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ONLINE RESOURCES ON THE ECONOMIC CRISIS

(plus: bailout humor!)

A Special Issue of The Liberator Online 

Vol. 13, No. 17

October 17, 2008

Published by the Advocates for Self-Government

Edited by James W. Harris | Email: james@TheAdvocates.org

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PRESIDENT'S CORNER

Dear friend, 

Welcome to this special "Bailout Crisis Resources" issue of the Liberator 

Online. 

We'll be returning to our regular format, with our regular columnists, next 

issue. 

In this special issue we want to share with you some articles, videos, and 

books online to help you understand and deal with the current economic crisis. 

The economic mess we're in is nothing less than the greatest threat to free 

market ideas since the 1930s. Every friend of freedom now faces new challenges 

in advancing our great cause. 

Libertarians are entering a new era, where we will have to refight battles we 

thought we had already won. 

We will have to dust off old arguments -- and craft new ones.

This special issue of the Liberator Online contains links to numerous resources 

to help you do this. 

There is a wealth of information below. We have included short excerpts from 

each, so you can pick and choose those articles that seem to best answer your 

questions and needs. 

First, however, I'd like to point out that three premiere libertarian resources 

-- the Cato Institute, the Mises Institute, and Reason magazine -- have 

collected the best of their writings on the subject. We highly recommend these 

collections: 

* THE CATO INSTITUTE's "Global Financial Crisis" audio, video and print 

collection: 

http://www.cato.org/special/financial_crisis/

* THE MISES INSTITUTE's "The Bailout Reader" collection: 

http://mises.org/story/3128

* REASON MAGAZINE's "What caused the crisis" collection:

http://reason.com/blog/show/128985.html

Following are additional articles we've found helpful. Most are short, non-

technical, and from sources you know and respect.

As always, the Advocates' primary focus is libertarian communication. We hope 

this information will help you explain to your friends, neighbors, and opinion 

leaders that the crisis wasn't caused by the free market and that there are 

sensible alternatives to the Big Government proposals we're being bombarded 

with. 

Remember, with crisis comes opportunity. Millions of Americans are outraged by 

the bailout. Many are making their voices heard. They are looking for answers 

and leadership. The fair-weather friends of the market are turning their backs 

on it. As a result, libertarians have the chance to make new allies and build 

our movement on this very issue during the coming months. 

We will continue to address this crucial topic of our times in future issues of 

the Liberator Online as well. 

Finally, don't forget -- laughter is great medicine. See the end of this issue 

for a collection of bailout humor from America's funniest late night talk 

hosts. 

We'll see you next issue in our regular format. 

Thank you for your good work for liberty!

Sharon Harris

PS: The economic crisis is hitting the Advocates hard. At the very time our 

services are so badly needed, the economic downturn is cutting into our 

donations. 

If you appreciate the unique and vital work we're doing, please consider making 

a donation now. Please consider, too, becoming a monthly donor. Just a few 

dollars a month makes a huge difference for liberty! 

We have some outstanding thank-you gifts for your help -- which, again, is 

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The Advocates work has never been more important. Please help us keep it going 

and moving forward. 

Please make donations securely here: 

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OR call toll-free 800-932-1776.

Thank you! 

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ONLINE RESOURCES ON THE ECONOMIC CRISIS

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RON PAUL: Short Videos on the Economic Crisis

Ron Paul recorded a series of short videos on October 10th that offer analysis 

on the current financial problems. 

Each is only a couple of minutes long. It's a great first stop.

Topics:  

* On Restoring Confidence in the Markets

* On Market Intervention

* On the Possibility of the End of Capitalism

* On the "Safety Net" Concept

* On Capital and Capitalism

See them at: 

http://www.campaignforliberty.com/

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Bingeing and Purging 

by John Stossel, syndicated column, October 12, 2008

The bailout passed! Too bad. 

When so many politicians speak with one voice in support of the biggest act of 

government intervention in the economy in generations, I cringe. 

