no way, jose!
unless you've been hiding under a rock for the last few months, you've been reading, or at least seeing headlines about this "sub-prime" mortgage fiasco.
this is yet another example of how completely incompetent "liberal" economic policy is through it's tenet of governmental non-interference in the marketplace and also proves for the need not for occasional regulation, used only as a last resort to pull markets out of a bad situation, but constant, permanent regulation to avoid these avoidable situations in the first place. but we all know that will never happen.
national reserve banks in vulnerable industrialized nations have propped up their private banks by giving them billions of dollars to weather the crisis. during financial catastrophes banking institutions are extremely vulnerable and can make a bad situation the end of the world. when a panic happens people withdraw all their money from their banks, for fear of these banks liquidating along with people's savings. problem is, banks never have enough cash on hand to be able to fulfill the demand of every one of their customers withdrawing their entire accounts simultaneously. the money that was deposited, or more precisely "lent" to the banks is immediately lent to others in the form of mortgages, car loans, hedge fund money, bonds, etc. and therefore becomes tied up in these other financial transactions, which may take years to fulfill. so, if there is a panic and everyone withdraws simultaneously from all their banks, the entire banking system could collapse as the banks simply don't have that kind of money. this has happened several times before, but hasn't happened much since the creation of the federal reserve. the federal reserve, or "fed" guarantees people's deposits up to a certain amount should banks fail, but if they do fail and the fed is required to pay out a significant amount of money at once, it still creates a tremendous strain on the flow of money.
in the case of the current situation, money that was lent via risky no-money down/exhorbitant interest rate loans to people with bad credit or no money has simply vanished due to the high numbers of defaults on these loans. think about this for a second, industry-wide there is a trend of giving high-interest loans to people with bad credit. the people who took out the loans had it in their cards that they weren't going to pay them back in the first place, as they can't even pay their gas bills through either negligence or lack of money and now look at the consequences. an industry-wide failure that has the potential to bring down other industries and economies. looking at bloomberg now, brazil's bourse has lost 7 percent and mexico's has lost 5 percent of their total value in one day. the united states is dead against the idea of foreigners penetrating it's boundaries, but perfectly fine with it's financial troubles penetrating world markets.
what this boils down to is the perpetually inane battle for industry de-regulation. the results are always the same, a market left to it's own devices, sans regulation eventually leads to failure, either through corruption as was the case with the savings and loan scandal of the 1980s, or failure due to risky practices, like we are seeing now. once a failure becomes evident, regulation always comes to the rescue for a short time, until the de-regulation camp eventually erode the standards and the cycle starts all over again. the great depression is a great example of this. there was a total capitalist system failure. and what saved capitalism? socialism. the american financial system was it's strongest under the new deal model and was the new deal was as close to socialism as the united states ever got, to be devastated by ronald reagan in favor of an un-regulated market approach years later.
the idea that markets should be left to their own devices in defense of "freedom" as prescribed by economic "liberals" is a great idea in theory, but reality is different than theory.
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