In a knee-jerk reaction to panic and fear over the current financial crisis, the government issued a $700 billion dollar bailout bill last week. Rather than considering the cause of the “toxic loans” at the heart of this crisis, Congress decided that it had to immediately do something—anything.
What politicians fail to realize, however, is that they are the ones that got us into this mess, and this bailout will only further exacerbate the problem. It is government meddling in the economy that caused the mortgage meltdown. Fannie Mae and Freddie Mac, the U.S. Department of Housing and Urban Development, the Community Reinvestment Act, and the Fed’s ability to manipulate interest rates each have contributed handsomely to the disaster. These government policies are the primary cause of the financial crisis, yet our president and both houses of Congress agree that still more government intervention is the only solution.
It is as if a man went to the hospital with low blood pressure and a low heart rate, and the doctor prescribed crack cocaine to treat his symptoms. After all, crack will raise the patient’s heart rate and blood pressure for a while, and even give him a temporary feeling of euphoria. But over the long term, using crack will severely weaken his heart and mind, making him an easy target for any infectious disease that comes along.
This is exactly what the Bailout Bill will do: temporarily treat the symptoms while allowing the disease (government intervention in the economy) to metastasize further. The only way to preserve long-term economic health in America is to attack the disease at its source. End Fannie Mae and Freddie Mac, neuter the U.S. Dept of Housing and Urban Development, repeal the Community Reinvestment Act, and take away the Fed’s power to tamper with naturally functioning markets.