I need a lot of help understanding economics. Still not sure exactly what Wall Street is. (Hopefully I’ll never run for president, because that will come back to haunt me.) So, for others in the same boat, here are some links to articles I’ve stumbled across (most through JT at Between Two Worlds) that explain what’s going on and how we got here.
- Al Mohler, A Christian View of the Economic Crisis
- Conor Friedersdorf, 5 Easy Pieces
- Drew Zahn, Guess Again Who’s To Blame… (Suggests, with credible links from the 90’s anticipating this problem, that government policies inducing mortgage lenders to lend to less-qualified minority homebuyers caused the lenders to make bad loans)
- David Kotter, Thinking Biblically About the Banking Crisis
My initial gut reaction was to oppose the bailout. Then I suspended judgment for a couple of days on the basis of realizing that I really don’t know what I’m talking about. Now after doing some reading, I’m back where I started, for a few reasons.
- It seems to me that the bailout is a massive step toward a government-run economy, which we’re already skewed toward anyway. As a free-market, less-government-is-almost-always-better guy, I don’t like that.
- From what I understand, the fallout from allowing more institutions to fail would be significant, but nowhere near the complete economic collapse of, say, the Great Depression. There would have to be some serious changes in how financial firms do things, and if you’re retiring in 5 years there could be trouble. But by and large, it would be companies that contributed to the credit bubble that would suffer the effects of the burst.
- Related to #2, the precedent a bailout sets is very bad. It says to investors: Go ahead, take crazy steps to try and make wild amounts of money, and get so big that you can make the case that the economy will suffer if you go down. Then the government will have to bail you out if you get in trouble. On the other hand, if some of these guys do crash and burn and the government lets it happen, it sends the message that you’re responsible for the consequences of whatever investing you do.
So that’s where I am. And it’s worth about what you paid for it (except for the good articles above).