The Rebounding Economy OR When “Socialism” Works

If you’re looking for some good news about the economy this should be very encouraging:

It is hard to miss the news: the stock market has been on a bit of a roll lately. But with far less fanfare, the credit markets, where the financial crisis began, are also showing signs of a spring awakening.

The revival is tentative and, like the gains in the stock market, which pulled back on Monday, it may well prove fleeting. But analysts say the improvements suggest that investors are starting to get some of their old nerve back, mainly because of sweeping federal efforts to get credit flowing again.

Credit markets and stock markets have largely been riding the same updraft in the last four weeks. A swell of optimism, ignited by the government’s new bailout plans and some positive chatter from banks about their profitability, has lifted shares from their lowest levels in 12 years and rescued credit markets, which had been stumbling back toward the bad old days of last year.

Government intervion into the free market is working?!?! I REFUSE TO BELIEVE THAT! But despite the dogmatic beliefs of certain people on the right this appears to be true.

If the credit market picks up in the United States, that would be a huge step in ending this recession. As the article states, the credit market is the part of the economy most effected by the poor economic climate. When banks and other lending institutions refuse to extend credit people can’t buy houses, small business owners can’t expand their business, and corporations can’t build new projects or buy other businesses. So with credit flowing again, the life line of the economy, there’s a good chance unemployment rates could start to drop and consumer spending began to increase. After all new projects and expanding businesses mean more jobs and ultimately more money flowing through the economy.

One last note, for all the complaints about government intervention, we often overlook one of the biggest benefits. A government guarantee is as good as gold in the private sector. Hate the government all you want but its true. (Treasury bonds anyone?) For all its misgivings, the government has one thing no private business can ever offer. Infinite resources and reliability. So when the government shows a commitment to restarting the credit market, businesses understand that whatever might happen the government will be there to back them up.

Which just goes to show, at their darkest hour, the free market is indeed a socialist.


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