"Wall Street is not a bastion of free-market laissez faire capitalism."

Writing at USA Today, Hoover Institution research fellow Peter Schweizer points out that President Obama's proposed Wall Street "reforms may be pro-business, but they're not pro-free market":

President Obama's proposed reform of Wall Street calls for creating a list of large financial firms ("Tier 1 financial holding companies") that will be officially designated as "too big to fail." They will, in short, be guaranteed rescue by taxpayers if they get into financial difficulty. This will be disastrous because it will encourage further speculation and saddle taxpayers with the cost of cleaning up future trillion-dollar financial messes.

The simple fact is that this sort of big government coddling is what got us into this mess in the first place. Wall Street is not a bastion of free-market laissez faire capitalism. Consider this simple question: How many times have the big firms like Goldman Sachs, J.P. Morgan, etc. been bailed out in the past 15 years? The big firms on Wall Street have been rescued from their profligate investments half a dozen times since 1994. And that propelled us to near collapse in 2008.

Read the rest here.

Comments

[Johnny Longtorso]

But what President Obama is doing is creating a permanent arrangement between Washington and Wall Street. It is downright dangerous, the equivalent of bailing someone with a DUI charge out of jail, giving him the keys to the car, tossing a six-pack in the back seat, and telling him everything will be OK. Nothing good can come of it.

Win.

[Johnny Longtorso]

I summon Joe to come defend Obama's bailouts of Wall Street. Joe waits dreaming.

Ph'nglui mglw'nafh Joe R'lyeh wgah'nagl fhtagn

[John Tagliaferro]

Throw in a live hooker and the whole thing turns positive.

[MikeP]

Win.

Would be more win if he mentioned that your 16-year-old daughter is in the passenger seat.

[Ska]

....fingering herself in a miniskirt.

[JW]

Will someone get Ska his own fantasy? He's horning on a good analogy.

[proud libitard]

and licking a lollipop....yum!

[Attorney]

... creating a list of large financial firms ("Tier 1 financial holding companies") that will be officially designated as "too big to fail." They will, in short, be guaranteed rescue by taxpayers if they get into financial difficulty.

I can't believe Obama is really this dumb. I'm starting to seriously consider the alernative.

[Tim Cavanaugh]

He's definitely not dumb, and probably not evil. He's responding rationally to an incentive: What president would not want to have direct control of the American boom-creation apparatus? From an executive power standpoint this may be more valuable than the Fed, because the Fed chairman is nominally independent, while a regulator is an actual part of the executive branch.

[ethicist]

Define "evil". Carefully.

[Super Nate]

It's actually pure genius. Wait a few years and he will quietly hand the list to the anti-trust sharks...

(a man can dream...)

[chunk]

Yes, yes, yes ... many libertarians (too many)fail to see the insidious relationship between big government and big business. Far too often, the rules of the political game are determined by the biggest donors and the people whose relationships with regulators are positively incestuous.

[Isaac Bartram]

Ummm...and exactly which libertarians would that be?

"[S]ee[ing] the insidious relationship between big government and big business" is a pretty substantial part of most libertarian thought.

Articles like this are routine in Reason and just about any libertarian journal you care to name.

[Tim Cavanaugh]

Ummm...and exactly which libertarians would that be?

Objectivists. From Murray Rothbard:

Conservatives have often placed their hopes in big businessmen. This view of business was most starkly expressed in Ayn Rand's dictum that "Big Business is America's most persecuted minority." Persecuted? With a few honorable exceptions, big business jostles one another [sic] eagerly to line up at the public trough.

[Tyler]

Perhaps your experience differs from mine, but I am quite active in the Philadelphia-area libertarian community and there seems to be a consensus that big business and big gov are in cahoots.

And pretty much any article or website I read online that claims to be libertarian is consistent on the distinction as well.

[Enjoy Every Sandwich]

Actually, we do see it; this is the very reason that libertarians express such skepticism that expanding the power of government will protect the Little Guy from Big Business. And then liberal wankers accuse us of being selfish bastards simply because we point out this reality.

[Hazel Meade]

To which your solution is to further strengthen that relationship by giving the government ever more control over business, and thus ever more reason to influence the government to business.

[SusanM]

I think you're thinking of Objectivists more so than Libertarians. The ones you're thinking of are the ones who either don't understand these philosophies or hope that no one else does.

[Rich]

Would someone *kindly* explain, if a firm is "too big to fail", why it cannot be sliced and diced into sub-firms that are small enough to fail?

[joe]

To big to fail will morph into to big a liability to operate independent of tight regulatory oversight will morph into to hamstrung to compete in an otherwise open market will morph into subsidies of the "To Big to Fails" and then a broadening of regulation on the general market, couched as fair play, a leveling of the playing field if you will.

[sage]

I highly recommend a new handle. Even if you call yourself Joe with a capital "J."

[John Tagliaferro]

Don't we already have one of those too?

[Jonas]

Maybe the reason joe disappeared is because he was doing a lot of political-soul-searching and has returned a diehard libertarian...

[hurlybuehrle]

Ladies and gentleman, your American auto industry!

[Pro Libertate]

All we friggin' need are the officially sanctioned and protected businesses of America. It's bad enough right now.

Remember, while all animals are equal, some animals are more equal than others.

