[Tactitus]

Originally Posted by Tietäjä

I'm aware of my giant self-revision. It's a result of acknowledging that your views on markets clearing perfect and invisible hand taking care of it all, and private sector fundamentally being corruption-free and regulation being source of it's flaws is impenetrable.

Only two questions.

First, you imply that financial markets worked well before bailout mechanics and government interventions. Do you think say 1907 was a signal of this well-functioning healthy financial sector (back then, there was no regulatory system in place, let alone a federal reserve).

I didn't say they always worked well, I just said they always worked (in the sense that, sooner or later, they always sorted themselves out). There have been recessions for as long as there have been markets.

The question isn't whether markets always work well or are always free of corruption (because they don't and aren't) but whether the alternative is better. Is government any better at sorting out market failures than the market is? Or in somehow preventing those failures in the first place? In my opinion and experience, I'd have to say no.

Second, could you direct me to a few of these academics (preferably ones with some creditentials) that argue that bailouts of Freddie Mac and Fannie May were mistakes, or argue that they should have never happened?

I was mostly referring to this letter signed by over 200 economists in various universities around the country and sent to Congress in September 2008 in opposition to the bailout then under consideration. It got a bit of attention here in the U.S. but maybe not elsewhere.

I don't know if you consider a professorship of economics as an acceptable credential, but their names and institutions are listed and you can decide for yourself.

Originally Posted by JonnyBGood

I like how Tactitus speaks of "powerful interests". "Powerful interests" rarely ever get hurt in any end-of-the-line fashion. Because they're powerful. The ones who get hurt are the ones who aren't powerful. This is why people accept bailouts. Because they believe that sooner or later they end up jobless and on a bread line wondering what the **** they did wrong and it's easier to pay an extra 1% of your income in tax and avoid that.

I suspect many people may have believed that last year but I think a lot fewer people believe it now that they've seen where the TARP and 'stimulus' monies have gone. 90% of the TARP funds went to bail out the banks and the car companies (read: the United Auto Workers Union). If they don't think that banks + UAW spells "powerful interests" then I've got two car companies and a bridge in Brooklyn I'd like to sell them.

6.5 million Americans have lost their jobs since last September (and more to follow). These are people who did not and will not get a bailout. Paying additional money for "bailout insurance" might be a reasonable option as long as you believe your employer will be bailed out when needed; but as more and more people don't get bailed out then it doesn't look nearly so attractive.