Submitted by Gary McConnell, Sep 10, 2007 09:50

I couldn't disagree more with Mr. Kudlow. The problem has been caused by too much liquidity spawning an environment of credit-based over-speculation. Of course it never appears we have a problem when the credit is being created, but this inevitably leads to an economy that needs more and more debt to create less and less growth - the analogy of an addict needing increasing amounts of drug to get high is not misplaced. Recessions, while painful, are the free markets' way of purging malinvestment and resetting risk tolerances. Had Greenspan let the economy recess fully in 2001-2003, we might have tempered the housing bubble and been in a healthier position today. Instead, we are in the perverse position of seeing supposed free-marketers looking to government and the central bank to bail out speculators. Based on normalized profit margins and savings rates, equities and real estate need to fall significantly, and attempts to prop up the markets are ill-advised.

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