Messing With Markets Again

Campus Report ^ | September 11, 2008 | Lance Nation

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Messing With Markets Again

by: Lance Nation, September 11, 2008

Currently the housing market has been of particular interest to politicians and the media. For example, the Bush Administration seized control of the two mortgage giants Fannie May and Freddie Mac. This takeover is an example of government control which hinders a free market society. “Consider the fate of mortgage lenders and homeowners,” writes Llewellyn Rockwell Jr. in Market During Crisis.

“The markets became wise to the fact that loose credit led to a fantastic bubble and that trillions in traded mortgages might not be serviceable in an environment of downward price pressure. Companies that were once seen as valuable and liquid are suddenly seen as unstable and wasteful. Their stocks are shorted by sellers. Their price crashes. Reality is revealed.” Now, government interference prevents the market from correcting itself, Rockwell points out in the The Free Market newsletter, which is published by the Ludwig von Mises Institute. “Bad investments need to be avoided. Good ones need to replace them. That is the very core of what all this economic activity is all about. If the informed guesses of traders turn out to be wrong, there is a profitable opportunity for other traders to guess more accurately. To dampen this spirit is to do nothing but prop up illusions and perpetuate error.” Another point of interest for consumers, politicians, and corporations has been the increasing price of gas. “[Toyota recently decided] their plant in Blue Springs, Mississippi (which is under construction) will produce the gas-sipping hybrid Prius, not gas-guzzling SUVs. They are also going to consolidate their truck production operations in their San Antonio plant,” explains Art Carden in the same issue of that newsletter...