With all the mindless market-bashing emanating from the Obama and McCain presidential campaigns, it’s nice to finally read a level-headed analysis of what’s really going on on Wall Street right now.
Russell Roberts of the Hoover Institution writes in Forbes that
The consensus is that Something Must Be Done to rein in financial markets. This consensus is part of a general theme among some pundits and economists that it’s time to give up the naïve faith that markets can solve every problem. We are told that markets have failed.
Yet much of the current chaos is the result of attempts to steer or control markets rather than let them be. Much of the chaos is the result of political failure.
He‘s right. Roberts argues that “the turmoil in the housing market and the resulting financial crisis is just the latest example of political failure.” Policy makers “wanted more home ownership than the market produces on its own, especially among low-income families.”
Of course, just about no one on Capitol Hill is listening to reason as lawmakers debate the $700 billion taxpayer-funded bailout of banks proposed by Treasury Secretary Henry Paulson, a former head of investment bank commercial bank Goldman Sachs.