This is no place

Regulation is No Alternative to Bailouts

As prognosticated, the calls for regulation in the wake of the House of Representatives refusal of the Paulson Plan have begun. Michael Moore is celebrating the houses rejection of the bill on Monday. We here at the liberty node of no place have a few objections to his interpretation of events.

First, the somewhat arbitrary, but important.

"what they didn't know was that hundreds of thousands of Americans woke up yesterday morning and decided it was time for revolt."

What Michael Moore doesn't seem to know is that this protest didn't start Monday evening. He has been so busy promoting his new movie that he didn't even get around to urging his supporters to fight this bailout until early Monday morning. Many people have been speaking out about this bailout for two weeks, spreading the word, and educating the public; groups like the Campaign for Liberty, Downsize DC, and No Cash for Trash, and all of the bloggers, activists, and individuals who spoke up and made Congress hear their voices. If the American people had waited until Monday morning to make their voices heard, we likely would be waiting for Bush to sign the bailout into law tomorrow after the Senate vote. Michael Moore may well be aware of this. Like I said, this is of lesser importance, but to preclude MM stealing any thunder from everyone who helped stop this fraud in the House, I want to point out that Americans fought hard for this and should be proud of what they accomplished.

After a bit of congratulations, MM goes into the partisan politicking:

"people are wondering why the right wing of the Republican Party joined with the left wing of the Democratic Party in voting down the thievery. Forty percent of Democrats and two-thirds of Republicans voted against the bill. ...

Here's what happened:

...The Republican reps are so scared of losing their seats, when this "financial crisis" reared its head two weeks ago, they realized they had just been handed their one and only chance to separate themselves from Bush before the election, while doing something that would make them look like they were on the side of "the people."

While this may bear some truth, It's hardly fair to cast Republicans in this cloak without sharing scorn for Democrat politics. To be fair, Michael Moore has been a vocal critic of the spinelessness of the Democrats often enough, but when they do something he approves of, for some reason there is no questioning of their motives. How quickly he forgets also that 50% more Republicans cast their lot against the bailout than Democrats, and the Democratic party leadership in the House has been pushing this scandal as hard as the Bush administration.

He goes on to describe the scene on the House floor before the voting began:

"There they were, one Republican after another who had backed the war and sunk the country into record debt, who had voted to kill every regulation that would have kept Wall Street in check -- there they were, now crying foul and standing up for the little guy!"

Again, no mention of the countless Democrats who control the Congress passing war spending bill after war spending bill.

But in that one sentence comes our greatest objection "every regulation that would have kept Wall Street in check". This is where the real education is needed. We've been trying to explain to the American people that regulation is not what is needed. Liberty minded individuals detest corporatism, as Michael Moore does, but we recognize that corporatism is not capitalism, and that corporatism is to blame for the current financial sector failures. It's well enough for left wing spokespeople to paint corporatism as capitalism and blame free markets and deregulation for all societal ills, but it simply isn't true. In fact, it's obvious that some financial sector regulations, such as Financial Account Standard 157, bear some of the responsibility for the credit crunch. The government has its hands all over this disaster, the last thing we need is more regulation, and deregulation certainly is not to blame for the current situation.

Hold on for just a moment, the non sequitors continue:

"Over 200 economists wrote to Congress and said this bill might actually WORSEN the "financial crisis" and cause even MORE of a meltdown."

While MM has never been too sympathetic to the opinions of economists when they argue against his far left political ideology, he chooses to cite them in this instance. Unfortunately, he completely ignores most of the words of those economists and their objection to the socialist aspects of the bailout, the nationalization of the financial sector. "America's dynamic and innovative private capital markets have brought the nation unparalleled prosperity. Fundamentally weakening those markets in order to calm short-run disruptions is desperately short-sighted." We understand giving private enterprise credit for anything positive is anathema to the government-should-solve-all-of-our-problems-world view, but come on! It's hardly fair, nor intellectually honest, to cite a group for their input and then argue against what they actually said!

Blame the Fed, blame easy credit, and blame Fannie and Freddie, but don't blame the free market. We don't have one. We need one, but in the last century of Federal Reserve manipulation of interest rates, government manipulation, price fixing, and moral hazard, we have seen the booms and busts of the business cycle and the pain it causes.

It's time to educate Americans on the economy: the wisdom of true free markets, and the dangers of government meddling. It truly is time to return to sound money, free markets, and renewed prosperity. You can take that to the bank.

~Canute

PS. Note the dates on those last articles linked. People who truly understand monetary policy, free market advocates, and Austrian economists have been making the same argument for years. They saw this crisis coming, and they pointed to the causes well before the housing cave-in.

Ron Paul
July 16, 2002
Ron Paul on the Housing Bubble, before Congress
http://www.ronpaul.com/2008-09-26/ron-paul-on-the-housing-bubble-july-2002/

Eric Englund
April 22, 2006
The Federal Reserve and Housing: A Cluster of Errors?
http://www.lewrockwell.com/englund/englund34.html

Ron Paul
March 19, 2007
Don't Blame the Market for Housing Bubble
http://www.house.gov/paul/tst/tst2007/tst031907.htm