Thursday, April 22, 2010

TARP recipients cut loans & boost pay...Surprise-Surprise!

And you thought capitalism was corrupt! Combine it with government largesse and voila! Corruption cubed! So the Federal Government first influences (some say forces) large banks to make more risky loans, then when the borrowers can't make their payments and the banking infrastructure begins to crumble under the weight, the government cries foul, demonizes the banks, and then bails them out with public funds effectively taking them over. Having escaped the natural consequences of their poor lending practices, the banks (with government oversight) use the TARP funds to shore up their balance sheets while tightening credit--who can blame them? Then they use their revived financial strength to pay their people more for their "pains." Everyone will blame them for that--justified or no. Finally, the government then demonizes them again for the sin of solidifying their structure in order to justify taking wholesale control or implementing suffocating regulations.

If market forces had been allowed to prevail, the banks never would have lowered their credit standards to begin with. Remember, government (public) "insurance" for higher risk loans coaxed lenders into those trecherous waters. Homebuyers would have had to have large/er down payments, better credit, and better ability to pay keeping high-risk loans out of the market. Banks would have seen fewer defaults and more solid balance sheets and profits. Yeah, fewer folks would have gotten into homes but they wouldn't be losing them now, either. And in the end, the economy would not have needed the "correction" it has now taken.

Sorry, it's NEVER rational to involve the government and "free money" into ANY industry. Regulation should be limited to protect consumers from criminal fraud, theft, and bodily injury (not risk) and government prop-ups should be outlawed. Ever. PERIOD. Businesses and industries who attempt to operate outside the laws of sound economics driven by demand, supply, competition, and value should fail.

Wednesday, April 21, 2010

Why Obama-esque financial reform is a bad idear

I'm gonna admit right out of the gate that I haven't done much homework on this one yet. But I'll fire a quick couple of shots over the bow as to why I think Obama-styled financial reform is yet another loser for all of us.

First, risk in the capital markets is a GOOD thing. By attempting to insulate consumers and investors from risk, the same will undertake such investments more carelessly relying on the government to "cover their sins" and do the due-diligence for them. Once again, as with healthcare, welfare, unemployment and a host of other programs, shifting the responsibility from the consumer/investor to the government aka "society" at large will only result in more cost and potentially more problems. Keep businesses accountable to their customers and competitors directly with appropriate laws and enforcement against misconduct and the free market will thrive.

Second, Obama is a power hog. He wants to suck up top-down (executive) control of EVERYTHING he can get his arrogant, progressive little paws on--because, of course, father knows best. Eventually (maybe sooner than you'd like), the Dems will be out of power. Ask yourselves this, lefties: Would you want Bush to have that kind of absolute control? If you give it to the big Zero, you're giving it to the next Bush just as surely. This is yet another attempt to demonize capitalism to both undermine and control it.

Third, here's another thousand-page bill that no one will read before it's passed and the consequences of which are unpredictable at best. Here's a suggestion: Identify the specific problem you wish to solve. See if the problem is already addressed in current law. If so, enforce it. If not, devise a rational, simple, common sense, bi-partisan solution and write a new law to fix it. Forget about "comprehensive" reforms. Solve specific problems one at a time. Leave out the earmarks and political horse trading. Pass a good law that everyone can understand and a solid majority can support.

Finally, Obama style statism (call it by whatever ism you choose) is a disaster for all except the rubes at the top; be they on the government or corporate side. It can only lead to more collusion between the state and the monied interests that the ruling party tends to favor. It means more big government intervention, more cost, more corruption, less efficiency, less profit, less innovation, lower quality, less responsiveness to the markets, more government dependence, less autonomy and independence, less opportunity for the regular guy, and more locked in power for the people who already possess it.

Whatever avarice you ascribe to capitalist corporate America, why would you ever think there's less of it in government?! The only problem is, public sector greed tends not to stop with the lust for riches. It seeks to control the lives and properties of others, as well.