Less than smooth sailing

A report was recently released that August had the highest unemployment rating in the past five years. Our unemployment rating is at a whopping 6.1%, numbers that most of Europe would kill to have. In real numbers, some 84,000 people lost their jobs last month. The markets tanked yesterday on the news, with the Dow falling by more than 300 points in one day.

That's not all that's going on, either. Mortgage foreclosures are increasing in some areas. Fed analysts have speculated that tightened credit will weigh on the economy for the next few quarters. (I'm sure that ARM rates increasing won't have any effect on that whatsoever, either. Thank you, Federal Reserve chairman (retired) Alan Greenspan.) With the rise in foreclosures, banks are borrowing more money from the Federal Reserve to make up for what's not coming back in as payments, hoping to forestall another closure like the one we saw last Friday. That was the tenth so far this year alone, with 117--pardon, 116, now--on the danger list.

Most, if not all, of this is the Federal Reserve's fault. Most, if not all, stems from Alan Greenspan's faulty attempts to prevent inflation. What is the Federal Reserve? A branch of the government. What's Alan Greenspan think is the best way to fix the problem? More government intervention, of course. He proposes that congress create another branch to bail out troubled business that are big enough to sink the economy when they go down. He doesn't think using the Federal Reserve as a "magical piggy bank" is a good idea.

I agree that the Fed shouldn't be bailing out the businesses that are on the verge of collapse. However, I disagree that the government should. First of all, nowhere in the constitution does it give the federal government the right or responsibility to bail out failed businesses. Second, and just as important, it was government intervention, through the offices of the Fed that got us into this mess in the first place. The government needs to let the market self-correct. Yeah, it'll hurt. In the short term. In the long term, however, I think it'll hurt far fewer people far less than increased government intervention will in the long term.

Don't believe me? Take a look at other, failed, command economies, like the Soviet Union.

Update: This is the wrong thing to do.