Government Intervention to Achieve Free Market Bliss?

That appears to be the logic peddled by a member of a Free Market think tank. What's really stunning about this piece is that its author, King Banaian, stipulates that it was government interference in the first place that caused this mess.

The “free market” did not get us into this mess, but we need the free market to get us out. For that to happen, the free market needs government as a partner, whether conservatives like that idea or not. …

[W]e suffer from more than a liquidity crisis at this time, and the most disconcerting for the free marketer is that many assets and derivatives on the banks’ balance sheets have an undetermined price. Mortgages on real properties are relatively easy to liquidate, but some other bank assets are relatively new securities innovations that turned out to be bad ideas. How these will be liquidated is unknown.

Ideally the government can act as a “market maker of last resort” in these securities, just as the Federal Reserve was envisioned as a lender of last resort for the liquidity crises of old. If the government can create a market where none exists, our system might recover without too much violence done to it.

Free markets do not mean always private markets. Free markets mean markets with an absence of coercion. It is possible for government to step forward for a missing market and not be coercive. A bailout that did not consume taxpayer dollars would be one example.

Well, with all due respect to King Banaian, free markets don't have partnerships with the government. Apparently Mr. Banaian is having a little trouble understanding the definition of the word free. A FREE market is FREE from government intervention, savior, or whatever euphimism some fair weather free market thinker wants to use. A free market is not free if it is bailed everytime the free market causes a crisis. I fact, a true FREE market is allowed to work out its own crises on its own without the steady hand of government intervention.

I have been stunned by the army of so called free market thinkers from Steve Forbes, Jack Welch, Dick Grasso, and Warren Buffet that have thrown their entire philosophy out the window because of this crisis. Now, frankly, what is clear is that they see this crisis as so severe that they believe that desperate times call for desperate action. That is a position I can respect. I will disagree with it but I respect it. What I don't respect is so called free market thinkers justifying and dressing up their government intervention pragmatism as some sort of back door free market approach.

It isn't. Let's call this what it is. There are really bad bonds and they have spread through the system like a cancer. Now, many believe that unless they are removed en masse from the system the entire system can't function. That maybe so. I don't know. I do, however, know that the government removing them from the system by force is nothing like a free market. Let's call a spade a spade. This is socialism and all so called free market thinkers that support it should at least have the courage of their convictions to admit that this crisis has shaken their belief in the free market.