Email Sent November 24, 2008

You consistently demonstrate far more insight into the crisis than any of our policy makers. Capitalism, free markets, market determined prices and Libertarianism are about the only things you can depend on in the world of economics and politics.

The car companies were destroyed by the government. Unions created unfunded pension liabilities that add thousands of dollars to every car. Union workers earn $75 an hour versus the Japs in the South who pay $48 an hour. Then the fuel restrictions and Green aspirations of the Congress have created an environment where they don't have a chance. There is no reason why we need 3 or even 2 car companies in this country. Not to mention if there is a need more will spring up. Saturn.

All the Wall Street prosperity of the last 5 years was a false house of cards, yet lots of people made lots of blood money. Plenty of bonuses will still be paid, but no where near the zenith.

You mention that the car companies can barely operate in good times. Our entire economy has been geared over the past decade to operate in an expanding credit environment and an economic bubble. Entire industries have been built to only work during "great" times. 10 years ago there wasn't a single $1 billion casino in Vegas. Today around 10. Restaurants have proliferated as people had money to eat out. Malls have grown at an unbelievable rate as cheap, easy money and aggressive developers built them everywhere. Condos, houses. The car companies have sold to everyone who might have ever wanted a car with Zero percent down offers. etc.... All of this will reverse itself. 2009 will be a year of massive bankruptcies in anything to do with retail or consumer.

Every sizeable action taken to date by the government has accomplished nothing and likely made things worse. The primary reasons:

Govmt. refuses to recognize that it was their intervention which caused the bubble and has triggered the catyclism. If you don't understand the cause how can you fix it?

Govmt. does not understand the law of unintended consequences. The Bear bail-out caused Lehman to not raise money because they thought access to govmt funds was enough. Private equity wouldn't invest in Fannie/Freddie because they didn't know the terms of a govmt bail-out. TARP has every city, state, company, industry, etc... lining up for handouts. Insurance companies are buying banks to get free money. Healthy companies are accepting money because they don't want to appear too weak to qualify. AmEx turned into a bank. Govmt actions simply distort the market and make thigs worse because the free market way is always best.

Govmt can't do nothing. It isn't in there nature and it isn't politically viable. We would be better off with nothing, but the politicians need to appear to be trying to help.

The stimulus checks did nothing as employers recognize that they are one-time events and that things will get worse. And who benefitted from the checks? The Chinese who made the goods.

Obamas giant 2 and 1/2 year stimulus plan resembles FDR. Unfortunately building bridges accomplishes nothing. As you know WWII got us out of the great depression as the entire manufacturing industry started to supply the allies in a massive way. Then 11 million men were pulled out of the economy but still needed to be supplied.

The ONLY thing that will work is unfettered capitalism. Let the markets clear. And slash taxes on EVERYTHING. Sustainable opportunities to form capital, make investments, build businesses are the key, not govmt direction.

The really scary one is that govmt appears intent on trying to prop up housing prices or delay inevitable foreclosures, which will drag this thing out.