Bush’s Bail-Out and Unintended Consequences

Yesterday’s Washington Post features a front-page analysis which points out that the “actions of government and officials have often created new problems“.


For example, the Bush bail-out spiked mortgage interest rates up, drove investor confidence in preferred shares down, and steered people to pull money out of community banks.

“It’s like a chess game,” former president of the Federal Reserve Bank of St. Louis William Poole told the Post. “You might be able to anticipate the next couple of moves. But after that, it gets very complicated, very quickly.”

But the best chess players in the world think a dozen moves ahead. Weak players think about the last move.

Government is a weak player. It tries to play the game without considering its principles. It reacts to the immediate situation simply by moving the first piece it sees with no regard to the overall set-up of the board, root causes, logical next moves, or later consequences. It expects people to change their behavior, like pawns, only in the direction of its goals, not theirs. And when its bad strategies display their own predictable counter-productivity, its solution too often is more of those same strategies.

Over and over again, government has shown itself to be too clumsy, too near-sighted, and too simplistic in its world view to manage the economy, or much else, effectively.

It is time to topple the king.

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1 thought on “Bush’s Bail-Out and Unintended Consequences

  1. Leslie,

    I was recently shown a webpage called Decision Moose. The guy who runs it basically rotates a limited set of exchange-traded funds to produce what he thinks are optimum gains. He accompanies his weekly picks by some commentary. So basically, he is like thousands of other financial analysts out there.

    This week he had some interesting commentary (in the part of the web page called “Moose Calls” which, unfortunately, he does not seem to archive on his website). I laughed out loud when I read this:

    Government, after all, is to management as chimpanzees are to nuclear physics. In either case their endeavors inevitably blow up in our faces, covering us with blackened banana peels and flaming monkey poop. Moreover, there is always the attendant worry that either could lead to the end of civilization as we know it.

    I hope that amused you.

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