2008-09-20

Ron Paul: You should allow the bankruptcy; you have to get rid of the mistakes! (subprime crisis)

The U.S. government support of bankrupt financial institutions like Freddi Mac, Fannie Mae, and AIG will cost the tax payer billions of USD (overall cost of one trillion USD). After the financial support was announced the global markets realized the highest one-day growth since years. As far as I know, this is biggest financial intervention of the government in the U.S. history. The short-term and mid-term effect of this gigantic money injection will becalm the markets and will prevent the really big stock market crunch from happening. But the long-term effect on the market is much more fatal as this support remains an intervention of the government in the market proceedings and as such it is also a disruption of the natural structure and procedures of the market ecosystem. And this ecosystem as every other (also natural) ecosystem is dominated by the principles of evolution. One of this principles is: Inefficient or unadjusted concepts and entities have to vanish in favor of their more adjusted and more efficient competitors; the unadjusted and inefficient entities have to die as justice have to be respected! If this evolutionary justice principle is consequently ignored, the whole system became successively uncompetitive, inefficient, and weak. The long-term result: Not only the respective system dies in an everything-in-it-destroying gigantic big crunch but damages also all other systems that interact with it.



"The current system is all about privatizing profits and socializing loses."