Saturday, March 15, 2008

The Ben Franklin Report: Everybody Panic!

What would happen if the government forced these big financial institutions to take responsibility for their own bad behavior, instead of forcing it on individual home owners?  Its both a bit creepy and a bit reassuring when the Wall Street Journal is asking the same questions we have been for months.  They reach the conclusion that presumably the fed reached with sober and rational thought.  That it is against public policy to allow a pillar of the U.S. financial world to fall during a widespread crisis.  

My problem with this whole thing is not so personal so long as I have a roof over my head and a steady job so I resort to moral philosophy.  I see a great deal of hypocracy in the behavior of large financial institutions during this crisis.  I assume that these white men in power over these companies are of a political bend that reacts negatively to the concept of welfare.  Yet here we see one of the most gross examples of corporate welfare since the Cheney crafted energy bills.  These institutions acted with a conscious disregard for the substantial risk in their investments or undertook efforts to conceal the risk.  This is a violation of even the slim standards of corporate ethics.  Even concealment is a thin excuse.  I am no financial guru, but even I was aware of news articles by sober economists who saw the writing on the wall regarding the real estate bubble a year ago.  Now these institutions are pushing the consequences of the risk they willingly, or negligently undertook, on home owners, and now on the tax payers because the government is afraid of what will happen.  Rightly so.  Still, it could be worse.  

This is another example of the Bush administration being asleep at the switch.  This administration frequently selects highly incompetent people for the highest offices in government based almost solely on their loyalty to the party or the specific individual that currently holds the office of the president, rather than to the people to whom they are supposed to be accountable.  This is not to say I would rather have had more cumbersome regulation of the markets.  But the markets will run off a cliff like a blind lemming if given the opportunity and I presume this administration allowed that to happen because of a pathalogical need to continue to claim the economy was doing well as whole sectors of the economy collapsed, one after the other, on their watch.  Now, more regulation is guranteed. This regulation is going to be drafted by people with only a rudimentary understanding of what happened and are more conserned with elections.  All industry has to do to avoid new, clumsy, onerous regulation is stop being both selfish and stupid at the same time.  

With the weak Dollar, the times are right for the manufacturing sector to surge into action and save us.  Tragically the long fall of the giant U.S. manufacturing sector, that supplied durable goods to the whole of the world for almost a century appears to be complete.  The last nail driven in the coffin by Wal-Mart.  

These two realities of market forces are both strong examples of the foolishness of faith in the market.  The government releaving financial institutions of the moral hazard of the decisions they make and our pathalogical need to consume massive quantities of cheep, foreign-made, goods are illustrative of how even regulated capitalism encourages us to feed the monster that is killing us.

I blame you.

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