Thursday, February 5, 2009

We Don't Have Free Markets

Regulation of Financial Markets
02/05/09 - by Russell Roberts

If we had an “unregulated free market”:

  • The banks that made stupid investment decisions would have gone bankrupt and be under new management.
  • The investment rating agencies that rated subprime loans as “AAA” would be disgraced, bankrupt and out of business -- no one on earth would deal with them any longer
  • No one could force bankers to make risky loans, as is currently done by the Community Reinvestment Act, lawsuits from ACORN, and the Justice Department.
  • No central bank would be in charge of the entire money supply.
  • - to make credit available at too-low interest rates.
  • - to create a permanent inflation that made housing jump in "value".
  • - to encourage risk by being a lender of last resort.
  • - to condone and support an over-leveraged banking system, where reserves are only 4% of loans outstanding, inviting constant instability.
  • No Fannie Mae, Freddie Mac, or FHA could direct trillions of dollars into unaffordable housing construction.
  • The government could not borrow $1 trillion for handouts to political interest groups.
  • The few elements of remaining capitalism would not struggle under thousands of pages of rules and regulations, and dozens of government agencies.
  • The little guy would not have to contribute his funds to a government that saves the incompetent and the dishonest from the consequences of their own actions.
We don’t have an unregulated free market; we have an out-of-control government intent on looting us blind.

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