On Government Intervention in the Capital Markets

Yesterday morning, I wrote about the nefarious consequences the government’s intervention in the capital markets foster. It was in reply to another reader’s comments after reading a news report titled “HSBC puts to heat map form the terms ‘risk on’ and ‘risk off,’ showing the sharp increase in correlation across asset classes since the Lehman collapse.” You can find it on Seeking Alpha, an Internet investment site.

Today, I read in The New York Times that Richard Parsons, former Chairman of Citigroup and for 16 years a director of Citicorp, expresses a similar observation. While Mr. Parsons was in a position to dissuade the Clinton Administration before the power of the White House pushed for legislation and remained silent, it’s clear now that he had a change of heart. The points raised are worth reprinting here if only to bring awareness among present and future investors. 

“Actually, investors would have a better chance of making the right call if the government stopped manipulating the markets and if the hedge funds faced the uptick rule and Glass Steagall were brought back. For sixty years we never saw manipulation as flagrant as we see since the repeal of the Banking Act of 1933. For sixty years, companies succeeded or paid the price by going bust.

No one was “bailed out.” Bubbles did not exist. Disparities were the product of wrongful personal decisions, not created by government intervention and manipulation.

In all candor, anything else explained beyond this point would only seem to trumpet Ron Paul’s platform. It would serve everyone well to read through it. The understanding of the many points raised underscores why liberty is not a negotiable commodity. Personal freedoms and free markets go hand in hand.

It’s dismaying to watch how we’re all capitalists when we make money and want to keep it all to ourselves, but when things go wrong, we immediately welcome socialist bailouts at the people’s expense and accept them as our unconstitutional right to prevent greater social and economic chaos. There are only two letters to explain this phenomenon, BS.

Government intervention in the market is preposterous on all levels, socially, financially, and as an economic philosophy; it detracts from the people as a whole and from each individual in specific terms. We can’t support freedom and liberty while we support government bailouts or handouts. In either case, only the recipients are different. They’re both abusive and defy the principles of law and order.

Tolerance for government intervention and acceptance of too big to fail are abuses of power no matter how they’re rationalized and sold to the public. In all of life, there are consequences to making wrong decisions. Why should commercial enterprises or personal choices be any different?”

About Francisco

Born in Cuba; political exile; American by choice; polyglot; father of four, grandfather of two; occupationally semi-retired; reader; writer; lover of mankind and nature; searcher of truths; hungry for wisdom; open-minded; romantic realist; critical thinker, enemy of despotism, government abuse, and inequality; believer and faithful; social liberal, fiscal conservative; in a quest to unmask the hypocrisy and the corruption enslaving overwhelming numbers of God's creatures around the world.
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