Sure, not baling out the broke banks would have been a start. It would, however, not have solved the problem, not even close. The libertarian class, of which Paul poses as a great defender, and to which Mike Shedlock is a proud subscriber, claims that the issue is not capitalism or the free market. (After all, these are their deities.) For them the trouble all starts -and ends- with government and its rules and regulations.
But that’s precisely where the issue gets all mixed up. For one, the bail-outs are not the beginning of the sorrowful saga. And we don’t need to, though we could, return to the 1913 establishing of the Fed, or the 1933-1971 steps that took the US away from gold. There is enough in the last ten years to make a solid point.
Allowing investment banks and securities firms access to taxpayer deposits, ref: the 1999 Glass-Steagall repeal (Gramm-Leach-Bliley Act), and liberating the derivatives trade, ref: the 2000 Commodity Futures Modernization Act, are the two pieces of law that directly led to a situation in which banks were allowed both to 1) become as big as they are now (too big to fail) and 2) to leverage their bets as much as they have (which wiped out their capital).
And you don’t really have to be all that smart to realize that both acts are de-regulatory, and made the markets more, not less, free. Now look around you and tell me what you see 10 years later. Not what the likes of Shedlock and Ron Paul envisioned, I’ll bet.
In other words, the free market system has failed America miserably. Well, at least in this instance, and that by itself should raise very grave doubts about that system.
And it’s not all that hard either to see why that is. If you let market participants free to pursue what is in their best interests, without forcing them to give priority to society’s best interests, they will eventually figure out that the best single investment they can possible make is to buy the government. That allows them to make the laws. Which is detrimental to the rest of society, and leads to the sort of mess we’re in right now, which even libertarians concede is not desirable.
So you would have to prevent that from happening. For which you need laws and regulations to keep those market participants out of the government. Since free market guys and dolls don’t want regulations, they have no solution to offer. Exit left, center stage.
Emphasis added.
But no, they’re not going anywhere. Because you don’t understand - government is bad, and laws and regulations are Teh Sozialism.
