With all the talk of a government bail out, the Libertarian Party says we should just let Freddie and Fannie fail.
The Bush administration wants to rescue Freddie Mac and Fannie Mae from financial collapse, but Tim Peterson, Fifth District Chairman of the Libertarian Party of Wisconsin , says government bailouts are nothing more than welfare for businessmen. Peterson says the bailouts are destructive to the market place.
"When the government meddles with the market you end up having unintended consequences down the road and that's exactly what we're seeing here."
Peterson favors a downsizing of federal subsidies for Fannie and Freddie rather than rewarding their bad behavior. He believes government bailouts decrease the incentive for these institutions to make responsible decisions, and government support unfairly socializes the risk.
"Well certainly anytime the government does a 'bailout' we all need to consider where that money comes from. Although it might not come directly from taxpayers, it comes indirectly from every worker in America."
Peterson says the government does not have "fairy dust" it can sprinkle over financial markets and make things all better again. He says the solution is simply hard work, and letting the markets prevail. Peterson says people have a better chance if they can see it coming, so government should not distort the markets because everyone pays.
Meanwhile, Peterson says Libertarians have been warning people for years that there would be bank runs, and the price of gold and other such commodities would increase substantially.