Everybody talked about the 'freeze' in the credit markets, but why, I wonder, 

were the cable news programs that repeated the credit-freeze mantra pausing for 

commercials from companies trying to lend me money? Ditech and LendingTree 

still hawk mortgages at under 6 percent. Some credit freeze.

http://www.ocregister.com/articles/credit-bailout-money-2191556-government-

politicians

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Don't Blame Capitalism by Peter Schiff

Washington Post, October 16, 2008

[Excellent short summary of the crisis and the false claim that the free market 

is to blame, by the economic adviser for Ron Paul's 2008 presidential 

campaign,]

Policies enacted by the Federal Reserve, the Federal Housing Administration, 

Fannie Mae and Freddie Mac (which were always government entities in disguise), 

and others created advantages for home-buying and selling and removed 

disincentives for lending and borrowing. The result was a credit and real 

estate bubble that could only grow -- until it could grow no more.

http://www.washingtonpost.com/wp-

dyn/content/article/2008/10/15/AR2008101503166.html

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Bailouts will lead to rough economic ride 

by Ron Paul

CNN Commentary: September 23, 2008

Highlights

   * Too much government meddling in economy caused crisis

   * The bailouts are another case of excessive intervention in economy

   * The government isn't letting the market adjust prices to lower levels

   * Bailout will only increase financial instability in the long run

The solution to the problem is to end government meddling in the market. 

Government intervention leads to distortions in the market, and government 

reacts to each distortion by enacting new laws and regulations, which create 

their own distortions, and so on ad infinitum.

It is time this process is put to an end. But the government cannot just sit 

back idly and let the bust occur. It must actively roll back stifling laws and 

regulations that allowed the boom to form in the first place.

http://www.cnn.com/2008/POLITICS/09/23/paul.bailout/index.html

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What Would Mises Do? Confessions of a free-market, anti-bailout operator

by Matt Kibbe, Reason magazine, October 2, 2008 

It seems to me, during times of economic crisis, that there is an obligation to 

first do no harm. Should we rush to pass legislation written by tired, 25-year-

old legislative staffers in the middle of the night in offices littered with 

Domino's boxes and empty vente Starbucks cups? What are the inevitable 

unintended consequences? My biggest fear is that the plan will do far more harm 

than good, even in the short run, by propping up poorly performing banks at the 

expense of well-run institutions ready and able to come in and clean up the 

mess. And, yes, as Warren Buffet could tell you, they hope to make a healthy 

profit doing it.  

We are talking about legislation that will fundamentally alter the face of 

American capitalism for at least a generation.  Allowing investment banks to go 

to the government for a $700 billion line of credit is akin to inviting a 

vampire into the house. If you live, you certainly won't be the same person 

when you wake up the next morning.  

http://reason.com/news/show/129218.html

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Henry Hazlitt on the Bailout

by Scott A. Kjar, Mises Institute, October 15, 2008

Treasury Secretary Henry Paulson needs to change his reading list. Instead of 

reading the balance sheets and income statements of the failing banking 

industry, he needs to read Henry Hazlitt's classic book Economics in One 

Lesson. It will cost Paulson far less than the $700 billion that he is spending 

on the bailout, and he might just learn a little economics in the process.

http://mises.org/story/3142

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Commentary: Bankruptcy, not bailout, is the right answer 

by Jeffrey A. Miron, CNN September 29, 2008

Highlights:

   * Government encouraged lenders to relax their standards

   * Mortgages were given to people unqualified to repay them

   * Rather than a bailout, government should let firms go bankrupt

   * Talk of economic Armageddon is scare-mongering

Jeffrey A. Miron is senior lecturer in economics at Harvard University. A 

libertarian, he was one of 166 academic economists who signed a letter to 

congressional leaders last week opposing the government bailout plan.

http://www.cnn.com/2008/POLITICS/09/29/miron.bailout/index.html?iref=mpstoryview

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The Free Market Didn't Fail

by Sharon Harris, the Liberator Online, October 4, 2008.

