My friend Bob Gelfond has this nice lead letter in today’s Wall Street Journal ^[1]:

I’m dismayed to see the
Journal’s editorial page give up its strong free-market principles in
supporting the Paulson Plan with some minor tweaks ("The Paulson Sale ^[2],"
Sept 24). You have led the way in exposing government actions through
regulation and support of government-sponsored enterprises as being the
major contributors to the current crisis. Yet how is it that when the
crisis deepens, the solution is for more government?

The lesson of past
financial inflection points is that we must let the markets reallocate
capital from less efficient to more efficient uses. The sad fact is
that we need to go through a brutal process of resizing down our
financial and real-estate industries. Actions to try to recapitalize
doomed financial companies only postpone the day of reckoning, which
will make matters worse as the Japanese learned in the 1990s.

Bob Gelfond
New York

Indeed so.

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