Tuesday, September 30, 2008

Maybe We Need a Recession

Another day, another deal gone bust. Such is the course of the emergency bailout. And the sweet thing was that it wasn't the Republicans that derailed it, but Democrats who value their reelection more than a shot at Nancy Pelosi's sagging political tit (the real thing is too horrifying to contemplate). Nevertheless, the failure shows that people are finally beginning to distrust Washington to the point that they may welcome a recession rather than more government intervention and entanglement. This idea gives me more hope than anything.

Someone on Fox News was using the analogy of a fire today while describing the economic mess. And while I've been having the thought that inspired the tile above for a while now, the analogy of a forest fire is exactly the way to explain how to solve the lovely mess that the continued infection of the free market by base politics has created.

A healthy forest is marked by greatly varying life and cover, from stands of old growth trees to brush and edge territory. I particulary like the edge territory myself, because it also happens to be prime deer habitat (woo hoo, the season's a'comin'). But if you hadn't noticed (and if you've ever raked leaves or cleaned up after windstorms, you know this), trees tend to shed a lot of shit, dropping leaf and bough. And eventually they fall over. The result is that a lot of stuff builds up on the forest floor. One of the mechanisms that exists to clear this out is fire. A fire in an untouched area will burn until it has consumed all the junk at ground level, burned the dead trees, and cleared an area. Then life can continue. Fire can often cleanse a diseased area and benefit all.

Enter Smokey the Bear, who was at the icon of the forestry services efforts at preventing and stopping forest fires. The result? After a century of this, a fire starts and burns the shit out of everything, including the big trees. In essence, by introducing artificial mechanisms to stop fires, the shit on the floor piled up until it could no longer be contained and we have an assload of destruction.

A free market economy is the same way. Anyone who's had basic economics is familiar with the idea of the cyclical economy. This means every 7 years or so, we can expect some kind of slowdown or recession. The last one was 7 years ago. It certainly sucks for some people, as businesses fail, jobs are lost, and the deadwood is burned away.

But in their infinite wisdom to spare people this pain, to stimulate the economy, to create "affordable housing" and to buy votes, various politicians over the years have created all kinds of ways to artificially protect us from these periodic burnings, these cleansings that allow a free market to not spin out of control.

The result is a meltdown of a major segment of the market. And while we are trying to control fires, a lot of that which needs to be burnt away is burnt away. While this means people will lose money, and it will most certainly make things harder on many people, perhaps it is also a good thing.

Now the Congress will eventually get a bailout through, and Bush will sign it. Hopefully, by the time things have been fixed so that they can get the votes to pass it, they will have taken as much waste and politics out of it as possible. Also, I hope that whatever they come up with, it will address the problem. But the window for acting before the coming recession gets too bad is closing. Lets see if our leaders can figure out how to lead for once.


Gayle said...

The title of your post reflects my position on this exactly. I think you are the first blogger I've seen to actually come out and say this, although I wrote a post "To Bail or not to Bail" and said I thought this entire thing was being overdramatized by both the politicians and the media. Not everyone agrees, which is no surprise.

I followed you over here from Mike's America and am glad I did because this is an excellent write up on the current bs that is taking place.

Toad734 said...

Ya but forest fires are only good when they aren't started by arsonists for no reason. Phil Gramm was the arsonist in this forest fire, or at least his bill was, not the Democrats forcing banks to give loans to homeless people.

So yes, forest fires are needed from time to time as long as they happen naturally. Neither 9/11 nor this happened naturally. I am of the firmest believers that a buffalo herd is only as fast/strong as it's slowest/weakest members. If a cougar takes out the slowest the herd gets stronger and faster and is more likely to survive.

Besides, this is the exact time to test free market principles; if there is any value in these banks, the government doesn't need to buy them, they will get bought by someone else. If there are people/companies worthy of credit, someone will be there to lend it to them.


You must have gotten tired of all the lies and nonsense at Mikes America. I don't usually agree with Pat but at least he doesn't make shit up and blame everything on Democrats and pretend that no Republican has ever______.

Fill in the blank options:

Blown dudes in bathrooms, Hired hookers, tried to molest underage boys, cheat on his wife, get someone other than his wife pregnant, break the law, cheat, lie, steal, disregard the constitution, go above the law, etc.

Toad734 said...

Oh, even though it was free market principles of deregulation that got us into the mess.

Pasadena Closet Conservative said...

If another "great depression" is what it takes, so be it. We'll recover. We always do. It will be a lesson learned for Pelosi and Barry and all their Socialist pals. It will also be a lesson learned for corporations who look to taxpayers for bailouts. And it will be a lesson learned for homeowners who got their mortgages based on bad credit histories and, in many cases, absolutely zero requirement for proof of employment or citizenship. Enough already! Let 'er crash!

Dave Miller said...

Pasadena Conservative, why is it that only Democrats are socialists?

Wasn't it a GOP Administration that proposed this bailout in the first place?

I thought barney Frank and his group were only doing the work President Bush and Sec'y Paulson asked them to do.

Did I miss something?

If this bailout is a socialist thing, the GOP is as much so as the Dems.

Let's be consistent.

Toad734 said...


What does citizenship have to do with the ability to pay off a mortgage? Americans are allowed to buy property in Mexico why can't Mexicans or any others buy property here? In fact, I think there are plenty of people who wished and immigrant or anyone would buy their property. Don't try to turn this into something it isn't. The free market and lack of regulation is to blame for this plain and simple.

Toad734 said...

And what Dave said.

Patrick M said...

Gayle: Government does need to bring up a solution. But the solution is not a bailout, and it shouldn't be more than containing the damage so that it obliterates the landscape.

And you should come by more often. I tend to come up with stuff like this all the time.

Toad: Ya but forest fires are only good when they aren't started by arsonists...

Doesn't matter in either case. The point of the fire is to burn away the bad. It's this asinine tendency of government to want to mitigate risk. To a point, that's ok, as our financial system is sufficiently complex and interconnected to warrant some regulation to avoid total collapse. But we, as well as Wall Street, have reached a point where we expect the government to step in every time the economy tanks. That's yet another component of this mess.

Besides, this is the exact time to test free market principles;

That's my point. The only problem there is getting the entangling mess that caused the problem fixed first. Otherwise, it comes back to bite us in the ass.

Pasadena: Welcome. As long as we keep up the pressure, Congress will keep failing to act. We got a 485 point recovery with Congress out for a holiday today. If we could get them to leave Washington, imagine the boost!

Dave: Wasn't it a GOP Administration that proposed this bailout in the first place?

You've got it.

Gayle said...

No, Toad, I didn't get tired of Mike. He's a good friend.

Gayle said...

In addition, I now see where I picked up Toad from. *sigh* Oh well, the risks of blogging! LOL!

Patrick M said...

Gayle: Scary thing, but I don't mind having Toad around. Occasionally he's right. Of course, a broken clock is right twice a day, soooo..... :)

Mike's America said...

If this is a fire, the last thing we need to do is send Pelosi and Obama into the woods with a box of matches.

And as for Toadbat's ridiculous Gramm-arsonist analogy, I've debunked him thoroughly on that score by pointing out how the ENTIRE Clinton Administration was pulling for that bill. But facts don't seem to matter to Toadbat. He just keeps repeating the same old lies and expects us all to believe them.

Toad734 said...


Yes Clinton signed it but it passed a republican congress and was written by republicans.I know you always try to blame democrats for everything but that's why people think of you as a fool with a closed mind. If it was written by Republicans, passed through a Republican congress....