BOOK REVIEW by Joanne B. Conrad, Meltdown

Meltdown

by Thomas E. Woods, Jr.

Full version)

Published 9-9-10.

Abolish Fannie Mae and Freddie Mac? Rework the Federal Reserve Board? Stop bailouts? Let them go bankrupt? A plethora of books have been written about the financial crisis, and Meltdown is another one with a different slant subtitled, A Free Market Look at Why the Stock Market Collapsed, the Economy Tanked, and Government Bailouts Will Make Things Worse.

This book disputes deregulation and unfettered free markets as causes. It claims government interference, including Federal Reserve Board actions, caused the calamity. Woods says, "...the very people who devised the policies that produced the mess are now posing as the wise public servants who will show us the way out....more regulation, more government intervention, more spending, more money creation, and more debt."

He points out that "economists of the Austrian school of economic thought...[are] the...people who predicted not only the Great Depression, but also the calamity we are dealing with today." Earlier this year, 200 economists signed a letter disputing recent policies. It appears recent policies are Keynesian, not Austrian. The point is that there are disagreements among economists, and there is no "consensus."

There is now a special White House Commission to investigate the 2008 financial crisis and report by December 2010. It will cost $5-8 million. It is Public Law 111-21, signed on May 20, 2009, by the President, and is officially the Financial Crisis Inquiry Commission (FCIC). It is rather pecular that a White Commission is charged with determining causes while, at the same time, the Administration is proposing new financial regulations. Is the cart getting before the horse?

It seems remarkable that so many ignored warning signs, regardless of differing schools of economic thought. An acquaintance often remarked over the last 10 years that something was wrong because of the burgeoning credit. It seems that he, along with many current protesters, somehow comprehends via some kind of gut reaction that things were, and still are, not right. It is sad that current protesters seem to be denigrated when protesters at other times have been regarded as patrotic or civic minded.

Readers of Meltdown will find a detailed examination of the Federal Reserve Board's and government's actions that caused the recent financial crisis, and, quite, possibly, more warning signs of more problems they may be causing. Woods ends, "...we can follow the...suggestions that prolonged the Great Depression and gave Japan its slump of nearly two decades, or we can try a different approach...." from what we are now experiencing.

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