SerpentVenom

This proposed bailout looks like yet another power grab scheme for the Simpering Simian. The broadening role of the Treasury department. The lack of over site. The lack of court review. It all adds up to a financial Patriot Act. At least Congress is giving it a little more scrutiny than they did in 2001.

What perplexes me is how this bailout goes counter to the whole "pure free market" system that the neo-cons have been championing for the past eight years. They deregulated the markets for these big companies. They allowed them to merge into even bigger companies. The even made it so that these big companies could shelter a big portion of their earnings from taxes. All in the name of a "pure free market".

So why is it a good idea now to bail these companies out? They put themselves in this position. If they had been a little more flexible with their borrowers, there might not be so many defaults. No one seems to be pointing out that little fact. Greed drove these companies to the state that they are in now. I say let them sink to the bottom as the free market system dictates.

The only problem with that idea is that these companies were allowed to grow so big, that their collapse brings too many down with them. A bailout may be the only way to keep the economy from spiraling into a recession more severe than the Great Depression of the 20th century. So if taxpayers are going to be called on to dig these behemoths out of their own graves, then the rules need to change.

Congress can start by re-instituting regulations that McCain and his cohorts threw out a few years ago. Next they can stiffen the antitrust laws to ensure that financial institutions can't just keep swallowing up their competition to the point that they become the only game in town whose failure could destroy the economy(see Bear Sterns, AIG, et al). Finally, they need to stop thinking from the top-down here.

These institutions got into trouble because borrowers began defaulting at unheard of rates. As I mentioned, if they had been a little more flexible with their borrowers, then there would have been far fewer defaults. So why not fix that problem by offering assistance to borrowers? After all, if people could pay back their loans in the first place, none of this would be necessary now.

Posted under Political Observations on Wednesday, September 24th, 2008 at 11:41

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