Since the onset of the financial crisis nine months ago, the government has become the nation’s biggest mortgage lender, guaranteed nearly $3 trillion in money-market mutual-fund assets, commandeered and restructured two car companies, taken equity stakes in nearly 600 banks, lent more than $300 billion to blue-chip companies, supported the life-insurance industry and become a credit source for buyers of cars, tractors and even weapons for hunting.
The effects are rippling into nooks of the economy far beyond Wall Street and Detroit’s troubled car industry. The massive intervention has shifted the way companies do business in a host of ways — not all of them intended by the government. Increasingly, companies big and small are competing on the basis of their ability to tap government money. A divide is opening between gets and get-nots.
Check out this blog, which offers “Independent monitoring of policies that affect world trade.” Follow governments as they disrupt markets and damage the quality of life. HT When Giants Fall.
If the Fed is going to strong-arm banks, combine with the Department of the Treasury, dictate pay, print money with reckless abandon, muck up markets all over the place, enrich the connected at the expense of those without political pull, and hire Enron PR veterans to sell/con the American people on such damaging shenanigans — activities which clearly characterize its history and present course and therefore true mission — couldn’t it at least stop bankers from making songs like this? One bank, indeed.
The emails confirm Mr. Bernanke was willing to threaten Mr. Lewis’s removal as CEO if he reneged on the Merrill deal and later sought assistance. They also suggest Fed officials had a dim view of bank management, with the Fed’s top lawyer noting at one point that Mr. Lewis “can be reckless.”
The Fed didn’t have an immediate comment.
“These were extremely difficult times in which all parties were working nights and weekends in an effort to prevent a severe financial collapse,” said Bank of America spokesman James Mahoney, “and we believe it involved good people working with good intentions.”
The question of who said what to whom became supercharged earlier this year as a result of testimony provided by Mr. Lewis to New York Attorney General Andrew Cuomo as part of a separate investigation.
Mr. Lewis said then-Treasury Secretary Henry Paulson threatened to remove management and the board if Bank of America did not go through with its purchase of Merrill Lynch.
Mr. Paulson later said he did so in part based on the Fed’s position on the matter.
Mr. Lewis also said Mr. Paulson pressured him to not disclose publicly details about the government bailout talks, and suggested Mr. Bernanke concurred.
Mr. Bernanke later denied pressuring Mr. Lewis over the disclosure issue.
“I’ll just come right out and say it: Ben Bernanke will go down as the greatest Federal Reserve chairman in history,” [Jim] Cramer wrote in New York magazine.”
The WaPost notes that the “cap-and-trade” bill sponsored by Henry Waxman and Edward Markey is, in fact, loaded with all sorts of direct federal regulation of a decidedly dictatorial command-and-control nature.”
To determine what will happen next, simply ask yourself what course will most concentrate power. That’s all this is — a power grab. It will of necessity end very very badly.
Centralized authority via government cannot allocate resources as efficiently as distributed authority via markets. Misallocation of resources is a non-trivial matter. It’s critically important.
Politicians know how to play a crisis, though. And America is still, by and large, numbly and dumbly taking it.
If you believe this has anything to do with Republicans versus Democrats, you are doing it wrong. Concentrating federal power is the grand unifying bipartisan project.
We don’t have a government problem. We have the government we deserve. We don’t have a media problem or even a monetary, health-care, or education problem.
We have a citizen problem.
Why do we still pretend? What store of value is safe? What happens next? What if the Austrian school is right?
