True North

Regarding the usurpation ...err...bailout proposed by Congress:

COBURN:  We have a patient with cancer, and they have secondary pneumonia because of the cancer and we're going to treat the pneumonia.  But we're not going to fix the cancer.  We're gonna ignore the cancer.  Let me tell you what the cancer is.  The cancer is Congresses for years upon years have totally ignored the Constitution of the United States and taken to us areas where we have no business being.  There is no way you can justify in the US Constitution that the country ought to be the source of mortgages for homeowners in this country, and yet Fannie Mae and Freddie Mac control 70% of the mortgages in this country.

When cornered by the media early last week, U.S. Senate majority leader Harry Reid warned that a solution to the turmoil in the financial markets wouldn't be forthcoming soon because, "No one knows what to do." A few hours later, Reid and a collection of bureaucratic and congressional cognoscenti emerged from a closed-door meeting knowing exactly what to do - put taxpayers on the hook for Wall Street's debt so bankers and brokers could take a balance sheet "mulligan."

Many politicos and pundits portrayed the prospect of a free-market Republican administration advocating government intervention and virtual public ownership of major financial institutions as the Armageddon of unfettered capitalism and the resurrection of more activist government.

But increasing uncertainty about the details of the proposed bailout and efforts to expand its scope only reinforce the reality that there is no one solution to the crisis, only trade-offs. Government bureaucrats necessarily lack the knowledge required to decide what those trade-offs ought to be. That is knowledge a single group does not have and cannot ever have. It's knowledge embedded in the market.