Thursday, October 02, 2008

More Letters

This letter went to my Representative today (or at least it will as soon as his website isn't so jammed.) I took a little more pragmatic approach in my positioning, only because of where I'm seeing the argument leading among honest individuals these days. More on that in another post. There is still time. Please write your congressman.

Dear Sir:

As the House now considers a 2nd “Bail out” provision, I again urge you to vote NO on any such provision.

This crisis was caused by extended government intervention in the financial markets, over the course of many years. It is very difficult to see how our government’s ability to understand the unintended consequences of its actions is going to improve by an increasing level of panic, shortened time of execution and far too little consideration of alternatives. It is said that “we cannot afford to stand by and do nothing,” but I would say that when government stands up to “do something” in the economic markets, there is hardly assurance that the cure will not be worse than the illness.

I know that CEO Andrew Liveris of Dow Chemical has come out for the bail-out on the basis that the short term credit market cannot afford to fail. His voice surely makes an impression on you. Yet, even now, many are beginning to worry that in an effort to save the short term credit market, the raising of such large sums of money via Treasury’s issuance of T-bills will in fact make the liquidity crisis worse by pulling money from those markets. It is the unintended consequences of hastily-taken policy moves like this one which will ultimately undo our financial system. (please see: http://www.nakedcapitalism.com/2008/10/more-discussion-of-why-bailout-bill.html )

The Great Depression of the 1930’s was not caused primarily by the stock market crash of ’29, but by a series of actions by government including excessive tarrifs, taxes, and social programs enacted in the subsequent years, which ultimately deepened what could have been a short recession. Congress at that time, was trying to help as well.

Please take this time to think hard that in passing this bill, your vote to “do something” may have unintended consequences that may very well make things worse.

Let the “something” we choose to do be to allow the free markets to work out this crisis, to lower capital gains and income taxes to fuel liquidity and spur growth, and to clear bureaucratic hurdles to allowing speedy recapitalizations of these distressed companies.

Vote NO on any “stimulus” package.

Best regards,

Kendall J

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