“A dynamic economy will always have booms and busts. But the story of the past twenty-five years is that Washington has created a financial system that cannot withstand the destructive part of creative destruction – necessary for free markets- without destroying the economy. We’ve grown so accustomed to government-subsidized failure in finance that we feel we have no choice. In accepting subsidized failure, we harm America’s trust in free markets, we harm the world’s trust in American markets, and we harm the financial innovation that advances the economy rather than smothers it.”
From After the Fall: Saving Capitalism from Wall Street- and Washington by Nicloe Gelinas
“Creating a systemic risk regulator would be a continuation of that regulatory confusion. Just as bad, a systemic risk regulator would work against Washington’s credibility in ending too-big-to-fail. Investors would be lulled into false confidence that the government is looking out for them just as it looks out for insured bank depositors. But a systemic regulator would be no more effective than the former USSR’s central planners were in seeing and knowing all. Just as markets seeking profits are better planners than central bureaucrats, markets protecting themselves from a credible threat of failure would be more effective regulators than a central office that stifles that threat.”
From After the Fall: Saving Capitalism from Wall Street- and Washington by Nicloe Gelinas
“The first step to restoring the robust financial markets that can support global capitalism is to reassert the market’s ability to discipline itself without endangering the economy. Through its too-big-to-fail policy, expanded over the quarter of a century after Continental Illinois, Washington’s leaders, from Presidents Reagan to Clinton, unwittingly supported financial recklessness even as markets warned against it. The predictable results was more recklessness.”
“Bad companies, including big, bad financial companies, must be allowed to fail, so that their bad ideas can have a chance of dying with them. This principle is the cornerstone of assuring healthy financial markets. Unless Washington credibly repudiates its too-big-to-fail policy, any other worthy regulations it enacts won’t matter. The lack of market discipline that the doctrine promotes will guarantee that big financial firms continue to have cheap money and the motive to find their way around such rules.”
From After the Fall: Saving Capitalism from Wall Street- and Washington by Nicloe Gelinas
From “Why Elitists Fail” in American Thinker, January 30, 2010
Even the brightest minds cannot escape emotional impediments to a rational conclusion. Combining such emotional rationalism with a focus on theories detached from the verification of practical experience can be downright dangerous. This is why it concerns so many that Obama’s administration has the lowest number of appointees from the private sector in his cabinet of any president in history.
The average American knows that taking a dollar from one person and giving it to another does not create a stimulus. The average parent knows that protecting one from the consequences of bad decisions does not teach one to make good decisions. The individual citizen knows that the government will not make better health care decisions or better investment decisions because they will never know as much as all the citizens. The voter who knows the consequences of too much debt on his household does not find it more acceptable when a lot of zeros are added to the balance and the loan account is moved to Washington, D.C.
