Not Worried About Short Term Effects
The most irritating comments I hear about the financial crisis are along the lines of 'having to do something', or 'needing to minimize the pain'. I'm seeing through that rhetoric for what it is, and calling it out as dangerous.
Needing to minimize whose pain? I have come to believe that for the President and lawmakers like Barney Frank, John McCain, Barack Obama, Nancy Pelosi, and Dick Lugar, it's all about not having a deep recession happen on their immediate watch. That's exactly the problem. Forestalling what needs to happen only will beget a bigger problem- later.
These bad loans are nearly worthless assets. They have been overvalued for far too long. They should be valued as worthless or nearly worthless. Those who gave out these loans should be losing their asses. Those who took loans they couldn't pay back should be losing their homes. Politicians who encouraged the Federal Reserve to endlessly print money or borrow severly from China and Russia deserve to have a crash happen on their watch. This is actual economic and social justice. Prolonging the necessary means that it will be worse later. Want a depression? Promote a new bailout package.
The market is making correction- as it should. Propping up prices means artificially making things appear to be worth more than they are. That's what Bush, Frank, et al want us to do. This is why I am so pleased that so many members of the House voted against the bailout. It's senseless. It does not have to happen. It is sane that it does not.