Over-stimulation?

One of the mantras of the 'politically conservative' movement is that the government should not intervene in the economy.  

It just doesn't work, they say, the government can't really impact the marketplace in a significant fashion.

Of course, they also say "Let the market run itself, let it be efficient and the whole of society will get richer."  Or at least, "we" will.

The result of the latter ideology is now plain to see.  The deregulation of the financial markets has let to a housing bubble, multiple bankruptcies, a mortgage crisis, a credit crunch, a massive recession and the loss of trillions of dollars in the worth of pensions funds and other savings all over the world.

If the need for regulation and government oversight is not obvious now, it will never be.  The housing bubble led to massive profits, with the accompanying massive salaries and bonuses for the people who 'made' those profits.  They invented new ways to sell debt, and at the same time, new ways to disguise bad debt. 

I don't believe for a second that they didn't see the crash coming.  They took the money and held their noses, averted their eyes, buried their ethical and moral compasses.  

No one else was looking.  That has to change.

I also have to comment on the wailing in the financial community over the fact that they can't reap the same bonuses as before, especially from government bailout money.  They won't be able to retain their 'talent'.  Well, since that's the same talent that sunk the ship in the first place, I say good riddance.  Let the talent find something else to do, perhaps even try to produce something of real value.  

Now back to the first statement.  Government intervention doesn't work.  Yes, just like government regulation isn't necessary.    Right.

Of course, the bailout money for the banks was unseemly, especially in light of those salaries and bonuses.  But the market economy is based on confidence, and lettting the banks fail would have crushed that confidence completely, I suppose.  

The bailouts of GM and Chrysler were harder to swallow.  Capitalism after all is supposed to punish failure, not reward it.

However, it is difficult to blame the Obama administration for the intervention at the time.  Confidence was extremely fragile at the time.  It seems now the early bailouts for the car companies were simple a way to bide time, to prepare the American public for the news that these two institutions would have to go bankrupt, sooner or later.

As for the Obama economic stimulation package, there was little choice as well.

One can criticize the details, wasteful spending, silly projects, etc.  but Obama was constrained by two major points.

1.  The package needed to be big.  A smaller monetary amount would have been like trying to dig a tunnel with a spoon.

2.  He needed to act fast.  It is not possible to micro-manage each item in the package, nor to achieve the consensus of congress and the senate on each item.

Certainly, there will be abuses of all that money.  And future generations will pay.

But that is the fault of those who created the crisis.  The deregulators.  The tax-cutters.  The war-starters.  The morally bankrupt. 

History will judge the effectiveness of Obama's efforts to pull America out of this abyss.  But one certainly cannot question his resolve.