For the first time in what seems like forever, I am proud of the majority of the U.S. House of Representatives. In a stunning blow to plutocracy, the House voted against the Emergency Economic Stabilization Act, better known as “the bailout.”
I fully expected to write a column blasting Congress for passing a $700 billion dagger that went directly at the heart of the free market and killed any semblance of economic freedom that was left in America.
I’m glad I was wrong, and I’m glad 133 Republicans and 95 Democrats agreed.
The measure, for those of you not in the know, was intended to bail out the financial institutions in America that had made unsound business decisions and have begun to feel the disastrous consequences of bad decisions.
On Monday, we were witness to one of the most important pieces of legislation to ever pass through the halls of Congress.
The proposed bailout was the worst possible scenario.
Imagine for a moment that the bailout passed the House. The Senate was already poised to pass the legislation, and President George W. Bush promised to sign off on it.
This massive bill was shoved through Congress in less than 10 days. Does anyone remember the ill-fated Patriot Act?
We were told by the White House and the talking heads on television that the Patriot Act was necessary to ensure freedom in America. Congress overwhelmingly passed that legislation with little debate at all, and look what happened there: We as a country came to regret it.
Don’t worry about the stock market. I know the Dow Jones dropped 777 points on Monday, and the S&P 500 fell nearly 10 percent, but this is not bad news.
People need to understand that stock prices have fallen because they are adjusting downward, toward the market price.
The Federal Reserve and the federal government have spent years creating a monetary policy that artificially kept prices higher, even though the market was unwilling to support it.
The drop on Monday actually is a good thing. The markets have been pushed to artificially high levels because the government in the past has been willing to do anything to maintain an illusion of economic well-being.
Of course, financial institutions have reacted negatively to the vote in the House.
I wrote in past columns this year that the government bailing out financial institutions would have a disastrous effect on the American economy. I predicted that when the government decided to nationalize Freddie Mac and Fannie Mae, other institutions would soon be absorbed by the federal government.
Look what happened: Lehman Brothers failed, Wachovia and Washington Mutual have been absorbed, Bear Stearns and IndyMac all but disappeared, and Bank of America was forced by the government to take over Merrill Lynch.
The consequences of the proposed bailout were huge.
This would have been the first of many bailouts, not “the only one” that would be needed, as congressional leaders promised.
The suggestion that corporations would learn from the bailout and reform their habits is ludicrous. The only thing corporations and Wall Street would stand to learn is that the government is willing to rescue businesses and banks who take unsound risks and fail because “it’s too important to the American economy” to let banks fail.
This would only lead to riskier decisions in the future.
The failure of the bailout is not a bad thing. In fact, we’ve already started to see some good come out of it.
The price of a barrel of oil fell to $96, and other commodities are falling as well.
Americans have been clamoring for lower gas prices, and this is a step in the right direction. Prices are going to come down even further.
Look at the value of the dollar versus the euro. With people losing confidence in paper money, we are going to see a weaker U.S. dollar. This is good news for American industry, as American exports are going to be cheaper and more attractive to foreign consumption.
Prices have to come down before there can be any sort of economic recovery.
The failure of the bailout is one of the first steps to economic recovery. Pundits on television are referring to the failure of the bailout as disastrous for the American economy, but this is not the case.
Monday was a turning point in this nation’s history. The members of Congress voted against the White House, against their leaders, against the Treasury, against the hyperinflation leaders of the Federal Reserve and for the American people whom they represent.
Days like Monday make me proud to be an American.
Don’t buy into the hype and hysteria that President Bush and television commentators are pushing. America is going to be much better off in the long run if we stop allowing the federal government to intervene in the economy.
Monday was the greatest victory for freedom in liberty that our generation has ever seen.
Let’s hope our representatives don’t give in to the hysteria and change their vote.
Joe Hunt is an economics and history senior. His column usually appears every other Thursday.
The Oklahoma Daily is pleased to provide you the opportunity to share your thoughts about this article. We encourage lively debate on the issues of the day, but we ask you refrain from using profanity or other offensive speech, engaging in personal attacks or name-calling, posting advertising, or straying from the topic at hand. To comment, you must be a registered user of OUDaily.com. Thanks for taking the time to offer your thoughts.
You must be logged in to leave a comment. Log in | Register
Chestertonian 3 years, 7 months ago
I could respect this article if it weren't completely unbalanced.
Perhaps the failure of the bailout is good for business, but it can hardly be considered good for America. You call the loss of 10% of the market a readjustment? I know people who lost thousands of dollars in that readjustment. And some of them are teachers on the brink of retiring. You think that's good too? The same thing goes for the weakening dollar. That means that foreign made items are more expensive. So maybe we can export more, but the cost of maintaining almost any lifestyle goes up. Savings mean less when the dollar weakens. And that oil that is temporarily cheaper? Well, it's harder to buy that too. Or at least it will be in the long run.
The problem I have with libertarians is that many people I know can not afford to be one. And as for the free market learning something from this: too little, too late. Congress will be more democratic and both candidates are in favor of taking more control of Wall Street. And no matter what happens, I would guess that most companies that failed will be gutted in retribution/to save face.