Timotheus has got it exactly right. This is the perfect storm of politics and problems – a recipe for wrongheaded government action. Like Timotheus, I have no doubt that the financial problems are real and will hurt the economy. I don’t want to diminish the very real hurt that will likely come.
Still, it seems as though conservatives like us – defenders of the free market principles that have built and sustained this country for almost two and half centuries – should not so quickly abandon our principles in the face of adversity. Indeed, it is when the call for government action into markets is so strong that we need to be most resolute. I could cite numerous sources of economists and other market watchers who can place the blame squarely on bad government policy – government incentives to lend to undeserving borrowers. Yet politicians think that more government is the answer, while doing nothing to address the underlying bad government policies.
Unfortunately, many elected officials can only see the expediency of the next election. These are the same people that have allowed the budget to bloat beyond control. They see the vote for the “bail-out” as their ticket to re-election – a way to show constitutents that they were “doing something.” That kind of “doing something” is the kind of good intentions that lead to one of those four letter words.