Letter: Distorted, misguided government policies caused free market failure

Distorted, misguided government policies caused free market failure

In the 1990s, I used to give speeches on federal government deficit spending and the potential problems it would cause. Consequently, I have not been surprised by the recent financial turmoil that has devastated our economy.
While the Congress and many consumers want to blame the free market, the irony is that most of the issues that confront us are due to the failed policies of the federal government and the Federal Reserve System.

It was a market that was distorted and manipulated by misguided government policies that failed.

Arguably, the linchpin of the financial avalanche was the sub-prime mortgage collapse.

Artificially low interest rates and Congressional regulations gave birth to the sub-prime mortgage debacle. The Federal Open Market “Committee” of the Federal Reserve set the interest rates, not the free market.

Free markets allow willing borrowers and lenders to determine market interest rates, not committees.

The artificially low interest rates allowed too many marginal borrowers, speculators and second homebuyers to enter the market. This unnatural explosion of demand caused an over supply of housing. When interest rates began to rise, buyers disappeared, foreclosures increased and the real estate market collapsed.
Interest rates alone do not create a market. Money or credit must also be available. In the early 1990s Congress eased the capital requirements of the Government Sponsored Enterprises (GSEs) of Fannie Mae and Freddie Mac.

Blaming the free market is dangerously misguided. The blind faith placed in the government to manage the markets has turned to desperate faith that the government can be the economic savior of last resort. Distortions and inequities occur in free markets as well as controlled markets. However, the invisible hand of the free market recognizes and corrects inequities more efficiently than interest rate committees and a governing body that has 535 members on its board of directors.

A. Denson Lipscomb
Auburn

Auburn board of trustees rivals shady world of Chicago politics

Bravo to you, Paul Davis, for your monumental, open letter to Auburn University President Jay Gogue! You said it all and said it well. But of course there were responses from the eternally offended, offended by any disagreement with our “infallible” board of trustees, no matter how insane their decisions are, no matter how the world laughs, no matter how Blagojevichian the dance of lies and trickery becomes. Our board of trustees makes Chicago politics look like kindergarten chats.

Right on, Paul!

Nicholas D. Davis
Auburn

Message of Salvation on front page Christmas Day was outstanding

Do you guys rock or what? Putting the salvation message of Jesus on the front page Christmas morning! Praise the Lord!
Thank you, God, for your great love toward us!!

F.W. Kerry
Valley

Christmas story on front page was marvelous, tasteful

What a thrill it was to receive my Opelika-Auburn News on Christmas morning.
To see the front page spread of the Christmas story was overwhelmingly marvelous and brought chills to my bones!

What a testimony it is to this area of Alabama to tell the world of the Savior of the world being born. I can’t tell you how grateful I am for your paper proclaiming this message to Lee County.
May God’s Spirit continue to fill your heart with the peace, joy and love that only His presence can bring.

Vera Smith T
Opelika