I found it humorous that Countrywide Financial Corp.'s CEO Angelo Mozilo was quoted in "Mortgage Crisis Extends Its Reach" (Page One, Nov. 13) as justifying government intervention by stating, "Capitalism isn't perfect." I think that capitalism is working just fine without government intervention, handing Countrywide and others billions of dollars in losses for acting so irresponsibly. What's unfortunate is legislators' eagerness to intervene, guaranteeing even more ill-advised loans, which amounts to a forced transfer of wealth from solvent middle-class taxpayers (and their descendents) to those responsible for the mess.
Capitalism only works when those who make bad decisions are allowed to fail or to get out of trouble on their own. Socialism doesn't work because it tries to save people from themselves, thus prolonging the effects of bad decisions and encouraging more bad decisions. Milton Friedman, in his book "Free to Choose," pointed out the difference: When companies fail, they go out of business, provided they're left on their own. When a government project fails, it gets bigger. It appears we're about to see that in action with Fannie Mae and Freddie Mac and the guaranteeing of jumbo loans at a time when housing prices finally are starting to revert to the mean on their own.
~ Brendan Conner, La Grange Park, Ill., "Capitalism Pays the Piper," The Wall Street Journal, letters-to-the-editor, November 28, 2007