Selective Socialism
Being the fiscal conservative that I am when it comes to government I have to wonder what the heck the powers that be have been thinking on some of their recent choices. There are just to many wrong choices being made, but let me see if I can work trough them.
From my perspective I really can’t see how the government can justify the major bailout that it has recently made available to Fannie Mae and Freddie Mac. Yeah, I get it, at one point they were government programs. However, they had long since moved toward the private sector, having private investors and paying those private investors dividends as well as rewards on the stock market. They assumed private risk in order to potentially (and did for some time) a private reward and the private sector backed them, putting their faith in the two FM’s with their wallets. Now things are turning a bit sour and in steps big brother to redeem them and make it all right again. I could almost see this as legit if the all ties of privatization were severed, especially given that the two organizations started out as a federal process. But instead, the are now discussing the eventual plan for more privatization after recovery of these entities.
Next up was the historic move that basically allowed a HUGE infusion of federal cash to help J.P. Morgan basically acquire the remains of the quickly sinking Bear Stearns. I have so many issues with this action that I feel like the cartoon characters with steam shooting out of my ears. To begin with Bear Stearns screwed up, they made the wrong choices, they were being penalized for those choices with a loss of faith in their ability as an investment banking firm. It is the purest of capitalism in plain black and white - the best will be rewarded and the worst will go out of business. The fact that the government stepped in on a private company is absolutely insane. After all, when I mess up on my budgeting and then have an additional expense of a car break down does the government step in to save me from myself? It gets worse though - the government did not step in directly to Bear Stearns, but instead basically gave the money to J.P. Morgan to acquire them, formerly a competitor of Bear Stearns. This acquisition of course was a great windfall for J.P. Morgan, buying out a rival at rock bottom prices and to put it bluntly using someone else’s money - how sweet!
This leads us to what happened earlier this week. On Sunday, after a rough few months and especially bad last week, Lehman Brothers, another bank met with the Federal Reserve Bank. They sought additional funds in the form of some sort of bailout to keep them afloat. I think wise that the feds said no for all intent. This of course lead to a massive sell off on Wall Street on Monday as well as Lehman Brothers having to actually file bankruptcy papers.
The question though is this? Why is it acceptable for the feds to selective decide who is going to be bailed out and hence benefit from this kind money and who is going to have to just suffer through and deal with the fall out of the failure on there own. The government needs to have a straight forward policy that is clearly one way or the other, even if it is based on certain conditions. However, this process by which the respective members of a regional Federal Reserve Board are seemingly making these kinds of decision at random is unacceptable. And of course, as a tax payer, I hate seeing my money being used for such things as any of these - so we all well know where I stand on such a seeming selective socialistic agenda that helps a select few in major ways.
