Why there is no such thing as the free market and why it's real, works and fails

In the current fincinal crisis It was the government mandates that caused the markets to fail. You can require banks to loan money to people who can not afford the loan and then agree to have another Government agency pick up the bad loan. Banks were forced to loan with no money down, no income, and no potential to pay off the loan. It was called the Community reinvestment act. You did it and the government would back the loan. The problem was the government did not have the money to back all the loans. In the free market if I loan you money and you don't pay me back I am out the money. Under the Community Reinvestment Act if I loaned you money the government would buy the loan through Fredie Mac or Fanny Mae and I could charge a high interest rate so why not make the loan, if you don't pay I still get my money. If I don't loan to you the Government will restrict what I can do and cause me to lose money. Many of the people who are facing fore closeuer, are current with their payments but because the value of their house is down and government regulations require that the banks for close on the property or face fines from the government. Again not the free market. The government should not be forcing banks to loan money to people who can not afford to pay it back. The old bank guide lines were find and there were always a few people who lost their homes because of poor decisions they made or just bad luck. Let the Free Market work and the greedy people will pay for their greed as it should be. Once you remove risk from the investment formula you are inviting trouble. If I want to risk my money in the Stock Market and lose it Should I look to the government to bail me out. NO.

Well put. It's amazing that people whho consider themselves "free enterprise" or "free market" supporters will oppose all regulation but don't seem to mind when one of their own "rigs" the market such as Alan Greenspan did with real estate. Apparently even moderate regulation is evil but manipulating the market is okay.

Hello Urbandekay, I cannot disagree with your underlying premise. The stock market is absolutely intangible. In fact, other than in Richard Bach's mind, there is no more concrete (pun intended) example of make-believe. Specifically, the entirety of the free-market is dependent upon perception, intuition, superstition, and 'follow the leader'. There's nothing REAL about it. I also agree that the application of 'living, breathing' status to a very inanimate 'market' is beyond silly. Yet, what is anything but silly is how the application of 'silly' perspective, perception, intuition, or superstition to national, supra-national legislation is deeply impactful on the hard reality of any economy, and its foundation -- the taxed. While it's fun to entertain the 'philosophy' of human suffering, the suffering rarely see value in such exercise! Instead, they suffer the consequences of the fools who attempt to legislate the free-market in defiance of base human instict. Suffice it to say, it is far wiser for legislators to leave economic decisions to those who know about economics rather than impose their ideological leanings on to the taxpayer, who with his and her sweat and tears finances the abstract world of political ideology!!!

Hmmm...I havent thought about economics since the end of the semester. Yes, this little crisis was caused by individuals that forgot that they are the ones that regulate the market, or at least thought that they could regulate it constantly upwards. But this little crisis is a correction as the free market regulates itself though the most basic economic law: Bubbles Break. People forgot this little fact, and now the basic economic laws are biting them in the rear. Too bad, it is also biting the rest of us and not just the yahoos that caused the mess in the first place.

You are correct to some extent but in the end the free market always rules. OPEC is a good example of what you are saying. They raised prices until they finally figured out they went too high and screwed up. Now they want to cut production to cause a shortage to get the price back up but it isn't working. Other things are controlling the amount of gasoline being sold not supply and demand. Under normal conditions this would work for OPEC but about 6 months ago our free enterprise system kicked in and has taken over. It is now in control of prices not the business people. This will continue to get tighter and tighter until our economy hits bottom then it will start to repair it's self. This crash is not all together bad. Every price that falls just increases the value of our dollar a little more. When our economy hits bottom that will be the max value of our dollar. That is exactly where we need to leave our economy. When the economy starts to improve it is not in our favor. It is simply heading back to a point it will crash again. Ever price that increases devalues our dollar. We need to learn to live with our economy at the very bottom. When it hits bottom we need to freeze everything world wide right where it is. No price increases and no wage increases. Then it is time for the government to step in and start programs that will put people back to work. Even if they just have to print out money to do it. No matter what you have heard this would not devalue the dollar. The value of the dollar is set by the amount of goods you can buy with it and that is all. Art

SO is your point that when people become too stupid and lazy to look out for their own self interests, the free market will fail? I guess that makes sense, but you only have to be so hungry and so broke that you realize that it is a better deal to buy 7 apples for $7 than 3 apples for $7