Monday, September 29, 2008

Why the Bailout is BAD

As smart as people are about this, and I am continually pleasantly surprised.
Far too many are buying the government line, hook and sinker.
Too many simply don't understand that when the dollar collapses, their credit and their 401K will be, well, worthless.

Not so.

The Rescue Package Will Delay Recovery

Conventional thinking presents economic adjustment — also labeled as "economic recession" — as something terrible, even the end of the world. In fact, economic adjustment is not menacing or terrible; from an economic point of view, it is nothing more than a time when scarce resources are reallocated in accordance with consumers' priorities.
...the best rescue plan is to allow the market mechanism to operate freely. Allowing the market to do the job will result in some activities disappearing all together while some other activities will in fact be expanded.

Take, for instance, a company that has six profitable activities and four losing activities. The management of the company concludes that the four losing activities must go. To keep them alive is a threat to the survival of the company; these activities rob scarce funding from profitable activities.

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