This housing bubble is starting to look serious. So much so, in fact, that I'm reconsidering my enthusiasm for the weak dollar. The main good thing about the weak dollar is that it makes American exports relatively cheaper compared to goods produced elsewhere. Unfortunately, the collapse of the housing bubble has done more than weaken the dollar. It has also made it very difficult to secure credit. Which means that, despite the weak dollar, we aren't seeing increased investment in the manufacturing sector. It's as if the invisible hand were in a sling.

All that said, I wouldn't say that I'm behind this proposal. Seems to me that lack of access to capital is not really the factor that explains the failure of the American auto industry. On the other hand, something is going to have to be done about the credit crunch because without investment the economy can't grow.

Lastly, there will be plenty of time later for libertarians to lecture us about the terrible cost, in terms of freedom, of averting global economic meltdown. For now, though, all the libertarians need to step out of the way while the adults get down to business and try to keep this (under-regulated) mess from snowballing into another Great Depression.

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