I always wondered who starts these think tanks and what qualifies an entity as a think tank. I don’t think this statement is ground-breaking but I didn’t see it widely reported so I might as well do it since I am tired tonight and can’t come up with anything better.
Government made the financial crisis
At the initiative of think tank leaders gathered in Tbilisi for the 5th European Resource Bank a public statement was made about the current financial crisis.
The document, signed at that point by 38 think tank leaders, is attached below.
Feel free to use it in anyway that would seem appropriate.
This statement is of course not the final word on the cause(s) of the crisis and on what should be done next. But it will help establish the fact that many intellectuals and experts don’t share the unfortunately widely spread idea that this crisis is the crisis of capitalism.
Government Made the Financial Crisis; Let Us Not Make It Worse
15 October 2008
Representatives of economic policy organizations throughout Europe released the following
recommendations to deal with the global financial crisis.
The basic cause of the global financial problem was that the U.S. government, along with other
governments, engaged in excessive credit expansion and pressured banks to make loans –
particularly home loans – to unqualified buyers.
Therefore:
1. We believe that responding to the credit crunch by adding more liquidity in the market is a
short-term fix that will only help banks that were mismanaged, and will fuel inflation.
2. We believe governments should facilitate, and not hinder, the process of the market
determining prices that realistically reflect supply and demand.
3. When hard times come, governments should share the burden with businesses and consumers(cut public spending and taxes) and not try to insulate themselves from the harm they have caused.
4. Governments should refrain from rescuing particular businesses or business projects. The
cost of saving businesses that failed will fall on the shoulders of others, through increased
taxes, inflation, or capital misallocation.
Free market capitalism has proven to be the only system which leads to sustained economic
progress and respect of human liberty.
Signed,
Lithuanian Free Market Institute, Lithuania
Institute for Global Economic Growth, US
Institute for Fee Enterprise (IUF), Germany
Institute for Market Economics, Bulgaria
Friedrich von Hayek Foundation, Slovakia
New Economic School, Georgia
Liberalny Institute, Czech Republic
Hayek Institute, Austria
Adam Smith Research Centre, Poland
European Center for Economic Growth, Bruxelles and Vienna
The Institute of Economic Analysis, Moscow, Russia
Institute for Research on Economic and Fiscal Issues (IREF), France
Contribuables Associes, France
Instituto Bruno Leoni, Italy
Project Lodz Foundation, Poland
Association for Liberal Thinking, Turkey
Mises Scientific Research Centre, Belarus
Estonian Free Society Institute, Estonia
Institute for Economic Studies, France
The TaxPayer’s Alliance, UK
Ludwig von Mises Institute, Poland
Competitive Enterprise Institute, USA
Ioan Barbus Foundation for Freedom, Tradition and Capitalism, Romania
Liberales Institut, Switzerland
Institut Constant de Rebecque, Switzerland
European Taxpayers Association
Association pour la Liberte Ecomique et le Progres Social, France
Paneuropabewegung, Austria
Liberte Cherie, France
Conservative Institute of M. R. Stefanik, Slovakia
European Policy Network, UK
Institute of Economic and Social Studies, Slovakia
CADI, Romania
Globalization Institute, Poland
OHRID Institute, Macedonia
Israel Center for Social and Economic Progress, Israel
Progressive Vision, UK
Public Association for Assistance to the Free Economy, Azerbaijan
Hayek Foundation Moscow, Russia
Albanian Liberal Institute, Albania
Kosovar Institute for Public Policies, Kosovo
Polish American Foundation for Economic Research and Education, Poland
Educational Initiative for Central and Eastern Europe
Liberty Institute, New Delhi, India
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11 responses so far ↓
1
travel
// Oct 22, 2008 at 6:46 am
I agree. Where was this statement published? Bet it will never see the light of day in the mainstream media or press.
2
m.v.
// Oct 22, 2008 at 6:52 am
I have a links to both the site and the statement in the post. I saw it linked on some Russian site.
3
Nuke
// Oct 22, 2008 at 11:23 am
Interesting post. Thanks for sharing.
4
Burrowowl
// Oct 22, 2008 at 12:30 pm
It’s astounding! 38 libertarian free market types get together and agree that the government having any hand in the market at all is bad? It’s like a miracle or something. The Ludwig von Mises reference is a dead giveaway. This is like having 38 bishops hold a conference and concluding that Jesus is good.
5
m.v.
// Oct 22, 2008 at 1:42 pm
moot point anyway since we don’t have a free market, however I agree with point #4: selectively bailing out businesses is fishy.
6
DKC
// Oct 22, 2008 at 5:06 pm
This whole mess was not caused by a black guy in Idaho with a bad mortgage, it was caused by huge investment firms using tools and financial devices which no one understands fully and getting horribly, horribly greedy. Scientists, not particularly well versed in macro economics, created algorithms and other foolishness that they believed made market creations failsafe… the ignored the unquantifiable … human emotion.
7
m.v.
// Oct 22, 2008 at 5:24 pm
I have a slightly different take on this: I agree that greed was the cause, but a large part of the population was able to cash in i.e. how many people became highly paid realtors, mortgage brokers, developers, etc. PBS profiled a barman who went on to make 75k/month at the brokerage. Builders, appraisers, contractors, designers, house flippers, TV shows about flipping houses - lots of people, no one stopped and said a word. It’s useless to look for who to blame now, millions of people were in on it.
8
DKC
// Oct 22, 2008 at 5:32 pm
All true but as the greed moved up the scale and derivatives were piled on derivatives unregulated, unbacked by reality and uninsured by sufficient capital, the bubble became to big to sustain. I don’t care about blame, but cause is vital to prevention in the future. It was too much government on one side and not enough on the other.
9
Burrowowl
// Oct 22, 2008 at 7:57 pm
Blaming the market troubles on “greed” is just silly. Greed and fear have always been the strongest players in market psychology. Fear failed to keep speculators in check, so greed took things a bit too far. Now fear had reared its head, and the market is sorting itself out. Fear is what failed here, not greed. Greed did its job just fine.
10
Moscow travel
// Oct 23, 2008 at 12:49 pm
It is a joke to blame markets now. The root of the problem is subsidized capital that was mandated by the wrong policies of the Fed. Free money caused market distortions. It is not the markets people. It is the governments.
11
DKC
// Oct 23, 2008 at 1:20 pm
Nope, it’s the markets.
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