AP article: Bush says anxiety feeding market instability

Of course anxiety is feeding market instability.  But what is feeding the anxiety?  That is the million dollar question.  If someone was on “Who Wants to Be a Millionaire” and needed to phone a friend for the answer to this question, I would recommend that they just pick a taxpaying American citizen (virtually any taxpaying citizen) to be their lifeline.  Anxiety is feeding market instability.  Government is feeding the anxiety.

People are experiencing high levels of anxiety because their representatives, the people sent to Washington to actually REPRESENT them, in large part voted for this $850 billion bailout despite receiving an overwhelming barrage of letters and phone calls from their constituents urging them to do just the opposite.  Now, people are freaking out about the market, and they are freaking out because they are afraid government is out of control (which it is).

In the article referenced at the beginning of this blog post, Terrence Hunt writes, “President Bush said Friday that the government’s financial rescue plan was aggressive enough and big enough to work, but would take time to fully kick in.”

President Bush is wrong here.  Things may get sorted out eventually, but the reason everything seems to be going to hell in a hand-basket right now is directly because of how aggressive and big this financial “rescue” plan is.  Congress, the one branch put in place to give the people a true voice in government, shirked its most important duty and did exactly the opposite of what people wanted.

So, yeah, anxiety is now feeding the market instability.  Remember when the House voted down the first bailout proposal?  The market saw a dramatic drop, and people freaked out.  But what happened the next day?  It stabilized, and I think it may have actually gone up a little.  At the very least, it didn’t keep plummeting.  What has happened since both the Senate and the House passed the bailout proposal?  The market has continued to drop day after day after day, and now it has actually crashed for the first time since 1987.

Think this anxiety is going away anytime soon?  Think again.

Under capitalism, the free market has to be allowed to work. People and businesses have to be allowed to fail. Mother Government can’t come in and save the day by using taxpayer money to bail out people and businesses just because it hurts to see this failure. When businesses fail, a hole in the market is left behind. That hole will eventually be filled by some other business who is likely performing the same function and very well might even employ many of the same people who worked at the failed business.

I believe the same thing applies to failed mortgages. I hate that people are losing their homes, but that isn’t my fault and it isn’t your fault. We shouldn’t have to pay for the mortgages that couldn’t be covered by those who owned them.  Personal responsibility needs to be the theme of these times.  If there are consequences people must face as a result of their irresponsibility or ignorance, then they must be allowed to face them.

What will happen? Well, the market might struggle quite a bit (though, now it looks like that was going to happen with or without a bailout). Housing prices and values may drop significantly. But here’s the thing. They will likely drop to a rate to where average people can start buying homes again.

That, in my opinion, is where a lot of this got out of hand. Everything has been overinflated for so long that it has just been accepted that this how things are supposed to be. The market is down to below 9,000 for the first time in 4 or 5 years, and people are freaking out. What does this mean for the average person? Investments may be struggling a bit and that can hurt, but, otherwise, not a whole lot. Life will go on. And maybe with corrections in the market, life will become more affordable again.

But that likely won’t even be given a chance to work … at least not under the leadership of either of the two main presidential candidates.  They do not seem interested in allowing the free market to do its thing.

Even if this mortgage buyout WAS a good idea in theory, the federal government is one of the worst managed “businesses” in history. Do you really trust them to not bungle up a mortgage buyout? I guarantee that once all of those mortgages are bought up, we’ll just see some other huge mess as a result of it that will cost billions and billions more. Things NEVER run as smoothly as the government tells us they will.

As radio talk show host Phil Valentine always says, “The government should only do what the private sector cannot, will not, or should not do.” The federal government should protect us from foreign enemies and domestic violence. The government should not try to control the economy—at least not on the micromanagement level of owning and controlling businesses. The economy’s ups and downs should be a result of the free market being allowed to work.

But that’s just my opinion.

Umm, yeah, so when the stock market plummeted following the failure to pass the $700 billion bailout proposal in the House, weren’t we told that it was directly because of the House’s vote?  So, now that the Senate and the House have both passed the new bailout proposal (which includes an extra $100 billion in pork spending so that it can now be called an $800 billion rescue proposal instead of a $700 billion bailout proposal—try to follow that logic), and the market has crashed today nearly as badly, what exactly are we to glean from this bit of news?

Is this just a case of “damned if you do and damned if you don’t?”

If it is, I sure wish they had stuck with “don’t.”

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