The financial world has turned topsy-turvy. Screaming headlines and newsmakers are saying this is the worst economic time since the Great Depression, or at least since 1982. The more alarming voices are saying that this is the end of American commerce and the death of capitalism.



I’m just going to hide under the covers. I won’t reappear until the worst is over.



No doubt, people are hurting. But this is definitely not the end of modern civilization. Recessions are cyclical. To combat the issues, the Federal Reserve Board has cut interest rates and loosened the money supply. Prices will fall. Bank will lend. The economy will hit a bottom and then accelerate.



Nevertheless, some serious questions are being raised as to what extent federal and state governments ought to regulate major institutions such as banks and utilities. Make no mistake: I’m unabashedly a free marketer. But from this statement one cannot infer that I or any other like-minded person believes in unadulterated laissez-fair economics. Regulations exist to ensure that markets are open and fair.



In the late 1990s and early 2000s, some unscrupulous power marketers and traders gamed the system, all under the well-appreciated goal of “maximizing profits.” It went beyond that, though, to “milking Aunt Millie.” It took the Federal Energy Regulatory Commission a while, but it eventually stepped up and tried to fix the problem.



A similar set of circumstances have surrounded banking. Loose money and easy lending standards in combination with little oversight led to a fiasco. Many of those financial institutions said they would soar if government just left them alone. Now, they are the recipient of the largest government bailout in American history at $700 billion.



Capitalism works. But markets must be properly regulated. The line of distinction between free markets and protections is murky and debatable. But if confidence is to be restored – and the economic cycle is to reverse its current course -- all Americans must be assured that the game is properly officiated. ###

The financial world has turned topsy-turvy. Screaming headlines and newsmakers are saying this is the worst economic time since the Great Depression, or at least since 1982. The more alarming voices are saying that this is the end of American commerce and the death of capitalism.



I’m just going to hide under the covers. I won’t reappear until the worst is over.



No doubt, people are hurting. But this is definitely not the end of modern civilization. Recessions are cyclical. To combat the issues, the Federal Reserve Board has cut interest rates and loosened the money supply. Prices will fall. Bank will lend. The economy will hit a bottom and then accelerate.



Nevertheless, some serious questions are being raised as to what extent federal and state governments ought to regulate major institutions such as banks and utilities. Make no mistake: I’m unabashedly a free marketer. But from this statement one cannot infer that I or any other like-minded person believes in unadulterated laissez-fair economics. Regulations exist to ensure that markets are open and fair.



In the late 1990s and early 2000s, some unscrupulous power marketers and traders gamed the system, all under the well-appreciated goal of “maximizing profits.” It went beyond that, though, to “milking Aunt Millie.” It took the Federal Energy Regulatory Commission a while, but it eventually stepped up and tried to fix the problem.



A similar set of circumstances have surrounded banking. Loose money and easy lending standards in combination with little oversight led to a fiasco. Many of those financial institutions said they would soar if government just left them alone. Now, they are the recipient of the largest government bailout in American history at $700 billion.



Capitalism works. But markets must be properly regulated. The line of distinction between free markets and protections is murky and debatable. But if confidence is to be restored – and the economic cycle is to reverse its current course -- all Americans must be assured that the game is properly officiated. ###