Chicken Little’s European Adventure

Secretary Paulson and Congressional leaders have no monopoly on market-damaging panic.  Witness today’s article in the UK’s Telegraph, claiming that world financial markets are ‘falling into the abyss.’  The article shares blame around, but places most if it on German chancellor Angela Merkel for opposing the redistribution of wealth among European countries.

A sample from the article:

We are fast approaching the point of no return. The only way out of this calamitous descent is “shock and awe” on a global scale, and even that may not be enough.

There are, of course, serious problems in the financial markets.  Most of these were self-inflicted, notwithstanding Democratic insistence in the US on loans to unqualified home buyers.  However, the crisis, the ‘emergency,’ is directly traceable to all of these idiots shouting “Fire!” in the global financial theater.

Let’s pause for a moment, too, and enjoy a moment of our own schadenfreude.  The panicked Euro-elite were, not long ago, delighting in the problems in the US markets and pointing to them as evidence of the failure of laissez-faire capitalism.  Oops.

In my opinion, the biggest problem we are facing is that the scaremongers have made it effectively impossible for market mechanisms to correct the problem naturally, by imposing an artificial time crunch.  Is government intervention necessary?  Probably, but what will be done will almost definitely not be what is needed.  Would government intervention have eventually been necessary in any case?  Possibly.  Eventually.  But, at worst, there would have been time for a reasoned and measured response that would have more likelihood of addressing the underlying problems and less likelihood of making the problem worse and/or having side effects far worse than the existing problems (whether governments are capable of such a response is another subject entirely).