Over the past day or two, I came to praise the Fed (Federal Reserve), and Treasury, for refusing to use taxpayer money to bail out Lehman Brothers. As with McCain, I should have know better.
Secretary of the Treasury Paulson and Fed chief Bernake are NOT free market guys. I never thought they were. They are fundamentally central planning guys who believe that THEY have the knowledge and power to "manage" situations like AIG. So the taxpayers end up essentially OWNING AIG (why do we want it?), while the management that made all of those mistakes remains in place.
Nope. You can't excuse that. I said I would name names, in connection with any bail out of Lehman Brothers, and I am naming names here. Fed chief Bernake: You are a COWARD, without the guts to send a definite message that the TAXPAYERS will not bail out people in the "free market" who make mistakes. Secretary Paulson: You are a COWARD with the same lack of guts. I would not vote for either of you as dogcatcher of Mt. Ida, Arkansas (small town where I lived most of my first 12 years of life). My advice: Don't run for anything. Yes, President Bush: I never believed you were a free market guy, and you have proved it again by simply standing aside while Beranake and Paulson play at central planning with taxpayer money.
"Hey", you say, "it was too much of a risk to the SYSTEM to let AIG fail." It is, of course, impossible for me to have the information that Bernake and Paulson have. So I cannot say for certain that this is true, although I think it is more a matter of COURAGE. Paulson and Bernake just did not have the COURAGE to RISK it. The question is, what was the greater risk? Was it the risk of a meltdown if AIG went under, or is it the risk of going deeper and deeper into the central planning illusion that the Federal Government can MANANAGE the economy? What about the risk that we are being CONDITIONED that the Fedral Government will bail EVERYBODY out? Don't homeowners have MORE of a case to be bailed out than the management of AIG, and the creditors of AIG? Down this road lies disaster.
But say I am wrong. Say that we could not afford to let AIG go under. Does that mean the Beranke and Paulson are right? Of course not. It would merely mean that Beranke and Paulson have FAILED. They are admitted FAILURES.
If we cannot afford to let AIG fail without the entire system failing, then the system has already failed. We can't afford to be in that position I previously mentioned the example of a power grid. You can't afford to be in a position where the failure of one component in a power grid knocks out the whole grid for god. It is the same with a free market economy, where the advantage of a free market is that the system should survive individual failures. The disadvantage of a Paulson/Bernake "management" economy is that ONE major mistake automatically dooms the entire system. If that is the position we are in, then doom is inevitable. In central planning, doom is always inevitable, because not human being is perfect. Eventually, mistakes are made. In a central plaining situation, those mistakes are fatal.
Now, the Fed routinely takes over failed banks. Am I saying that is wrong? Not exactly, although Fed regulation of banks has not stopped MAJOR mistakes by banks, has it? Central planning has, in fact, failed in the recent regulation of financial institutions, as it always does fail. However, confidence in banks may be so important as to justify reassuring people that their money is safe. IF the Fed is going to insure deposits, then the Fed HAS to have the power to take over failed banks. Problem: AIG is NOT a bank.
AIG was NOT subject to Fed regulation and scrutiny of the type banks have. AIG is an INSURANCE COMPANY. Are we now in the position where the Federal Government is going to bail out insurance companies, and therefore should control the entire industry the way it supposedly controls banks? See where you go once you go down this road?
Nope. AIG represents FAILURE by Bernake and Paulson. It is either a failure of NERVE, or it is a failure of management of the system such that one insurance company can bring down the entire system. As usual, I vote for BOTH. The taxpayers are paying the price, as usual.
Either way, Bernake and Paulson are exposed as failures.
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