...but government bailouts don't!
We have lived in a society where no pain is acceptable. We want instant gratification. Heaven forbid that we should have to pay a price for our societal mistakes! Spare us the consequences of our irresponsibility! It has practically become politically incorrect to accept, much less endure, the pain of a recession.
Too bad! We may have to endure one anyway! Today's stock market (see above chart) is an example of what I mentioned yesterday -- that government bailouts tend to have short-lived effects. The Dow dropped 280 points just one day after the government's Fannie/Freddie bailout. Not much bang for that buck, huh?!
Is it so awful to experience a little discomfort once in awhile? If we are patient, we'll learn from our mistakes, we'll emerge stronger and more resilient, and we'll also be a little more humble. And that's a good thing!
But what really scares me is the second part -- the longer-term effect -- that I mentioned yesterday. The more blundering bailouts we see, and the more times government officials make erroneous statements about the state of economic affairs, the more it erodes confidence in the financial markets and the capacity of government to "fix" things time after time. The more mistakes are made, the less beneficial impact that the next bailout will have. It sends to the market the message that it's just more lipstick on the pig! Meanwhile, the politicians think they have to play our paternalistic parent and keep meddling and messing with everything!
We just may have no choice but to allow time its balm to heal all wounds. There is no substitute! Not even government!
Too bad! We may have to endure one anyway! Today's stock market (see above chart) is an example of what I mentioned yesterday -- that government bailouts tend to have short-lived effects. The Dow dropped 280 points just one day after the government's Fannie/Freddie bailout. Not much bang for that buck, huh?!
Is it so awful to experience a little discomfort once in awhile? If we are patient, we'll learn from our mistakes, we'll emerge stronger and more resilient, and we'll also be a little more humble. And that's a good thing!
But what really scares me is the second part -- the longer-term effect -- that I mentioned yesterday. The more blundering bailouts we see, and the more times government officials make erroneous statements about the state of economic affairs, the more it erodes confidence in the financial markets and the capacity of government to "fix" things time after time. The more mistakes are made, the less beneficial impact that the next bailout will have. It sends to the market the message that it's just more lipstick on the pig! Meanwhile, the politicians think they have to play our paternalistic parent and keep meddling and messing with everything!
We just may have no choice but to allow time its balm to heal all wounds. There is no substitute! Not even government!
