Option1307 (30.48)

The most redeeming feature of capitalism, is failure...

December 28, 2009 – Comments (1) | RELATED TICKERS: F , AI , L

Mish has another excellent blog up covering a recent article from this week's Barron's.

Any healthy system needs a way to correct error and remove waste. Nature has extinction, the economy has loss, bankruptcy, liquidation. Interfering in this process lengthens feedback loops. Error and waste are allowed to accumulate, and you ultimately get a massive collapse...

As a country we've become less tolerant of economic failure. The result has been a series of interventions, such as meddling in the credit markets, promoting homeownership and creating a variety of safety nets for investors. Each crisis leads to an even greater crisis. The solution is always greater doses of intervention. So the system becomes increasingly unstable. The interventionists never see the bust coming, then blame it on "capitalism."

See the rest of the blog here:

I'm not saying that I agree with everything the article proposes, in terms of how we could have better handled the financial crisis last year; ultimately we probably did have to do something because we were so far down the hole after years and years of intervention etc. However, I certainly do feel that we could have done more to help out the "little guy", and focused less on bailing out wallstreet.

On a side note, many people made a name for themselves by "calling" the housing/financial crisis last year. While I am in the camp that expects a significant correction to the overall market, it'll be interesting to see how many of these market guru's lose their credibility if in fact one does not paly out.

I personally feel the market is currently overvalued and I am not buying anything right now. However, I am completely aware that the market does not mimic reality that often and can stay irratioanl for a long time. I prefer to sit this inning out until I have a better handle on things. Whenever that may be...

Happy holidays fellow Fools!