Socialism for the Rich

Wed, Mar 12, 2008 | Jared Woodard

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bernanke-time-is-up.jpgThat’s how Jim Rogers (and Barry Ritholtz, and John Cassidy, and…) describe the series of recent Fed actions to bail out banks, brokers, mortgage lenders, and any other institutions whose sacred profitability has been imperiled by their poor planning and risky behavior:

“No country in the world has ever succeeded by debasing its currency,” he said. “That’s what this man is trying to do. He’s trying to debase the currency as a way to revive America. It has never worked in the long term or the medium term.”

‘Socialism for the Rich’

The Fed’s move to accept risky collateral is not part of the central bank’s business, he added. “What is Bernanke going to do? Get in his helicopter and fly around the world and collect rents? That’s absurd,” Rogers said.

A recession may be a good way to clean up the economy, while trying to prevent one may cost more and actually worsen the recession, Rogers said. Also, investment banks should be allowed to fail. “Listen, investment banks have been going bankrupt since the beginning of time. If people make mistakes — if you bail out every investment bank that gets in trouble, that’s not capitalism, that’s socialism for the rich,” he said. [link]

This is actually a question that transcends (or should transcend) electoral politics – when major financial institutions take on more risk than they should and their positions go south or their liquidity dries up, dumping some cash in their laps is probably not the way to make sure that it doesn’t happen again. All for-profit public corporations – but especially banks – are like very small children: they’re inherently borderline sociopathic. And when Bernanke goes around rewarding bad behavior, we shouldn’t be surprised when, after working through this recession, another financial crisis comes around in a few years’ time.

[tags] banks, brokers, Fed, Bernanke, socialism, rich, sociopathic, recession [/tags]


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