Friday, September 26, 2008

Economic meltdown: Just let the markets crash? Is that such a bad idea?

I have to admit to some unpopular opinions in regard to this piece. I'm on the side of the "some House Republicans" referred to here. I work two jobs and barely make $40K doing so, so I'm not sitting in an ivory tower here either. I understand that a market contraction of the size implied here would be devastating.

I also recognize, though, that not allowing the market to contract will be more devastating in the long run. First, from what I know, the market is "contracting" because it has been artificially inflated through lending of way too much credit; so this sort of contraction is inevitable. All Congress would be doing here is giving $700 billion of tax-payer money to the same agents responsible for the crisis we're facing, with few strings attached. There go even more social programs, etc. into Wall Street's gluttonous maw.

Even more importantly though is that the current program of economic growth uber alles is what is threatening the very survival of humanity or at least of civilization as we know it, in terms of resource depletion and global warming.

A crash would not be pleasant to anyone, although the poorest among us would probably feel it least, ironically, having endured privation in the midst of the economic "boom" of the last few decades. But it might give us a chance to start anew, and approach our economies more wisely, with people and the planet in mind.

A tenuous agreement on a bailout plan for Wall Street that had been reached Thursday morning was threatening to fall apart by the time evening had arrived. At fault, it became clear, was a divided Republican Party within the House of Representatives, whose leadership begrudgingly favored the $700 billion bailout but whose ardently conservative members were balking at the idea.

Things grew so heated within the caucus, the Politico reported, that "some House Republicans are saying privately that they'd rather 'let the markets crash' than sign on to a massive bailout."

One GOP lawmaker, referring to his defiant colleagues, asked rhetorically: "For the sake of the altar of the free market system, do you accept a Great Depression?"

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