don’t know if we will get any of it back; our future and that of our offspring are at risk; we are darn sure fit to judge. Now is the time to draw the line and understand that it is not always better to do something than nothing, and insist that our elected officials understand likewise. That is, most interventions do more harm than good. A quick glance at economic history shows that substituting political agendas for business judgement during periods of panic is bound to fail. It never worked before and it never will.

But readers need not accept our word. A man who fought for this very thing, who championed the free market after the fall of communism, who never has taken capitalism for granted - Czech President Vaclav Klaus. Klaus said during a recent speech at Columbia Univ that massive gov’t spending in the US and tighter regulation will simply prolong the recession, and urged Obama not to endanger the free market in his response to the crisis. "I am therefore convinced that fighting for freedom and free markets, something we always appreciated here in this country (the United States), remains the task of the day," said Klaus.

Indeed it does.

Robert Craven