October 27th, 2008

Good clean fun

A Question and an Answer from the Simple Dollar (http://www.thesimpledollar.com)Blog

Here’s a question for you, Trent… how do you feel about being personally expected to bail out failing Wall St companies who knowingly made really stupid financial decisions?
- Jillian

I’m not mad at Wall Street. They’re playing the game according to the rules they’re given. The problem comes with the people writing the rules. I’m mad at the flavor of “deregulation” in Washington that has created a situation where a select few (the CEOs and the large stockholders) collect the profits while everyone else covers the risk.

Let me be clear: we have socialism in the finance industry right now, except it’s a diseased kind of socialism, where everyone bears the risk but only a select few enjoy the profits.*

The blame for this falls squarely on the people who have been in charge of instruments such as the Treasury Department, the Senate banking committee, and the House financial services committee over the last twelve years or so, excluding perhaps the last few since it would have been impossible to slow the train in just a year or two.

Free market capitalism doesn’t work if the people who make risky moves aren’t saddled with the risk of those moves. That’s what we have now, and that’s a failure.

* Holy Crap, that bolded sentence is so right on it gave me chills.

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