The questions we're all hearing right now go something like this:

"Isn't the current economic crisis a failure of the free market? Doesn't it 

show the need for additional regulation and government control?"

The answer: Not at all. The crisis has absolutely nothing to do with the free 

market. In fact, the opposite is true. This crisis was *created* by massive 

government regulation and government interference with the market. The 

government actually over-rode the market, and removed the protections the 

market normally provides.

http://www.theadvocates.org/liberator/vol-13-num-16.html#President

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An Open Letter to my Friends on the Left

by Steven Horwitz 

Department of Economics. St. Lawrence University

September 28, 2008

Consider instead that the problems of this mess were caused by the very kinds 

of government regulation that you now propose. 

Consider instead that effects of the profit motive that you decry depend upon 

the incentives that institutions, regulations, and policies create, which in 

this case led profit-seekers to do great damage. 

Consider instead that the regulations that may have been the cause were 

supported by, as they have often been throughout US history, the very firms 

being regulated, mostly because they worked to said firms' benefit, even as 

they screwed the rest of us. 

Consider all of this as you ask for more of the same in the name of fixing the 

problem. And finally, consider why you would ever imagine that those with 

wealth and power wouldn't rig a new regulatory process in their favor.

http://myslu.stlawu.edu/~shorwitz/open_letter.htm

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How Government Stoked the Mania: Housing prices would never have risen so high 

without multiple Washington mistakes.

by Russell Roberts, Wall Street Journal, October 3, 2008 

Many believe that wild greed and market failure led us into this sorry mess.  

What's missing is the role politicians and policy makers played in creating 

artificially high housing prices, and artificially reducing the danger of 

extremely risky assets...

http://online.wsj.com/article/SB122298982558700341.html

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My Vote: NO

By Dick Armey, National Review Online, September 29, 2008

The difficult question each member of Congress faces today is simply this: Do 

you believe that the political process, having produced many of the perverse 

incentives that resulted in our economy's current predicament, can solve these 

underlying distortions by essentially doing more of the same? I believe the 

answer to this question is unequivocally NO.

http://www.freedomworks.org/newsroom/media_template.php?issue_id=4100

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Bailout Brakes

by Matt Kibbe, Washington Times, October 1, 2008

"Well, if you're so opposed to a bailout of Wall Street, what would you do?" 

I get this question all the time from advocates of the proposed $700 billion 

Wall Street bailout here inside the Beltway. ...

If I had any confidence in the ability of the political process to produce a 

rational, bold response, my answer would be: "I would do plenty." Start by 

unwinding the many government mistakes that created the housing bubble, 

repealing the various laws and regulations specifically designed to put people 

into homes that they could not afford. I would scrap the Community Reinvestment 

Act, break up Fannie and Freddie, and put the pieces back in the private 

sector. If "liquidity" and the availability of capital is the immediate 

problem, I would also repeal the tax on capital gains and other tax provisions 

that punish savings and capital accumulation. The Flat Tax does all of this in 

one fell swoop. And, finally, I would repeal the various distortions in 

corporate accounting hurriedly drafted during previous legislative panics, 

starting with Sarbanes-Oxley.

An even bigger, but essential, legislative lift would take a serious look at 

the destructive role the Federal Reserve has played in this financial crisis. 

Rep. Ron Paul, Texas Republican, was arguing this before it was cool.

http://www.freedomworks.org/newsroom/media_template.php?issue_id=4101

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VIDEO: Austrian Economics and the Present Crisis

Peter J. Boettke, October 17, 2008

Future of Freedom Foundation

In this video distinguished Austrian free market economist Peter Boettke 

analyzes the current credit crisis from an Austrian perspective. It's part of a 

lecture series by our friends at the Future of Freedom Foundation. 

