Ben Bernake Can’t Count?
HE IS FROM SOUTH CAROLINA, PEOPLE
By Mande Wilkes
FITSNews - August 25, 2008 - In the aftermath of several monumental government bailouts, Federal Reserve Chairman Ben Bernanke wants to ease worries that such government intervention will continue. How does he propose to mitigate public concern?
By promulgating more market regulation, naturally!
Bernanke, the beleaguered beneficiary of Al Greenspan’s bittersweet legacy, is right to acknowledge that recent bailouts have instilled worry in the public. Government takeovers of conglomerate behemoths indeed prompt concern that intervention will become permanent.
But only a governmental agency could argue that the best medicine for anxiety caused by too much intervention is more intervention …
As for what kind of increased regulation Bernanke seeks, he’s predictably not saying. Engaging the proletariat in such esoteric matters would be … gauche, that whole “representative democracy” thing notwithstanding.
Bernanke does hint at the nature of the increased regulation, though, warning against “excessive risk-taking” as a precipitate of “yet greater systemic risk in the future.”
While these phrases seem like nothing more or less than predictable platitudes, they show how clueless the Fed chief is.
The problem is not with risk-taking - that’s the fuel for capitalism - but with government intervention that invariably ends up squelching it.
Comments
By Gillon on August 25th, 2008 at 10:31 am
So your argument is that if we had had less gov’t intervention we wouldn’t be in the sub-prime loan crisis that we are enduring now. I suppose that lax lending practices, business greed, and ignorant borrowers had nothing to do with it–just let the “free market” work its way.
By Silence Dogood on August 25th, 2008 at 10:57 am
Mande, I disagree considerably. Don’t confuse the consquences of lack of regulation (i.e. government bailouts) with regulation itself. I am all for capitalism, and the risk taking that is involved. Regulation is the rules by which the market - even a free market - is allowed to work.
No regulation leads to, for instance, monopolies and predatory pricing, which allows economies of scale to squeeze out certain competetors that may actually be able to give a better/comprable product for a lesser price. That is one example of how no-regulation is antithetical to the free market.
Another example is the fact that pure risk taking is effectively just plain old gamble. That is why, in insurance for instance, you have to have an insurable interest in the item to buy insurance on it. Otherwise, why not just profile older people in poor shape or ships taking off during hurrican season and place an insurance claim on them.
Obviously too much regulation can squelch the “free market,” but here is a doosy that most neo-cons forget about. Too little reglulation can be just as damaging to a maximum growth and value added by the free market system as well. Again, bailouts are usually the culimation of poor regulation and oversight.
By baker on August 25th, 2008 at 11:06 am
I don’t think “intervention” = “regulation.” At least not in this sense — intervening in the crisis of an individual company vs. regulations that govern markets and entire industries.
By The Federal Reserve is not federal and has no reserves on August 25th, 2008 at 2:39 pm
Poor Mande and the readers need an education on the Federal Reserve-
For instance, you state
“But only a governmental agency could argue that the best medicine for anxiety caused by too much intervention is more intervention … ”
The Federal Reserve is NOT a government agency - It is not “federal” and it has no “reserves”.
It is set up to bail out its rich banking buddies who indulge a little heavily at times and need to get “bailed out”. Notice how the only entity benefiting from the last “bailout” of Bear Stearns was J.P. Morgan- leaving the taxpayers to guarantee the crappy loans leftover . Big connected corporations win- taxpayers lose.
Most folks do not understand money creation or what really happens in a taxpayer assisted bailout- and that is how the beneficiaries would prefer it - keeping us all dumb and uneducated.
The Federal Reserve , a group of privately held bankers, without any oversight , artificially sets our nation’s interest rates . If they set them too low - everyone runs off and builds and speculates on 5,000 sq. ft. houses they do not need - this is the boom bust cycle that is falsely attributed to a free market economy.