Tuesday, September 23, 2008

Ron Paul: Don’t Bail Out Wall Street & my comments


Whatever you think of Ron, I know him somewhat & met him many years ago in a private talk.
His remarks," Blame government intervention for the current economic crisis, Rep. Ron Paul, R-Texas..."

"Moreover, bailouts only exacerbate the problem, according to Paul: “Additionally, the government's actions encourage moral hazard of the worst sort. Now that the precedent has been set, the likelihood of financial institutions to engage in riskier investment schemes is increased” — meaning institutions will misbehave if they are certain of a bailout as a final means of correction.

Paul writes that the solution is a hands-off government. “Government intervention leads to distortions in the market, and government reacts to each distortion by enacting new laws and regulations, which create their own distortions, and so on ad infinitum.”

He says these bailouts do not work and ultimately taxpayers are saddled with the fallout: “Using trillions of dollars of taxpayer money to purchase illusory short-term security, the government is actually ensuring even greater instability in the financial system in the long term.”

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