Peter J. Boettke is the BB&T Professor for the Study of Capitalism, Mercatus 

Center at George Mason University, and University professor in the economics 

department at George Mason University. He is the author of several major books 

and is editor of the Review of Austrian Economics. 

http://www.fff.org/comment/com0810j.asp

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An Echo, Not a Choice

by Sheldon Richman, Future of Freedom Foundation, October 17, 2008

[This is an excellent brief look at the politics of the bailout.]

Both major presidential candidates support the taxpayer bailout of Wall Street. 

They are just arguing over how to do it. ...

Free markets are free of more than regulation; they are also free of subsidies, 

privileges, and guarantees. Lightening up on regulation may please business, 

but if it is done while keeping the subsidies, privileges, and the guarantees 

in place, it is not a move toward the free market.

To see this point, imagine that you offer to cover someone's losses during a 

gambling junket to Las Vegas and as a measure of protection, you impose some 

restrictions on the size of the bets, the games played, and the total loss 

during an evening. If you were to remove those restrictions later while keeping 

the guarantee in place, we'd hardly describe it as a move toward self-

responsibility. Quite the opposite, in fact.

This is analogous to what has happened in the American economy... 

http://www.fff.org/comment/com0810i.asp

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At Moment of Truth, Where Was Dagny Taggart?

by Joseph L. Bast, President, Heartland Institute, October 2008

The front page of today's Wall Street Journal carries a story titled "At Moment 

of Truth, U.S. Forced Big Bankers to Blink." In the quarter-century I've been 

reading the Journal, I've never read a news story that was more disturbing. ... 

A long train of government policy mistakes led to the financial crisis, but the 

capitulation by business leaders to the demands and claims of government 

officials has turned what could have been a contained and short-term economic 

problem into a genuine threat to the very survival of capitalism, and with it, 

of democracy.

http://www.heartland.org/article.html?articleid=23982

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BAILOUT HUMOR

Take a break and laugh with America's most popular late-night hosts: 

"The United States have developed a new weapon that destroys people but it 

leaves buildings standing. It's called the stock market." -- Jay Leno

"This economy is crazy. I saw a Lehman Brothers executive walking around town 

wearing a sign that read, 'Will work for a seven-figure bonus.'" -- David 

Letterman

"President Bush announced today he is going to have the Federal government put 

$250 billion into US banks. Yeah. Bush also said if he's putting that much 

money into a bank, they'd better give him a big-ass toaster." -- Conan O'Brien

"You know, do you think President Bush really understands any of this stuff? 

Like today, he was asked about General Motors. And he said, 'I think he's doing 

a fine job in Iraq.'" -- Jay Leno

"The average price of a gallon of gas has had its biggest drop ever this week 

also. It's now down to $3.30 a gallon. Remember $3.30 a gallon? That's the 

price you used to get outraged about a year ago." -- Jay Leno

"So let's see, the country is broke. Listen to this: 60 percent of the people 

in America now say we are headed toward a depression, not a recession, a 

depression. We are in desperate needs of profitable industries we can tax. Um, 

now can we legalize pot?" -- Bill Maher

"Ladies and gentlemen, the Bush administration is taking over the banks. So, 

hey, crisis over." -- David Letterman

"Congress keeps saying that not only are taxpayers going to get back the $800 

billion, oh, they're going to make money on the deal too. Yeah, yeah. See, now 

you know where the 'con' in congressman comes from. That's where it comes 

from." -- Jay Leno

"The bailout plan has been passed. Here's the deal. It went from $700 billion 

to $800 billion. Now the reason for that, it costs the taxpayers more. If it 

costs the taxpayers more, the better chance that Congress will vote for it." -- 

David Letterman

"The House on Friday passed the $700 billion Wall Street bailout package. 

President Bush then signed the bill into law after consulting with his economic 

advisers, M.C. Hammer, Ed McMahon and Willie Nelson" -- Seth Meyers

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THE LIBERATOR ONLINE is the official newsletter of the Advocates for Self-

Government. Visit us on the Web at: http://www.TheAdvocates.org

THE LIBERATOR ONLINE was created by Paul Schmidt and James W. Harris.

Tags: bailout, liberator, libertarian