Most Americans think that closing the markets for a day or two is the action of socialists and not an appropriate way to deal with the current credit debacle.

Nevertheless, the Russians like the idea and will shutter their markets until Friday. The government there has also put $70 billion into the financial system to improve liquidity. Tomorrow morning, the world will get to see whether the action helped.

If the Fed and Treasury are willing to take actions that undermine a free market system, closing the exchanges is an appropriate way to settle the panic down. On top of bailouts of AIG (AIG), Fannie Mae (FNM), and Freddie Mac (FRE), the Fed has offered several hundred billion dollars worth of loans at its bank and brokerage window.

A broad group of central banks from around the globe said today that they will provide another $180 billion to improve market liquidity in the hope that increasing access to capital will help alleviate a shortage of dollars. The theory is that this shortage has been driving financial stocks to multi-decade lows.

There is a large school of government officials and bank executives that believe that rampant speculation and short selling are causing a moment-to-moment panic which is destroying a system without giving thought to the consequences.

What would closing the US market for one day do? It would increase the already heavy hand that the federal government has placed upon market capitalization and the survival of some companies. The acts of socialism are already present.

But, closing the markets could have a second, more salutary effect. It might make traders stop and think, regroup for a moment, and reflect on whether making money from short-term trading is worth destroying the underlying system.

Douglas A.McIntyre

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