Please Mr. Bush Don't Speak Anymore!!!

President Bush is set to talk again today to calm market fears.  Hank Paulson talks, Ben Bernanke talks, in fact everyone is talking. And the stock market continues to drop.  Perhaps if they stop talking things will change?!

That isn't going to work, but at least we should start updating our priors.  And many people should just stop talking.  And stop advocating for, and pursuing the socialization of the US economy.

This morning Jeff Sachs said the following --- "this is a new era and we need a new economic philosophy" and he also argued that we have been practicing an extreme form of economic philosophy that never made much logical sense and that argued for no government must be replaced with a new economic philosophy as we "need an activist government" from now on out.

What world is Professor Sachs talking about?  Look at Bush's spending record; look at the mixed regulatory state of affairs that provides perverse incentives and distorted information; look at the policy steps taken so far in this crisis --- how much more active does Jeff want the government to be?

Here is a new economic philosophy for you ---- get the government the hell out of the economy.  Perhaps if someone would actually argue that from a position of leadership, and actions taken would in fact curtail government intervention, and central banks would stop inflating, then the necessary market adjustments would take place.  Instead, we are seeing the consequences of an orgy of reckless fiscal policy for the past 25 years (if not more) and the consequences of inflationary central bank policy.  Credit induced booms that are not allowed to be cleared out when the malinvestment is revealed in the market through government intervention and even easier credit DOES NOT GET YOU OUT OF THE TROUBLE.  Instead, it merely masks the problems for another day.  We have been pushing off the adjustments for decades.

A useful analogy might be the economy as Keith Richards. I happened to like the Rolling Stones. But we have to admit that Keith tried for decades to pursue better living through chemistry.  It has taken its toll.  The better living through chemistry in the economy is easy credit and government spending.  Irresponsible monetary and fiscal policy needs to cease.  If we come clean, we might have a viable future.  Market discipline will be restored, and the needed adjustments will be made, and as long as government gets out of the way the enterpreneurial talent world-wide will realize the gains from trade and the gains from innovation.  Unfortunately, it appears that our political imagination doesn't permit the sort of clean living that would bring forth the necessary adjustments and recognize the great opportunities for mutually beneficial gains.  Instead, when we wake up after a tough night of partying, the leadership comes in and gives us a new bottle and perhaps a fresh needle. Judgments are clouded, opportunities for mutual gain go unrealized, and talent gets wasted.  Who would deny that the Rolling Stones were better at the beginning of Keith's experiments in better living than at the back end of those experiments?!

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[Tyler Watts]

Hank Williams Jr. offers the antidote:

"And hangovers hurt more than they used to do
And cornbread and ice tea's took the place of pills and ninety proof
And it seems like none of us do things quite like we used to do
But nobody wants to get high on the town
And all my rowdy friends have settled down"