When the private sector fails to act prudently...

[vc1111]

...the government must act.

We saw monumental examples of that in America this past week.

We witnessed what happens when private sector organizations fail to act in the best interest of all involved while still trying to make profit.

It is only natural that the government must then step in and take over to preclude having the economic cancer spread.

We may not like it, but that is the way it is and hardly a word was written to the contrary on this board this past week. Generally it is accepted that the failures in the private sector such as the likes of Freddie and Fannie were so monolithic and so widespread that the government (thats us) had no choice but to remove those in the private sector from the helm at least for the foreseeable future.

Health care will likely be the next target for emergency takeover...maybe not in precisely the same form, but for essentially the same reasons, meaning its effect on our economy will eventually affect so many American's financial well-being (through the loss of jobs from and orders for corporations who can no longer compete because they are shouldering what is essentially a tax for each employee) that collectively we will have no choice.

Moments ago Bush and his officials announced that new regulations will be required and HUNDREDS OF BILLIONS WILL BE NEEDED to rectify this private sector failure. Even money market funds, traditionally one of America's safest investments will need to be barricaded.

You may not like it, you may prattle on all day with Limbaugh-like phrases such as "having your neighbor pay for your health care," but this week's events were glaring proof of a simple fact: The private sector cannot always be trusted because it is supposedly always naturally regulated by competition and market forces. Sometimes the private sector fails.

Then what?

[Lanse couche couche]

The line between the privatesector and government involvement started blurring at the end of the 19th century. Right now we are just negotiating the boundaries of a relationship that is already in place.

[vc1111]

The president just announced a temporary ban on short-selling. We are witnessing historic and truly unprecedented levels of intervention.

[Champlain Islander]

Interesting to note, the short sales are prohibited for the next 10 days on financial company stock with the theory that speculators contributed to the crash. That basically pulls the plug ona segment of the exchange to give it a breather. That is another government intervention similar to what happened after 911 when the market plummeted. Too bad that couldn"™t have happened when the price of crude oil sprang up.
VC you beat me to the buzzer on that one. I understand the Russian Stock Exchange has closed for a few days so it doesn't get sucked down with the rest of the world markets. I guess that is another way of regulating the market...close the door and wait for better times.

[boysda]

in fact, the free market, unfettered, is a brutally efficient, agileand uncompromising beast without a conscience. from a free market come spectacular financial achievements and immense failures.

government, by nature, is slow, plodding, and inefficient.

balancing the two has always been the challenge.

keep the beast ona leash, allow it to hunt, but not so much slack that it eats the children

[Lanse couche couche]

Its not pretty, but then again totally unrestrained capitalismcan be much uglier at times.

[Fieldmouse]

We may not like it, but that is the way it is and hardly a word was written to the contrary on this board this past week. Generally it is accepted that the failures in the private sector such as the likes of Freddie and Fannie were so monolithic and so widespread that the government (thats us) had no choice but to remove those in the private sector from the helm at least for the foreseeable future.

Fannie and freddie are and were the government. The government for years continued to push them into new markets and expand their reach. In turn it puts pressure on the private sector to take more and more risk in order to make a profit. This goes hand and hand with the article Dr Williams published not long ago called Economic Myths.

Health care will likely be the next target for emergency takeover...maybe not in precisely the same form, but for essentially the same reasons, meaning its effect on our economy will eventually affect so many American's financial well-being (through the loss of jobs from and orders for corporations who can no longer compete because they are shouldering what is essentially a tax for each employee) that collectively we will have no choice.

The government needs to solve it's 45 trillion debt that Medicare has before they even think of taking on more people. It's failing because they are involved.

[vc1111]

Too bad that couldn"™t have happened when the price of crude oil sprang up.

Which raises the most interesting question of all. How do we collectively decide how and when this intervention is appropriate?

What sectors are appropriate for intervention and which are not? Airlines? Oil companies? Medicine? Manufacturing? Technology?

[vc1111]

Fannie and freddie are and were the government.

Help me out here. I'm confused. What other branches of the government issue stock? Can I buy IRS stock?

[burniegoeasily]

ORIGINAL: vc1111

Which raises the most interesting question of all. How do we collectively decide how and when this intervention is appropriate?

What sectors are appropriate for intervention and which are not? Airlines? Oil companies? Medicine? Manufacturing? Technology?

Thats the million, or should I say trillion dollar question. Id just go out on a limb and say that none should be granted bail outs, but as we see, some buisnesses have a greater impact on our economy, as well as the world economy. Its those buisness we will have to help, and let the nonplayer die. Fair???? Nope. Necessary??? Atthis point yes. The SEC really needed to have been more awake.