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Sept. 21, 2011, 12:01 a.m. EDT
By Daniel Englander
NEW YORK (MarketWatch) "” Contrary to popular belief, our problems are not intractable; they simply require a willingness to make prudent, long term, and, yes, difficult choices.
These decisions center around two themes: getting government out of the way and increasing the accountability and feedback loop for more of the country.
Said a different way, we need to allow the market to make as many business choices as we can and avoid problems that arise when government goes where it does not belong.
Here goes:
The Federal Deposit Insurance Corporation, a government entity, provides guarantees to depositors who place their hard-earned money in banks. Banks pay deposit insurance, but it is far too good a deal for them. If there were no FDIC, banks would have to compete for deposit cash like other businesses compete for customers. Sounds crazy, but this competition thing has actually worked out well for the United States. Maybe banks with their convoluted, highly leveraged balance sheets would be shunned by the market. I am confident that the localized judgment of Mr. & Mrs. Average American would force better decisions on the banks than any government entity could.
The "GSEs" -- Government Sponsored Entities -- are currently in conservation. Despite their near-dead status, they are still propping up the housing industry. If they were shut down, the housing market would surely crash. Prices could fall as far as 50%, and quickly. But for every person that was over-extended and had to sell, there would be a buyer getting a great price that he or she could afford. Inventory would clear. People would be hurt, but the market would recover. Capitalism purges and corrects itself like this; it may not be pretty, but it works. The market should determine who gets credit, and on what terms. It would be impossible to do worse than Fannie /quotes/zigman/226360 FNMA -0.97% and Freddie /quotes/zigman/226335 FMCC +1.01% .
Can anybody explain why the government operates a mail delivery business? Is it possible some other entity could do this, and perhaps turn a profit? Last I checked, UPS /quotes/zigman/251269/quotes/nls/ups UPS -1.80% and FedEx /quotes/zigman/254280/quotes/nls/fdx FDX -1.90% were pretty darn good businesses, and they began as competitors to a government monopoly. If we shut down the post office, I have two predictions: a new business will figure out a way to deliver the mail (and make money at it), and the government will stop losing the billions it currently does providing the service.
For reasons that escape me, this country has decided to make ethanol into a key component of fuel. Never mind that it is more expensive and its benefits are yet unclear, to say the least. And...
There is an opportunity for the United States to become the largest exporter of liquefied natural gas in the world. Can anybody imagine the US as a meaningful exporter of energy? Could that have positive ramifications for the world we live in? Fortunately for us, we are blessed with an abundance of natural gas. The least we can do is level the playing field so that energy sources that make sense for our country have a chance to compete on their merits.
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