Two interesting stories on facing pages of the Review-Journal today. <\/p>\n
On page 9A, Kevin G. Hall of McClatchy Newspapers reminds us \u201cStock prices reflect future expectations about the U.S. economy, so the continuing avalanche on Wall Street signals tough times ahead. … The Federal Reserve has shoveled bout $800 billion in short-term loans into banks and other financial firms since March to keep the banking system functioning. Yet it hasn\u2019t been enough.\u201d <\/p>\n
Meantime, on page 8A, The Washington Post quotes Bart Bennett, chief of equity trading at Memphis-based Morgan Keegan, saying \u201cEveryone applauds (the government\u2019s efforts.) The fearful part is that nothing has taken hold. None of it seems to stop the free fall in the market.\u201d <\/p>\n
In the paragraph immediately following this quoted remark, a whole bevy of Post economic reporters combine their efforts to explain: \u201cThe problem seems to be that many of the government actions, such as the $700 billion bailout passed a week ago, take time to go into effect.\u201d <\/p>\n
Really? But didn\u2019t Mr. Hall of McClatchy just remind us that these \u201cbailouts\u201d have been going on since March? Hadn\u2019t Bailout Ben Bernanke and Shifty Paulson of the Treasury already poured $800 billion of taxpayer funds into these \u201cfixes\u201d over the past seven months, before they went to Congress, threatening martial law and a shutdown of the entire banking system if Congress didn\u2019t OK another $700 billion? Why won\u2019t they tell us how long they DO take to work? <\/p>\n
In fact, if Mr. Hall is correct when he states, \u201cStock prices reflect future expectations about the U.S. economy,\u201d and the common consensus among investors was that these new infusions of still-wet-from-the-printing-presses cash and credit were going to fix things, shouldn\u2019t the market now be rising in ANTICIPATION of the proven effects of these \u201cbailouts?\u201d <\/p>\n
In fact, this is like saying \u201cThe problem seems to be that sacrificing young virgins to the volcano god takes time to have an effect,\u201d or \u201cClearly the number of virgins sacrificed is still not adequate. How many more you got?\u201d <\/p>\n
No. When your problem is a bubble caused by the reckless expansion of the credit and money supply, \u201cpumping in more liquidity\u201d doesn\u2019t work any better than tossing screaming young girls into the volcano. <\/p>\n
It\u2019s also standard policy for any responsible newspaper or news service to follow a direct quote from a hand-picked expert, declaring \u201cThe world is flat,\u201d by inserting a sentence to the effect that \u201cMost experts still agree the world is a sphere.\u201d <\/p>\n
So why didn\u2019t the Post reporters follow Mr. Barnett\u2019s statement that \u201cEveryone applauds (the government efforts)\u201d by pointing out this is clearly not so? <\/p>\n
Congressman Ron Paul, who came in second in Nevada\u2019s GOP primary last winter, who has been right about fiat currency, the Federal Reserve, and the inflationary credit bubble for years, articulately condemned the latest \u201cbailout\u201d on the floor of the House on Oct. 3. See it for yourself at http:\/\/nalert.blogspot.com\/2008\/10\/ron-paul-warns-of-bailout-will-lead-to.html . <\/p>\n
\u201cThe bailout will set back the economy\u2019s recovery,\u201d current Libertarian presidential candidate Bob Barr said two days later, on Oct. 5. \u201cIt tosses good money after bad. It also punishes companies that attempt to work through their problems without taxpayer largesse. Now only a fool will take tough steps to clean up his firm\u2019s balance sheet. Instead, they will put in a call to Treasury Secretary Henry Paulson to ask for help. Moreover, Congress is creating a bailout culture. No matter how foolish or irresponsible a borrower, lender, or investor may be, they can count on the government to bail them out. <\/p>\n
\u201cCongress already has approved money for the automakers,\u201d the former Georgia congressman pointed out. \u201cHow long before other industries begin lining up in Washington with their hands outstretched? Congress will have no good argument to use in saying \u2018no.\u2019 Finally, who will bail out Washington when the government can no longer pay its bills? What happens when the Chinese stop buying America\u2019s debt? If Uncle Sam can\u2019t learn to say \u2018no,\u2019 the entire financial house of cards will soon collapse.\u201d <\/p>\n
Does that sound to you like \u201cEveryone applauds (the government efforts)\u201d? <\/p>\n
The only reason Ludwig von Mises, Friedrich Hayek, and Murray Rothbard aren\u2019t hooting up a storm at such idiocy is that they\u2019re blissfully dead. <\/p>\n
F. Hayek does return from the grave with a spookily on-target analysis of what these geniuses are up to, though, in my Oct. 3 post on this site, in case you missed it. <\/p>\n
Happy Halloween. <\/p>\n","protected":false},"excerpt":{"rendered":"
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