Doing Nothing is Not an Option
Tens of millions, perhaps billions, of people are taking action today. Some are buying books in order to better understand this situation. Some are watching the news. Some are reading this blog. Some are buying stocks on the dead cat bounce. Some are husbanding cash in anticipation of future needs such as payroll. I am sure some are taking the advice of Dr. Doom and moving out of dollar denominated assets. Schiff was unequivocal in part two of this interveiew on Australian Television. (Part One). Some are taking the action of observing the situation and orienting themselves to it as part of their own personal OODA loops.
I agree with Congressman Hoyer, "doing nothing is not an option". Millions and billions of actions need to be taken in order to unwind the mal-investments caused by 15 years of US government manipulation in the credit and housing markets.
I disagree with Congressman Hoyer. Doing nothing is an option; for the US Government. Beyond getting out of the way, enforcing contracts, and prosecuting fraud, there is nothing useful the government can do. If Ken Lay can go to jail for cooking the Enron books, then so can Franklin Raines and Daniel Mudd.
The primary and fatal conceit of Secretary Paulson, Chairman Bernanke, and Congressman Hoyer is that their brains can hold enough information regarding the trillions of daily human interactions of a market that they can then select the optimal action.
There is a lot of action going on to right this economic ship. The problem for Paulson, Bernanke, Hoyer and their bankster pals is that very little of that action is government action. Without government action banksters are unlikely to make it to the life boats as the economic ship lists right over them while righting itself through billions of individual, human action in the highly regulated US market and in the much more regulated world markets. (Contrary to propaganda the US is not a free market, but a less regulated market)
The US government doing nothing allows honest bankers to thrive while the politically-connected banksters to wither. Through bankruptcy and acquisition bankster assets are turned over to the prudent and productive members of Wall Street and Main Street. Even though this will cut down on campaign contributions to Congressman Hoyer and temporarily slow or contract economic growth, I think allowing those who have been prudent and productive in the past to prosper in the present is a good. Let the multitudes take the myriad individual actions needed.
Ultimately, I trust a drug-addled woman living in a her mortgaged, double wide trailer in Rhinelander, Wisconsin to handle money more responsibly and to predict the future better than I trust Paulson, Bernanke, and their political allies at Wall Street mega-banks to handle money and predict the consequences of their decisions. Her self-interested actions (or inactions) and the self-interested actions of tens of millions of others, will hit on correct solutions. Legislation will not.