Sand wrote:
Then shall we assume the elected government is totally powerless before economic events that descend like natural disasters and we should all rid ourselves of the function of voting or manipulating the economy and sit on our hands and await the blessings or disasters of an uncontrollable fate? Whatever happened to analysis and comprehension of cause and effect?
This would be the other extreme, which in my option also false. Governments have their influence, they can provide the framework in which economy can work: The legal system, the infrastructure, the education standards, I would also count a social security network into the frame work, because a worker which can "fall back" on such a system is more likely to take risks.
Governments have also a place in to ease consequences of e.g. a depression for the single person. But if governments try to fight against major corrections of the markets (and the current crisis is such a correction by a rapid re-valuation of asset prices) they will cause more problems than they can solve.
An other problem are mere political payments, especially, but not exclusive wars. Such payments must be in reasonable relation to the tax revenue. When e.g. the richer EU-States are paying for their poorer member states and it paid out of the 1% VAT the EU gets, the relation is still well manageable. When Germany paid over nearly the last 20 years in the excess of €1'000 Bio. for the unification, it was perhaps the absolute limit for a political motivated payment for Germany (with severe consequences for Germany). What the Bush-II-administration did was to lower the taxes and raised the political motivated spending without giving the tax payer the bill. This on the short term convenient way, which was instrumental for winning the second term, bounces back now. And here is the main difference to Germany: In Germany they borrowed money, but they also raised the taxes and cut public spending elsewhere, so the government finances are still quite sound and "German Bund" are still regarded as the fool-prove-lowest-interest investment within the Euro-Zone.
I do neither deny that government must play a role, nor I would say that government intervention is the cure for everything. But the current situation is caused primary by government spending and raising this spending can't hardly be the fix.