Let Them Fail

The Republofascists tried their hardest today to scare Congress and the American people into believing their trillion dollar tax payer funded bailout is so important that it needs immediate action.

"Action by the Congress is urgently required to stabilize the situation and avert what otherwise could be very serious consequences for our financial markets and for our economy," Bernanke said.

He's just flat wrong. The only thing urgent is that Congress take its time with this bill. This bailout cannot be a band-aid, and in its current condition Bush's bill is nothing but a temporary fix to a hugely Republican created crisis. There is no reason Congress should give this president anything. They have giving him three bailouts already this year worth hundreds of billions of dollars. They went along with his troop surge, they went along with his FISA spying powers; there is no logical reason for them to give him this bill as is. To be very frank, let the corporations fail. Who cares? If you can't manage your checkbook that's not my fault. There is no reason why the American people should assume a trillion dollars worth of bad debt just so a business can survive. It's not government's role to manage debt while nationalizing industry. At least it's not in a capitalist society.

I absolutely agree with Ron Paul on this.

I am afraid that policymakers today have not learned the lesson that prices must adjust to economic reality. The bailout of Fannie and Freddie, the purchase of AIG, and the latest multi-hundred billion dollar Treasury scheme all have one thing in common: They seek to prevent the liquidation of bad debt and worthless assets at market prices, and instead try to prop up those markets and keep those assets trading at prices far in excess of what any buyer would be willing to pay.

Additionally, the government's actions encourage moral hazard of the worst sort. Now that the precedent has been set, the likelihood of financial institutions to engage in riskier investment schemes is increased, because they now know that an investment position so overextended as to threaten the stability of the financial system will result in a government bailout and purchase of worthless, illiquid assets.

Using trillions of dollars of taxpayer money to purchase illusory short-term security, the government is actually ensuring even greater instability in the financial system in the long term.