Sub-prime Bail Out

[ZenGum]

Originally Posted by Radar

There are only 2 choices.

1) Free-Market capitalism which does not require force to exist.

2) Everything else.

I am imagining Radar's childhood colouring books ... no colours, just black and white. And not one scribble over the lines.

Seriously:
Force is inherent in a capitalist system. Robbery is the most extreme form of capitalism. Either a system allows robbery (with force) or forbids it (by threat of punitive force). Some force is inescapable.

No market can exist without some kind of government intervention in the form of the regulatory environment that creates the conditions for the market to exist, such as banning fraud, stipulating accounting standards, and so on.
I acknowledge that you were denying the appropriateness of bailing out sub-prime borrowers, presumably with buckets of cash, which is a very different kind of intervention from this regulatory framework intervention. But there is a wide spectrum of possible interventions that fall in between (eg. cutting interest rates, injecting cash for liquidity, etc) and your (EDIT) zero intervention approach doesn't cope with this reality.

You say that markets always take care of themselves. Markets can be manipulated; they can swing wildly and irrationally, and real people get badly hurt by these swings.
Here, I think, is the root of our difference. Maybe markets do always take care of themselves. I don't care about the welfare of the market per se. Markets don't have feelings, interests, needs, in anything but a metaphorical sense. They have no value in the giant moral or utilitarian calculation. They are only of interest insofar as they serve to advance human interests.
It doesn't matter if the market can take care of itself. I care about taking care of the people. And I mean all people, not just brokers or investors or foolish mortgagees.

BUT! I agree that most interventions, like price limits, quotas, subsidies, tariffs, and such, usually provide temporary relief at the cost of making the problem worse in the long term. Bite the bullet, get it over with.
I am also opposed to middle-class welfare. I am opposed to rewarding greed and foolishness (it will just encourage more). And I don't have a solution to the sub-prime crisis that won't involve a lot of people loosing homes they can't afford. This is very rough on them, but ... in this case ... I don't support a buckets-of-cash bailout.