More State-Capitalism in America
The latest - did you see today's New York Times front page, Hank Paulson the head of US Treasury Dept, and the head of Citibank announcing the banks biggest loss-making quarter, in side-by-side photos eg the Times promoting crony capitalism (again) - is that the US Government is encouraging the largest private US financial groups to get together (collude would be the more appropriate word) to create a new "structured investment vehicle" to cover the bad long-term debts created by overly risky housing mortgages.
Why is this bad?
1) It sends a signal to people that the US government will step in to save the financial institutions. Why is that bad? If bad investments arent allowed to work themselves out we - the economy - are stuck with them. Business is risk, you win some you lose some, if you dont lose any, things fall apart as larger risks are taken at taxpayer expense and you end up with the Savings and Loans debacle and third world debt rescheduling (a recipe for forever staying third world if you will). And you end up like France ha ha. (Which is a cool place but its not the place where you want to be young and needing a job).
2) Cause the US government created the problem in the first place by guaranteeing the risky mortgages in the first place. So why would we want more of these bright ideas?
Ok point is, everytime Uncle tries to help business it screws the people. Sure it helps the financial houses in the short-term, but this help is paid for by everyone else. And really it is only the top 5% of the people at the finance house who make the big bucks with these government programs. Do we really want our government and our tax money used for this? (Answer, no. No we don't want government safety nets. Thats what we have already. It sucks.)