an unconventional view on the economy

Yeah, it comes from the Ayn Rand people. If that means you won't read it, fine.

Misrepresenting “How We Arrived at This Moment”

By Alex Epstein

What must be done to recover from this financial crisis? Barack Obama rightly stresses that we first must understand how today’s problems emerged. It is “only by understanding how we arrived at this moment that we’ll be able to lift ourselves out of this predicament."

Unfortunately, Obama (along with most of the Washington establishment) has created only misunderstanding. In calling for a massive increase in government control over the economy, he has evaded the mountain of evidence implicating the government.

For example, Obama’s core explanation of all the destructive behavior leading up to today’s crisis is that the market was too free. But the market that led to today’s crisis was systematically manipulated by government. Fact: this decade saw drastic attempts by the government to control the housing and financial markets--via a Federal Reserve that cut interest rates to all-time lows, and via a gigantic increase in Fannie Mae and Freddie Mac’s size and influence. Fact: through these entities, the government sought to “stimulate the economy” and promote homeownership (sound familiar?) by artificially extending cheap credit to home-buyers. Fact: most of the (very few) economists who actually predicted the financial crisis blame Fed policy or housing policy for inflating a bubble that was bound to collapse.

How does all this evidence factor into Obama’s understanding of “how we arrived at this moment”? It doesn’t. Not once, during the solemn 52 minutes and 5,902 words of his speech to Congress did he mention the Fed, Fannie, or Freddie. Not once did he suggest that government manipulation of markets could have any possible role in the present crisis. He just went full steam ahead and called for more spending, more intervention, and more government housing programs as the solution.

But a genuine explanation of the financial crisis must take into account all the facts. What role did the Fed play? What about Fannie and Freddie? To be sure, some companies and CEOs seem to have made irrational business decisions. Was the primary cause “greed,” as so many claim--and what does this even mean? Or was the primary cause government intervention like artificially low interest rates, which distorted economic decision-making and encouraged less competent and more reckless companies and CEOs while marginalizing and paralyzing the more competent ones?

Entertaining such questions would also mean considering the idea that the fundamental solution to our problems is to disentangle the government from the markets to prevent future manipulation. It would mean considering pro-free-market remedies such as letting banks foreclose, letting prices reach market levels, letting bad banks fail, dismantling Fannie and Freddie, ending bailout promises, and getting rid of the Fed’s power to manipulate interest rates.

But it is not genuine understanding the administration seeks. For them, the wisdom and necessity of previous government intervention is self-evident; no matter the contrary evidence, the crisis can only have been caused by insufficient government intervention. Besides, they are too busy following Obama’s chief of staff’s dictum, “Never let a serious crisis go to waste,” by proposing a virtual takeover of not only financial markets, but also the problem-riddled energy and health-care markets--which, they conveniently ignore, are also already among the most government-controlled in the economy.

While Obama has not sought a real explanation of today’s economic problems, Americans should. Otherwise, we will simply swallow “solutions” that dogmatically assume the free market got us here--namely, Obama’s plans to swamp this country in an ocean of government debt, government controls, and government make-work projects. But alternative, free-market explanations for the crisis do exist--ones that consider the inconvenient facts Washington ignores--and every American should seek to understand them.

Those who do will likely end up telling our leaders to stop saying “Yes, we can” to each new proposal for expanding government power, and start saying “Yes, you can” to Americans who seek to exercise their right to produce and trade on a free market.
http://www.aynrand.org/site/News2?page=NewsArticle&id=22999&news_iv_ctrl=1021

I once spent $1,500 to study this drivel.

Excellent article - thanks for posting it.

It's a shame that the President isn't the "post-partisan" leader he was marketed as during the campaign. One of the first things he should have done after his inauguration was to call for a 9/11 Commission-style, bi-partisan Commission to dig into what happened and how to avert another occurance. Of course Chris Dodd and Barney Frank would reject this idea because they would come out of it looking very bad - along with a lot of Republicans as well.

While the President and Congress adeptly keep the focus on "greedy bankers" they avert attention to the government's failure (pushing banks to lower their lending standards, Fannie and Freddie, etc.). And, as the article rightly points out, nothing will come of the reforms the Obama Administration puts forth as long as the philosophy that the government is the solution thrives.

We need Obama and the gov to change our diapers!

Politicians created these problems and dammit, politicians will fix them...........

Another person who blames the bank's lending practices on the government while failing to point out how exactly the government forces anyone to loan anything to anyone else.


And then he calls it "all of this evidence" - what fucking evidence are you talking about?

That writer seems retarded.

Top 10 Corporate PAC Contributors:

Obama:
Goldman Sachs $739,521

UBS AG $419,550

Lehman Brothers $391,774

Citigroup Inc $492,548

Morgan Stanley $341,380

Latham & Watkins $328,879

Google Inc $487,355

JPMorgan Chase & Co $475,112

Sidley Austin LLP $370,916

Skadden, Arps et al $360,409


you're right SJ, banks and politicians have no correlation....

What we have here is another FAILURE to point out EXACTLY how the government forces ANYONE to loan ANYTHING to ANYONE ELSE.

Anyone else wanna try?

Doubt it !

It's not so much force as it is encouragement.

If only that debate had been canceled so you could gone to Washington to fix the problem.

Pretty sad another blame the mortgage holders. Lets leave out the massive cash grabs on wall street. Fucking sad.

Atlas Farted.

Ler's depend on Chris Dodd and Charlie Rangel to fix this mess...we know they wouldn't do anything wrong

Yeah, because encouragement is all it takes for otherwise reasonable people to make horrendously retarded business decisions.
The financiers greed had nothing to do with any of this.

Ayn Rand's writings are the babbling of a fucking idiot.

The Federal reserve sets interest rates. By keeping the cost of money artificially low, it encourages more and more speculation and risk taking. Virtually every business cycle in this country's history has been brought on by loose credit.

Everyone understands that there are unscrupulous people in the private and financial sectors who abuse the system. That is why we have rules and accept government's role in regulating economic activity. What is hard to understand is why government, an entity we trust with regulation because we assume it knows better, would deliberately pursue policies that would encourage risky behavior in the business sector.

Before you go off on Republicans, try to find a Democrat that hs ever castigated the Fed for holding the interest rate too low.

No thanks , Alan Greenspan did enough for us the last 8 years.

Thanks for a stupid response.

Low interest rates?

You're blaming this on low interest rates?

Your "encouragement" post was so intelligent, I just couldn't compete.

You are a fool and a faggot.

Actually, artificially low interest rates were a contributing factor to the housing mess and (for failure of a better word) "encouraged" loan activity.

But there's plenty of blame to be passed to other factors....Gramm, Leach, and Bliley to name a few. If anyone has the opportunity to read "American Theocracy" (Kevin Phillips), the third section of the book does a great job dissecting the economic problems...and was published three whole years ago.

You are unoriginal and unintelligent.

And you're a commie, Mao.

:2thumbs::2thumbs: