Tuesday, March 11, 2008
It won’t happen though
Today's economic and financial crisis would resolve itself more quickly and efficiently if the government got out of the way. Yes, there would be pain. Some banks would fail. Others would clamp down on credit to atone for the years of lax lending standards. Homeowners-in-name-only would become renters. Housing prices would fall until speculators found value. That's not going to happen. The bigger the mess, the more urgent the calls for a government solution, the more willing government is to oblige. We want laissez-faire capitalism in good times and a government backstop against losses in bad times. It's a tough way to run an economy.