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Today’s actions by the House of Representatives spooked the market, no doubt about it. But the actions they proposed would have put the US Taxpayers behind the 8 Ball and allowed the stupidity of the Wall Street banks to go unpunished.

Sure the  market dropping is not fun. 777 is a number for Vegas not the stock market (that is how much the Dow fell today.) But that is not the end of the world.

Economist Brian Wesbury, of whom I am turning into a big fan, has this to say.

The isolated storms in housing, finance and energy, are now being exaggerated by excessive government intervention (on a knee-jerk basis), mark-to-market accounting and panicky words from political leaders. As a result, consumers are pulling back, credit is being squeezed even to solid, well-run businesses and the economy is being threatened by this spreading panic.

The housing market has struggled, gas prices soared as oligarchs and despots have manipulated oil supply and a  surging worldwide demand sucked up inventory. But the economy has not fallen into a recession even after the media  has talked it down. In fact, Brian makes another great point.

Never in history has a drop in consumer confidence caused a recession. But that does not mean there won’t be a first time. It could happen in the next few months and we would expect to see some very negative data on economic activity. But this would be followed by an offsetting increase in activity following the psychological slowdown.
Productivity is still booming, and so are exports, the Fed is exceedingly accommodative and tax rates have not been hiked. Moreover, oil prices are below $100 per barrel. Finally, all it would take to fix financial market problems today is a temporary suspension of mark-to-market accounting for a targeted set of illiquid assets.
In other words, any economic problems that the US faces in the next few months or quarters is temporary. Financial markets have priced in Armageddon, and as a result still present one of the greatest buying opportunities of our lifetimes. via First Trust.

So Wall Street threw a hissy fit that they were not going to get the taxpayer pot of gold at the end of the rainbow. In the long term the country may be much better off without a 700,000,000,000 dollar liability.

Related posts:

1. Another Voice For Mark to Market Reform
2. Economy Grows 3.5 Percent in 4th Quarter Even With Housing Slowdown
3. Investors Optimism Hits 10 Month Peak
4. Bernanke Says Mortgage Troubles Not Spreading
5. Market Down To Market - An Acccounting Change That Could Free Up Wall Street