During this past week, many of us witnessed the rant of Rick Santelli of CNBC on the trading floor here in Chicago. It was good entertainment for sure, but it also seemed to hit an exposed nerve for many of us. On the heels of several months of volatility in the markets, the continued erosion of capital, and the passage of the stimulus bill, the Obama administration announced it's plan to address the mortgage mess, and the free enterprisers snapped. How can our government pick winners and losers and reward homeowners who never should have owned a home in the first place? Why do good, hardworking people who continue to make their mortgage payments have to bailout these deadbeats who got us into this mess in the first place? It's just not fair!
We've all heard the argument and many of us feel strongly about the free enterprise system and the fundamental belief that continued bailouts from the government will only make the problems worse and prolong the process of recovery. In theory, it makes great sense. If the free enterprise system is left to it's own devices the excesses will be mitigated and the market will correct on it's own. As a pure theory, it is elegantly simple. The only problem is that government has always intervened. The battle between the free enterprisers and the interventionists is an argument of a dream versus reality. It just doesn't make sense. We will never have a pure free enterprise system, and the need to intervene is greatest in times of crisis. This isn't just a recession, we're experiencing the effects of the failure of our financial system, and more intervention is inevitable.
The discussion and debate over the last few months has been interesting, and the varying views on how to shore up the financial system, stimulate the economy, and clean up the mortgage mess have energized those who believe the free enterprise system should be left alone. I'm uncomfortable too with one bailout after another with seemingly no end in sight. We're all suffering from bailout fatigue. But the whining has got to stop and the irresponsible fear mongering during these times only adds to the anxiety and uncertainty driving the continued sell off in the markets. We have a crisis of confidence, and Rick Santelli may have helped his career with his well publicized rant, but these are days for realism not dreamers.
Where should the government draw the line? When will we know that the financial system is working again? Let me know your thoughts.
