Joseph Calhoun, in a Real Clear Markets column today, explains that the better answer to the financial crisis is to let capitalism work the way it is supposed to. The credit market is not working but it is wrong to believe that the only way to get it working again is for the government to intervene.
Calhoun explains this well:
?There is not a shortage of capital for well run financial companies. This plan short-circuits the capitalist model, which would allow the stronger, well-run institutions to gain market share and/or expand profit margins.
The market is functioning as it should. It is the Fed that is not functioning correctly.
A better alternative would be to allow capitalism to work as it should and stop the interventions of the Fed in the money market. Trust capitalism. It works.?
Now that it appears Congress is back to the drawing board on the bail out, perhaps they’ll consider something that actually might work.
