Home > Opinion, Politics > A Political “Solution” – Thomas Sowell

A Political “Solution” – Thomas Sowell

Thomas Sowell has written two part series earlier this week called A Political “Solution” at Townhall.  [Part I | Part II].  This series deals with the recent financial crisis on Wall Street.  They are a good read, so check them out.

In Part I, I can agree with Mr Sowell on how government will do in addressing this problem:

There are times when government intervention can make things better. But that is no guarantee that it won’t make things worse. As they say, “the devil is in the details”– and we don’t know the details yet.

Probably most members of Congress don’t know the details yet– and many may still not know the details when the time comes for them to vote on this bailout.

In a way, the one who created the mess in the first place might make it worse.  In fact, Mr Sowell sees it that way:

Why then is there such a mess in the financial markets? Much of that mess is due to the very people we are now turning to for solutions– members of Congress

But as the MSM has been crying “recession” all year long, but one cannot disagree about this fact:

Ninety percent of the people on this planet would exchange their economic situation for ours in a minute. […]

The American economy is growing, not declining. Our unemployment rate is up to 6 percent but there are countries that would be delighted to get their unemployment rate down to 6 percent. Our inflation rate is up a little but many countries would love to get their inflation rate down to where ours is.

No matter how the world seems to hate our current president, thank you MSM, they would love to have our current economic situation as Mr Sowell states.  Throw this crisis out the window and the world would come here in a minute.

But as Congress attempts to address this financial crisis this past week, we hadlearned that there was a deal, or supposedly a deal, or maybe no deal when they were asked to attend a Leadership meeting with the president this past Thursday.  Although the facts of the meeting were suppose to be remain confidential and quiet, it did not go very well. Democrats run to the MSM to tell us that it was McCain and House GOP fault.  But, was it?  Check it out here. Yet, one must realize something that Mr Sowell points out in Part II prior this meeting:

The longer it takes Congress to pass the bailout bill, the more of those goodies are going to find their way into the legislation. Speed is important, not just to protect the financial markets but to protect the taxpayers from having more of their hard-earned money squandered by politicians.

This is probably greatest reason why the House GOP opposes what was discussed in theThursday meeting. By standing by principle, they are attacked by the Democrats as the bad guys. So, why can the Democrats not pass their bill since they have the votes to do it? The answer: protection from you and me. If this plan fails, the Democrats want some cover.

In going further in his Part II piece, Mr Sowell provides us with some historical hindsight on addressing this financial crisis:

The real point is to avoid a major contraction of credit that could cause major downturns in output and employment, ruining millions of people, far beyond the financial institutions involved. If it was just a question of the financial institutions themselves, they could be left to sink or swim. But it is not.

We do not need a replay of the Great Depression of the 1930s, when the failure of thousands of banks meant a drastic reduction of credit– and therefore a drastic reduction of the demand needed to keep production going and millions of people employed.

But bailing out people who made ill-advised mortgages makes no more sense that bailing out people who lost their life savings in Las Vegas casinos. It makes political sense only to people like Senator Dodd, who are among the reasons for the financial mess in the first place.

People usually stop making ill-advised decisions when they are forced to face the consequences of those decisions, not when politicians come to their rescue and make the taxpayers pay for decisions that the taxpayers had nothing to do with.

The Wall Street Journal, which has for years been sounding the alarm about the riskiness of Fannie Mae and Freddie Mac, recently cited Senator Christopher Dodd along with Senator Charles Schumer and Congressman Barney Frank among those on Capitol Hill who have been “shilling” for these financial institutions, downplaying the risks and opposing attempts to restrict their free-wheeling role in the mortgage market.

In the end, maybe if one would take responsibility for one’s action we would not have this mess. Congress is not standing up to their responsibility in this matter, so maybe we need to be responsible and elect people who will this fall.

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