I remember it well. Some of you do too. The market had collapsed. The banks and brokerage companies were in big trouble. Auto companies were going broke. States were not making it. Cities collapsing. The VIX was at an all time high. People were terrified.
It was the end of a long session of insanity in the market. Irrational exuberance it had been called. It was correction long overdue.
I railed against the response to this insanity when the collapse came. I was not alone. I did not prevail in my opinions. Now I am convinced I was right. What if common sense had reigned and not political expediency, we would be far better off today than we are now. Here are the things I would have done or not done:
Let the banks that were weak go broke. There were plenty of strong banks positioned to pick them up if they had failed. That's the way free enterprise works. It would have been far better then pouring money down a rat hole and never get it back as we did. Supporting people who simply failed. They were not worthy of our support and did not deserve the bailouts we gave them.
The insurance companies that seemed so essential that we poured billions into them for no good reason. AIG as an example. I know the economic arguments. They were guarantors for loans and under writings. There were others willing to take those risks.
The brokerage houses that seemed so essential should have been allowed to go broke. The customers would not have been harmed. There was no danger... their interests would have been taken up by others anxious to make money on their accounts.
The automobile companies should have been allowed to fold up. The residue would have been picked up quickly by other companies. Yes the unions and their contracts would have been destroyed. Yes some supplier companies would have gone broke. That's what happens. People would have been out of work...for a while. Soon someone would have come in as they did with Hostess Twinkies, make new deals, new contracts with labor and we wouldn't have that stupid Volt car today. Chrysler might have been picked up by Fiat anyway. There was and is plenty of money available to buy up the assets.
Letting failing companies, states and industries would have been far preferable to what we have now. Our national debt would be HALF what it is now. We would have far more powerful industries, banks, labor market, insurance, brokerage and states would have already come to reckoning.
THEN the worst thing we did was pour money into the economy. I oppose Keynesian economics of any kind. I despise the government picking winners. That's what we did. Green energy that has turned out to be a total dud. Windmills, ethanol, solar panels. Money wasted. Then the stimulus. Much of it spent to prop up failing systems of teachers, unions and state governments.
IF we had put HALF the stimulus money into Nuclear Power Plants we would have less.
So much of what we were told would save jobs, cost them. Yes, the downturn would have been severe, the unemployment huge, the pain incredible. YET it would have been short term. The rubble would have contained enormous opportunity for the bold. March 6, 2009 might have been 3000 not 6000, yet today we would be on solid footing.
We already had enough laws in the bankruptcy code to allow things to recover. All the money we spent propping up failing industry was wasted.
There are many many other programs that were wastes. It was non partisan. I remember BEN STEIN who was on TV saying we HAVE to do this. Our economy will collapse. He is supposed to be a republican. I screamed at the TV set and said NO IT WON'T.
But in the end the big banks, big insurance, big government, big business, big labor won.
We are worse off for it.
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