During a broadcast of The Jerry Doyle Show Saturday evening, I heard Richard Ebling of the American Institute for Economic Research comment on the recently emerged allegations that Fed Chairman Benjamin Bernanke and former Treasury Secretary Henry Paulson strongarmed Bank of America CEO Kenneth Lewis into the acquisition of Merrill Lynch. Ebling said that this incident was a frightening indication that we have lost the private sector in the U.S.
Clearly the full story here has not yet been revealed, so in my judgement conclusions are premature. But, in the meantime, let's play devil's advocate for a moment and flip the argument around.
Given the widely held view that the crisis that made the acquisition of Merrill Lynch necessary in the first place was the result of extreme deregulation that allowed the financial sector to run amok, perhaps the correct view is that, since the Reagan administration, it has been the government rather than the private sector that, in effect, ceased to exist -- in terms of imposing any reasonable level of control over the parameters in which the financial sector could operate.
In other words, due to the extensive influence of business and financial interests over government policies (or non policies) during the past 25 years, government had become, in effect, an extension of the private sector, an instrument to further the interests of those with the resources to influence policy through lobbying, campaign contributions, and so forth.
So one could argue that the incident was one of government taking a measure, however drastic, to compensate for the effects of having surrendered regulatory authority that should never have been relinquished in the first place.
Whether this drastic measure may have constituted any wrongdoing on the part of the government remains to be seen as the facts continue to emerge, and perhaps this story gives further weight to the calls for an independent panel, with subpoena power, to investigate the origins of the financial crisis and the government's initial attempts to manage it.
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Monday, April 27, 2009
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In my own humble opinion, financial regulation of the private sector is none of the government's concern. In a true capitalist society, all things financial sink or swim on their own. If they cannot offer a competitive value on the product or service they provide, they fall, and will be replaced by another who can. This is what keeps commerce healthy. The government's current involvement in the propping up of failed businesses (especially those in which gov't or gov't officials hold stock) is an outrage. If our economy depends on these few, we are doing it wrong!! These financial giants have bled the people dry and even then managed to overextend themselves to the point of absolute ruin. And now WE are expected to take on their debt? Their debt to whom? To US!! Its disgusting and they all should be allowed to fail miserably in the interest of free enterprise. Our government is betraying us on the most basic level.
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