Who is this free market that you like so much? A bunch of idiots who trade oil up to stratospheric heights only to watch as it collapses back to the ground? Greedy bastards who bid up tulips until a single tulip bulb was worth a house? Free markets are a costly way to do business esp. for the little guy.
Wrong. In the case of the banks, the free market represents investors with capital to deploy. If Dexia or Societe Generale are insolvent and need to recapitalize, the free market path would be for them to reach out to other banks or other investors who can either loan them the cash at a market rate of interest that is commensurate with the perceived risk of the loan not being repaid, or they can let the investors take an equity stake in the business in exchange for a cash infusion. Either way, you have sophisticated investors deciding whether or not the rewards are worth the risks.
The Socialist path that the US and the European governments are taking is to use tax payer money, WITHOUT OUR CONSENT, to in many cases recapitalize the banks for free and backstop all their bad decisions. In this path, the bank executives can act with impunity and continue to take ridiculous risks and continue to make very bad decisions because what the hell, it's someone else's money and if their risks result in a disastrous loss of capital AGAIN, then it doesn't matter, because the Governments will just bail them out again. Government bailouts of banks have created the mother of all Moral Hazards and endless mis-allocation of capital.
Why do you think we're on this endless meri-go-round? It's because we are not going to solve this problem by endless bailouts of the very people who created this mess. It is giving more heroin to the heroin addict. The sooner we let those banks fail, or better yet, create a plan for an orderly winding down and selling off of all their assets, the better off the whole world will be.
In your support of the endless bank bailouts, it's precisely the little guy's money that is being used, WITHOUT THEIR CONSENT. If those banks deserved a bailout, let them find it from investors with the financial acumen to fairly value their assets and determine how much of a pound of flesh they want to extract from the bankers in the form of equity stakes or interest on cash infusion loans. Don't asset strip American and European citizens to bailout the bankster fatcats, so they can buy more gold-plated toilets. |
