Don't write off the free market yet - we need to first give it a try!

I take issue with Roger Bootle who seems to argue that the collapse of Lehman Brothers somehow put paid to the free market.

They should never have bailed out LTCM - or cut base rates to support the market in 1987 and 2001 - or allowed any bank or financial institution to become so big.

They should never have used Fannie Mae and Mac to extended liar loans to people who could not pay.

They should never, ever have messed with the price of money - because that is messing with the price of risk - and when that happens you get a gross mis-allocation of resources that leads to asset price bubbles.

We need more risk in the system not less. We need floating currencies and floating interest rates. We need to get away from this socialist idea that the state can prevent busts yet deliver perpetual booms.

We need more volatility to keep the market on its toes - rather than lulling people into a false sense of security that leaves them shocked when the inevitable crisis hits. (Better to deal with rolling hills than miles of fens followed by jagged mountains.)

Banks need to be smaller and leaner. Markets need to be more transparent and efficient - that means less government interference not more.

Blessings for an end to moderation and meddling.

Father Ignatius Brown

http://www.father-ignatius-brown.com/