Another Get Out of Jail Free Card  

Posted by LibertyCast in

First off Happy Thanksgiving to everyone!

We keep seeing the US government "bailout" or as they put it "rescue" businesses for the sake of the American economy and the foreign countries that are stakeholders in our economy, such as China. Now again we see another bailout plan, this one for Citigroup, which hit much of the news a few days ago. This bailout will be worth 20 million against predicted losses of 700K+ in the status quo. Is this fair or unfair? Right or wrong? Well a lot of this will depend on your opinion of economics and how the markets should be...

Personally I lean more in the direction of free markets; preferably laissez-faire. A free market is one free of government regulation by many interpretations. However this in itself is not entirely correct all on its own. A free market could also be one free of coercion; one free of forceful direction. Going back just for a moment Socialism/Communism have markets governed more or all by the state or government. Capitalism leans the other direction with private industry but can be handled on different levels being mixed capitalism (blend of state regulation and freedom, laissez-faire (minimal government influence), or anarcho-capitalism (no government influence).

Some disagree with free market principles, saying that in the current economic situation what would happen is that the market would consolidate with companies going away do to poor judgment and mistakes. This is absolutely true! But when many argue that this leads to monopolies because the companies left would grow larger, I disagree. Many people in educated countries know the dangers of monopolies (one being if one company owed all of one resource they could set any price no matter how high because they have no competition). Well, many would return to the support of smaller businesses and not approve of the development of monopolies because they do not want to become financially trapped.

Now, by pumping US companies with American tax-paid funds the US government is coercing companies back into their current condition before failure. This government intervention has been done without the intervention to protect its investment. Example: AIG executives going on a 400K spa retreat after getting millions from the government.

In the mortgage industry this was especially unpractical! Companies have allowed loans at high or flexible interest rates to those who could not afford them, and in return our government has given the corporations more of our money (our tax money) and leaving us with the same loans to continue to fail by. This is billions of our dollars going to what could likely be only the delay of the inevitable. This can only work with companies reforming their own policies, which may or may not happen.

And if we were to promote a fair economy why not also give American tax payers money back to them to pay for these loans that they have been trapped within? If the government would support the economic corporations should it not also support its ailing taxpayers?

Let these companies go away and give rise to new ones in their place! American citizens are not unintelligent and can avoid monopolies. Free markets for the most part are driven by the consumer because they buy they goods and services, and if we don't buy a company's goods or services then they don't make money. Consumer buying habits will determine what happens to out markets and we will buy what we want to buy.

This is only increasing our national deficit and to astounding amounts by which the government hasn't regulated to the degree in which the success they want is guaranteed, and thus is our money laid to the roulette table?

The question is do we feel lucky? I don't. Do you? Corporations have been acting on their behalf and, at least in the case of AIG, have continued to do so after assistance given to them in good faith. I am not convinced that they are going to change their habits. So they should learn from them they hard way, through their own experiences.

If they go away then let them go and make way for the new. In order to have a freer market we cannot block out competition. This is the same mannerism that creates monopolies, and even if on a larger scale it is a road of bad habits which would more than likely continue to lead us to disaster.

The deficit is huge and growing larger all the time. A good visual diagram of our economic history to now can be found here showing how it relates to the current budget. And I worry about the presidential elect, Barrack Obama, as well as he has supported the bailouts, and stated recently not to worry about the deficit for the next two years as the economy trumps the budget. I see that this risk is more of the same which will likely, in my mind, lead to same results.

We cannot afford the same constant ineffective status quo, and we need change. I hope that Barrack Obama will be more than "Change We Can Believe In", but more importantly "Change We Can Count On."

This entry was posted on Thursday, November 27, 2008 at Thursday, November 27, 2008 and is filed under . You can follow any responses to this entry through the comments feed .


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