tag:blogger.com,1999:blog-38479691.post5777973037606357236..comments2023-11-05T01:35:10.419-06:00Comments on The Travis Monitor: What McCain should say on Fixing Financial SystemRandy Samuelsonhttp://www.blogger.com/profile/05422806680210032661noreply@blogger.comBlogger4125tag:blogger.com,1999:blog-38479691.post-42744813280849895992008-09-18T00:16:00.000-05:002008-09-18T00:16:00.000-05:00http://www.redstate.com/diaries/rod_patrick/2008/s...http://www.redstate.com/diaries/rod_patrick/2008/sep/17/corsis-article-mccain-was-right-since-2005/Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-38479691.post-85530624632492607882008-09-17T18:49:00.000-05:002008-09-17T18:49:00.000-05:00I disagree that the Panic of 1907 was induced by t...I disagree that the Panic of 1907 was induced by the earthquake, though I learned what you wrote when majoring in economics at Texas A&M. The textbooks were written by keynesians and other variations of fabian socialists. I do not agree with what I was taught then.<BR/><BR/> By the time of the Panic of 1907, currency legislation had already been passed such as the Gold Standard Act. Moreover, the financial sector was already heavily regulated. I believe that the panic was caused by the Treasury Department's inflationary policies the 2 years prior to the Panic. And, as government always does, after it screws something up through regulation and command and control economics, it calls for more power to do the same, just as it is doing now.<BR/><BR/>To me the basic problem is an age old one. Man, since Eden, has always wanted to be as a god. We think that we can avoid the consequences of the reality of this world which was created by the one, true God by defying economic truths through manipulation of markets. The Bible warns repeatedly against long term debt and inflation and gives the consequences of violating His law on that issue--enslavement.<BR/><BR/>The actions of the government in nationalizing AIG, Fannie Mae and Freddie Mac, etc., are further emptying the coffers (which, essentially contain only iou's anyway), destroying the assets of the people and indebting us and your children for generations.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-38479691.post-25346415409410275292008-09-17T15:22:00.000-05:002008-09-17T15:22:00.000-05:00Honestly, the statement "you cant there from here"...Honestly, the statement "you cant there from here" that Vermont Yankees use comes to mind. While I dont disagree with some of your points, the fact is that the crisis will not be solved, nor will we get back on track, by ending 'centralized management of money'. We cant get there (total privatized money system) from here, any more than we could just abolish the EPA, FBI or DOE.<BR/><BR/>The panic of 1906, induced by the San Fran earthquake was ended when one private man JP Morgan stepped in. Its quite possible that the whole credit system could collapse if there is no private lender of last resort to stabilize the system. <BR/>The current Fed-based system has since 1913 been that last resort - the ONE TIME THE FED IS NEEDED is times like now. In 1930, the Fed refused to help Bank of New York from collapsing - the rest, as they say, is history.<BR/><BR/>Also, Paulson is trying his best to step lightly. That's why he did NOT save Lehman and the Bear Stearns was a private takeover but with Fed backing.<BR/><BR/>The Federal Reserve has ONE ESSENTIAL ROLE: Keep the money supply and credit system stable and orderly. If they can do that, then we might still have bankruptcies, bull and bear markets, and credit cycles, but we should not have credit market meltdowns and financial system shutdowns. When Panics Happen, the Fed needs to make sure the adjustments are made in an orderly manner and keep the systemic risk to a minimum.<BR/><BR/><BR/>... "Government intervention and manipulation skews and causes underestimation of risks" - TRUE, but much of that was for example in Govt CRA rules, Govt non-oversight of Fannie Mae.<BR/><BR/>McCain will not deliver laissez faire nor deregulation, but I think he could at least get us to clean up the mis-regulation that is going on.<BR/><BR/>Also, your point speaks to the 'moral hazard' issue. Every bailout makes the next bailout more likely. We 'solve' that by locking down credit rules and bringing these credit derivatives to the light of day.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-38479691.post-22061794953343730012008-09-17T09:38:00.000-05:002008-09-17T09:38:00.000-05:00What McCain needs to say is that we are seeing the...What McCain needs to say is that we are seeing the perils of easy credit and the culmination of 70 years of teaching keynesian "economics" and both need to stop. It is appalling that politicians who have bought into the centralized management of money, thereby creating the conditions and incentives for high risk behavior, now demonize the markets without looking at the evils of government intervention. This is like Hoover calling the markets evil while instituting policies which made the situation worse.<BR/><BR/>Furthermore, Paulson is using the Constitution to blow his nose as he interferes with the bankruptcy courts and stomps all over the separation of powers provisions. In fact it's worse than that. The people taking these actions are not even elected. If anyone thinks all this will help, they are mistaken. The problem will be compounded and more people will be roped into and hurt by the inevitable market corrections.<BR/><BR/>Government intervention and manipulation skews and causes underestimation of risks--which is exactly what happened here. By demonizing those in the markets, McCain is ignoring the mote in the government's eye and focusing on specks.Anonymousnoreply@blogger.com