Does this mean the capital markets knowingly take extraordinary risks fully expecting a government bailout if they fail badly enough, but pocketing the profits if luck goes their way?
Are the ultimate free market advocates on Wall Street secretly non-believers in free markets?
What makes you think that the Wall Street folks are free market advocates? (Goldman Sachs, in particular, is a huge believer in govt intervention, perhaps because almost all of the folks in govt making such decisions have Goldman ties.)
In other news, big biz isn't a free market advocate either. GE is lobbying for govt mandates for its products. Walmart is lobbying to increase the health insurance costs of its competitors.
If you don't want big biz running something via govt, you can't let govt run said something. Regulatory capture is how things work.
Good point. I guess I believe everything they tell me on CNBC. ;)
CNBC's audience is investors, not wall street folk.
An intrinsic part of getting the benefits of free markets is to make sure you don't end up with single companies that are too large. Beware the "socialism" that is just a cover for consolidating entire industries into one company.
My question is this: if officials at all levels of government are working in collusion with big-business, e.g. former finance executives making key decisions about fiscal policy and spending, who does the actual breaking? Those people will never be voted out, as those positions are usually filled by appointments. The irony is the government, as it stands, is the only entity capable of enforcing the "fair-play" necessary for a free market to function. Yet, if I recall, the government is the bane of free markets in the first place.
It needs power to break up monopolies, and a certain minimum size to be able to function effectively in this capacity, yes, but performing this function does not require massive staffs of bureaucrats making tons of regulations on every conceivable industry and thus being susceptible to capture in so many places. These two things are totally orthogonal; you can easily have either of "massive regulation" and "monopoly busting actions" without the other. Minimum size for monopoly busting would not be very large; monopolies aren't that tricky to detect.
Besides, historically speaking monopolies have existed in lieu of strong government regulation or involvement. Look at Germany in the late 19th-early 20th century, e.g. the Rhine-Westphalian Coal Syndicate or Bayer.
No. But if you had a large sum of money in the financial system, would you have felt more secure if the government did or didn't bail out Lehman?