“Free-Market Bailout” or Paulson’s Bureaucratic Nightmare

October 6, 2008

At Onsite Computer Services in New Orleans, the opinions from our Microsoft business clients of Paulson’s Treasury bailout plan are varied, but fervent.  As a student of the Austrian school of economic thought, Onsite believes the market should be allowed to correct itself and government intervention only delays recovery.

The weak banks whose management made bad decisions should be allowed to fail.  As an example, consider Lehmann Brothers and Merrill Lynch.  Other than temporary unemployment to employees and financial loss to shareholders, the free market adjustment was speedy and quiet.  Do you think government intervention in the form of a bailout (i.e. taxpayer dollars) will yield more efficient or cost effective results?  We’re about to discover the answer and the potential cost to taxpayers is HUGE.

The concept of a ‘free-market bailout’ is an oxymoron.  ‘Free markets’ loathe ‘bailouts.’  In free markets, firms who make the best decisions receive financial rewards and firms who make bad decisions reap financial failure.  However in a bailout, the firms who made the worst decisions receive a ‘life-line’ to continue their errant management practices.  If past government intervention failures (i.e. Great Depression, Japan, Mexico) are any indication of potential outcomes of bailouts, some contend Paulson’s bailout COULD fail to rescue Wall Street.

Paulson hopes his bailout will produce results similar to Sweden’s recovery from its banking crisis in the 1990s when a company with Swedish government backing absorbed troubled companies and assets.  On two occasions this year, Treasury officials met with the head of the Swedish National Debt Office to discuss the Swedish strategy.  According to Swedish officials, the government must not only pump money into the system, but also must have complete control over bailout assets in order for the bailout to succeed.

Many believe the US economy is presently in a recession.  The question du jour is will Paulson’s bailout reduce the severity of this economic contraction.  What do you think?

If you’re searching for New Orleans computer service or repair of your Microsoft based system or network, then call the Microsoft specialists at 504-469-6991. Onsite Computer Services, Inc. in New Orleans

You may also be interested in Onsite Computer’s Blog.

This New Orleans On-Site Computer Service post was provided by Eli Lucas. Eli can be reached at eli@onsitenola.com. Onsite Computer serves the Microsoft computing needs of small businesses throughout the Greater New Orleans area including Uptown, Lakeview, Broadmoor, Mid-City, Metairie, Jefferson, Kenner, Westbank, French Quarter, and the Warehouse District. Please visit our website for New Orleans Computer Service.

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2 Responses to ““Free-Market Bailout” or Paulson’s Bureaucratic Nightmare”

  1. shari Says:

    Tired of Bankers having all the fun.

    Bailout! The Game the hilarious parody of the government bailout where when you lose, you win. In this role reversal of the classic board game debt is king.

    Bailout! The Game gives you an endless supply of T.A.R.P funds, laughs and fun.

    Be the bank, lose billions and get a bailout.

    Play as one of six banks: Bankruptcy O’ America, Worth Farless, No Cashvia, Liquidation Brothers, Greedy Investors of America, or Washed Up Mutual.

    Land on or pass over Frantic May and Frivolous Mac spaces and get slammed with bad debt.(MBS’s and CDO’s)

    Just as Monopoly was born out of the Great Depression, Bailout! The Game was born out The Great Recession.

    Winner of the Mr. Dad Seal of Approval. http://www.mrdad.com

    Creators of Bailout! The Game and Bailout! The Card Game
    Liberty Street Games
    http://www.bailoutthegame.com

    • elilucas Says:

      Ah, a lady with a “slightly” skewed sense of humor. Thanks for the comment. You should attend lunch with the Austrian Economists. Some experience bladder incontinence when exposed to their thought.


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