Archive for the ‘government bailout’ tag
Former Federal Reserve chairman Alan Greenspan told angry lawmakers Thursday he was “shocked” to discover — as a once-in-a-century financial crisis spread — that his bedrock belief that financial firms could police themselves turned out to be “flawed.”
“I made a mistake in presuming that the self-interests of organizations, specifically banks and others, were such as that they were best capable of protecting their own shareholders and their equity,” Greenspan, described as a maestro and an oracle while at the central bank, told a House committee. Greenspan called that “a flaw in the model … that defines how the world works.” — USA Today
So essentially, it took Alan Greenspan 30-plus years to figure out the hard way that bank execs, lending moguls and the like can’t control themselves and will, in the end, be governed by greed above all else?
I have a degree in English, and little formal training in economics and that’s far from rocket science.
This whole debacle brings to light the perils of the free market system. Make no mistake, I’m a fan of the free market system. It’s what makes this country one of the strongest economically in the world. But left unchecked and unregulated, the will of greedy men and women will in the end rule out. If the Microsofts, AIGs, Wal-Marts and Fannie and Freddies of the world grow to such gigantic proportions, and if by some colossal stroke of bad luck those companies go under, the ripples are felt throughout the country, and dare I say, the world. Something is intrinsically wrong with that system. The demise of a single company should not cause such an effect on our economy, and that effect witnessed in recent weeks and months, speaks to a flaw in the system. That flaw has to be lack of regulation. But I’m not speaking of the lack of regulation on lending practices as Greenspan was talking about. I mean lack of regulation with regard to monopolies and industry influence and power. Sure, the federal government attempts to regulate some companies with regard to monopolies, but company slogans, such as Microsoft’s “embrace, extend and extinguish” are dangerous, not just in the technology business. It carries over into the lending world. In short, companies should not be so large that the economy’s very survival depends on the feds bailing those companies out. Such necessity, it appears to me, is wholly anti-democratic and breeds the kind of quasi-socialism that some, yes those who in their own hypocrisy support the free market system that bolstered such monstrous companies in the first place, are deriding today.
The entire story USA Today can be found here.