Calmer voices amid scare-tactic fearmongers

Quality commentary on the bailout:

Bankruptcy, not bailout, is the right answer

It makes me sick when people lay the current financial crisis at the feet of deregulation, ignoring government’s hand in the creation of this economic Frankenstein’s monster. From the article:

This bailout was a terrible idea. Here’s why.

The current
mess would never have occurred in the absence of ill-conceived federal
policies. The federal government chartered Fannie Mae in 1938 and
Freddie Mac in 1970; these two mortgage lending institutions are at the
center of the crisis. The government implicitly promised these
institutions that it would make good on their debts, so Fannie and
Freddie took on huge amounts of excessive risk.

Worse, beginning
in 1977 and even more in the 1990s and the early part of this century,
Congress pushed mortgage lenders and Fannie/Freddie to expand subprime
lending. The industry was happy to oblige, given the implicit promise
of federal backing, and subprime lending soared.

This subprime
lending was more than a minor relaxation of existing credit guidelines.
This lending was a wholesale abandonment of reasonable lending
practices in which borrowers with poor credit characteristics got
mortgages they were ill-equipped to handle.

I’ll tie this back into the debate from Friday–I’ve rarely heard so many things of which I need to be fearful. If you swallowed the debate hook, line and sinker you’d probably believe we’re on the brink of another cold war with Russia, that the economy is going to grind to a complete halt, that we should be scared out of our pants over Iran, etc., etc., etc.

Thank goodness there are people keeping a cool head in the midst of the “whatever works” school of campaigning and governing (see, e.g., fear). I know I’m going far afield here but I’ll bring it back quickly. Take a look at September’s Cato Unbound topic on responsible psychoactive drug use (brilliant discussion that I would be happy to drive traffic to). It drives me crazy that people believe it is legitimate for government to provide misleading or inaccurate information for the purpose of achieving a public policy goal.

I think it OK (meaning not unconstitutional and not outrageous if the
majority want it) for the government to promote health and well being
through public health campaigns that seek to change behavior,
particularly when the campaigns are directed toward youth. I generally
prefer for such campaigns to achieve their ends simply by providing
accurate information, but acknowledge that sometimes appealing to
emotions or providing only selective information is more effective at
changing behavior.

Don’t misunderstand the author here . . . “selective” information is merely a euphemism for lying to the public. It’s “spin” (with all the negative connotations that implies) . . . “technical” accuracy leading to inaccurate conclusions based on the knowledge of how people will interpret provided data from a “trusted” source.

Translate that into any topic . . . the economy? The War on Terror? I don’t know that all slippery slopes have the same grade, but when it comes to information we receive from our government, we seem to be pretty far down a pretty slippery slope already. I understand national security, which is to say that it is a legitimate reason to potentially withhold information, but it has been so misused over the last several decades even there it seems there is little reason to trust what we are being told.

So I take these dire warnings from Paulson in late-night meetings to Congressional leaders with much less credibility than perhaps others are. But let’s stop teasing Wall Street with a big government bailout, and let them get about the task of picking up their pieces. It can be done. We’ve seen them do it. But they’re going to drag their feet as long as there is the promise of free money out there. No reason to bite the bullet if you might get a Get Out of Jail Free tomorrow, right?