[Barry Loberfeld]

What does Ralph Nader's denunciation of "corporate socialism" concede except that the corporations owe their current privileges, not to laissez faire, but to government intervention? Which leads us to now ask: What exactly is the "capitalism" of these anti-capitalists? Is it "Little England"-ism or mercantilist imperialism? Free trade or protectionism? Laissez faire or interventionism -- A or non-A? Just as theocracy cannot denote both the union and the separation of Church and State, so capitalism cannot be both the union and the separation of Firm and State.

Orthodox Marxism cynically -- amorally -- rejected the possibility of neutrality and equity in political matters. All government was the special interest of one "class" or another. Just as capitalism ushered in the rule of the bourgeoisie, so would socialism bring about the "dictatorship of the proletariat." But how does capitalism -- that is, the free market -- represent the special interest of "capitalists" (i.e., nonmanual laborers)? If respect for property rights favors "capitalists," then why do corporations seek subsidies (each for its own self, mind you, not for the entirety of its purported "class")? If unregulated commerce leads to monopolization by these "capitalists," then why do real-world businessmen turn to government to provide them with monopoly entitlements (optimally, only for their own company, not for all "capitalists" including their competitors)? And if free trade benefits this class and no other, then why do each country's business leaders -- and union members -- lobby for tariffs on imports? We seem to forget that the classical liberals formulated their principles of private property, laissez faire, and free trade -- rejected by the Left and Big Business alike -- not against the graspings of the have-nots, but in opposition to policies that favored the few over the common good.

From here.

[Hazel Meade]

Beautiful rant, thanks.

[JW]

Can't we get a small business that's too small too fail?

[rst]

Yeah they call that "alternative energy", and they're bailing that out with Waxman-Markey.

These bitches keep all their re-election bases covered.

[Bronwyn]

I elect SPH Enterprises, LLC.

Thank you for your consideration.

[Ska]

The logic behind these policies is about parallel with "Inflammable means flammable?! What a country!"

[R C Dean]

We should start a pool.

If these firms almost cratered the entire global economy with only an implicit guarantee, when will they in fact crater the economy once they have an explicit guarantee?

I give them three years.

[Joshua Holmes]

Six bailouts in 15 years isn't exactly "implicit".

[Pro Libertate]

The Dukes of Moral Hazard.

[JW]

Excellent. +1

Yours or borrowed?

[?]

Don't think about Jamie Gorelick in Daisy Dukes.

[Xeones]

Will someone get Ska his own fantasy?

Yo, SugarFree. Job for you, dude.

[Ska]

What have I ever done to deserve that X?

[The Gobbler]

Candor about taxes is rare in Washington, so when House Speaker Nancy Pelosi admits that Democrats may have to impose a huge new tax on the middle class to fund their spending ambitions, believe her.

Speaking with PBS's Charlie Rose on Monday, Mrs. Pelosi mused publicly about the rising possibility of enacting a value-added tax, or VAT, as part of broader tax reform. "Somewhere along the way, a value-added tax plays into this," she said. "Of course, we want to take down the health-care cost, that's one part of it. But in the scheme of things, I think it's fair to look at a value-added tax as well."

http://online.wsj.com/article/.....10416.html

[Xeones]

What have I ever done to deserve that X?

Just lie back and enjoy it.

[Hazel Meade]

President Obama's proposed reform of Wall Street calls for creating a list of large financial firms ("Tier 1 financial holding companies") that will be officially designated as "too big to fail." They will, in short, be guaranteed rescue by taxpayers if they get into financial difficulty.

This is utterly horrifying and I can't understand why *progressives* aren't up in arms about it too.

This is like guarenteed corporate welfare for life. Obama's own base should be in open revolt over this.

The idea that a particular firm be guarenteed perpetual existance by the government should horrify anyone who values either the concept of social mobility, or economic fairness. They are actually *institutionalizing* government favoritism.

This is institutionalized corruption.

[ArkhamOutpatient]

It's the Chicago way!

[Clueless Obama Supporter]

But . . . but . . . but . . . CHANGE!

[Long time reader]

But the "wrong" people are against it!

[Rhywun]

That's what the health care "reform" is for--"Here, look at this!"

[Pro Libertate]

If certain companies become one with the government, then they become an untrammeled good as well.

[Chad]

I understand why we bail out financial systems. I don't understand why we are bailing out bankers.

Heads should be rolling at the top...literally.

And a lot of people slightly lower down the chain should be wiped out....and by "wiped out", I mean stripped of everything they own but a burlap sack and a pair of underwear for each member of their family. As a special present, each banker should get his own personal IRS auditor for life, who follows him around and collects payback for the taxpayers if the banker so much as earns a nickle for turning in a pop bottle from the trash. Ahhh, sweet justice.

[Hazel Meade]

Funny, that's exactly what would have happened if we had let AIG, Goldman Sachs, and Morgan Stanley fail.

Proving that sometimes the rich wouldn't get richer, if only the socialists would stop bailing them out.

[Pro Libertate]

We should've let the bitches fail. We'd be recovered from that by now, and all of the essentially unaffected large and medium-sized institutions would've picked up the slack.

[The SAT]

We must not allow healthy 20 year olds to go without health insurance because they'll cost taxpayers a few thousand dollars in the unlikely event they need serious medical care.

However, we must allow Goldman-Sachs to go out and make hundreds of billions of dollars in bad loans with taxpayer guarantees because ____________________.

[JB]

Obama sure is one stupid fucker. 'Let's give tons of companies a blank check.'

Yeah, that will work out well.