Ron Paul Says Don't Bailout Wall Street

Ron Paul has an interesting take on the investment bank collapse. He advocates entirely jettisoning Fannie and Freddie Mac and completely deregulating the industry. According to Paul, it's government regulation that artificially inflated housing market prices and that if the government keeps its fat face out of the business of housing loans, market forces will adjust accordingly and maintain the miracle that is free market balance.

What Paul says here is what I most fear: "Additionally, the government's actions encourage moral hazard of the worst sort. Now that the precedent has been set, the likelihood of financial institutions to engage in riskier investment schemes is increased, because they now know that an investment position so overextended as to threaten the stability of the financial system will result in a government bailout and purchase of worthless, illiquid assets."

Coming off bailout after bailout, what incentive does any U.S. company have to conduct themselves in a fiscally responsible manner? If they know they're big enough to bring down the entire U.S. economy, what's to stop them from throwing caution to the wind and gamble high-stakes style? If the U.S. taxpayer ultimately inherits the risk, what's to stop them from making a grab at all that juicy money?

I'd like to hear what some leading economists think of less regulation. It seems to me that not enough oversight led to this crisis in the first place. I'm not a trained economist though. If deregulation really is the solution, then that's what we should do. To be honest, it makes me blindly angry that Wall Street pissed so much money away and that our government will ultimately pull their asses out of the deep fat fryer. I'd like nothing more than to see them burn. I mean, thems the breaks of a free market system. But I don't see anyone, except for Ron Paul, pushing for letting Wall Street hang and twist in the cool autumn breeze. In fact, some economists won't even detail the consequence of letting bank after bank fail; they say it's too dire to even contemplate.

Halloween is coming up, maybe they can share the details then.