Jul
2
In the most blatant example yet of government wanting to interfere in US markets, US Treasury Secretary Robert (”His Name Is Robert Paulson”) Paulson is calling for the Federal Reserve to get more regulatory power to “strengthen its process for regulators to unwind failing investment banks without threatening the stability of the financial system“. We’ve already seen this with the “rescue” of Bear Stearns (essentially a government loan to JP Morgan to buy the investment banking company), and Paulson thinks this sort of thing should continue.
In other words, the Darwinistic aspect of the markets will no longer work - for banks. If you’re a pizza store owner and you don’t sell any pizza… no more pizza store! If you’re a struggling entreprenuer whose product is suddenly made more cheaply and more often by people in China… no more entreprenuer! But if you’re an investment banker whose company completely fails, well, the government will still see to it that your bank stays afloat long enough to be bought and you’ll potentially get a Vice Chairmanship in the new bank, which you might even turn down.
We might as well just concede that the US banking system is already under the control of the government.
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