$Stock*Shop*Charts*News*Option$

[FoodStamps4stocks]

May 18, 2010
The Angry Market Message In Billions
By John Tamny

The great 20th century libertarian philosopher Albert Jay Nock long ago observed about market forces that any tampering with them "must have its consequences, and the only recourse for escaping them is such as entails worse consequences." Were he alive today, Nock would be an aggressive opponent of the myriad bailouts foisted on the global economy with "worse consequences" in mind.

But just because he's not alive does not mean his warnings don't hold great relevance. Indeed, his wisdom is being revealed in a blinding way through the numbers 359, 787 and 1 trillion.

Those are the numbers cited over the weekend by business reporter Terry Keenan. As Keenan noted, $359 billion, $787 billion and $1 trillion are the growing amounts of "money needed to plug the holes" of an economic crisis that seemingly has no endpoint. Nock warned us.

Of course the $359 billion was what the TARP adherents needed to "stabilize" the banking system in order to allegedly "save" the U.S. economy. And then with the economy not saved, the Obama administration imposed on Americans $787 billion in "stimulus" meant to keep unemployment from reaching double digits on the way to unemployment reaching double digits. And then last week it took $1 trillion from the IMF and EU to prop up a country as economically inconsequential as Greece.

To suggest that something's amiss here is to engage in obnoxious understatement. The amounts needed to bolster the global economy show that far from propping up anything, the bailouts have served to turn what shouldn't have been challenging into something that is increasingly expensive, and worse, unworkable.

The reasons why are obvious, and they're rooted in the fact that the bailouts weren't so; rather they weakened the economy. Indeed, the sign back in 2008 that the economy was on the mend were the bank failures themselves.

They signaled that market forces were ridding the economy of the kind of business practices that were forcing limited capital into faulty investments, most notably housing. The great Arthur Laffer has long pointed out that for governments to bail some of us out, they must bail others in.

In this case, prudent individuals and businesses were fleeced in order to prop up the imprudent. More to the point, we weakened our most productive individuals and businesses so that we could stimulate the failures.

more.........
http://www.realclearmarkets.com/articles/2010/05/18/the_angry_market_message_in_billions_98473.html