Reno Hayek Symposium

In 2008 to elect, inter alia, Barack Hussein Obama and other Democrats,  Goldman Sachs contributed $4,463,788; that’s 75% of its total contributions to the Democrats, the party of Wall Street. Also the party of public employee unions and unions in general. Also the party of trial lawyers. These three groups together with sundry “rent seeking” corporations like GE have cost the U.S. economy, particularly the taxpayers, billions of dollars. A little money buys a lot from Democratic whores like financial perks to Goldman from selling structured phony investments, more government employment union dues for union bosses, and contingency fees for trial lawyers from phony lawsuits. The economic cost hurts us in inflated deficits and debt, higher capital costs and exploding taxes and higher medical costs from inflated malpractice insurance rates.

The Wall Street payoff continues with Sen. Dodd’s financial ”reform” package. It is a bailout at taxpayer expense waiting to happen. With Obama and Democratic lips moving in support of the Dodd security blanket for Wall Street you know the denial of future bailouts is bold face lie. What Dodd has done is to institutionalize future bailouts garnering more power to the federal (DEMOCRATIC) regulators. Just another step in big government. Just another money getting lever for the Democrats. Just another vote buying lever for the leftists.

The problem is twofold and all bad: One: More control of the economy, main street as well as big business, because the general economy works with the financial lubricants provided by the financial industry. More control means bigger government. More control means more opportunity for rent seeking behavior and less competition. More control means more incumbent power.

(Definition: rent seeking behavior is the business behavior to obtain unfair competitive advantage from government regulation, subsidy, or taxation against competition without such advantage. Examples: subsidy of environmental devices, ethanol, and government bond agency.)

Two: Just as bad from an overall economic perspective is the moral hazard enshrined in the Dodd bill. Moral hazard is the real or imagined sense that there is a safety net protecting business from adverse risk. If I feel the government will always be there to bail me out, I will take more and more undue risk to gain greater profit because I have nothing or little to lose in the process. This is a guaranteed bubble generator and when the s__t hits the fan, the necessary cleanup will fall on the taxpayer. Fannie and Freddie are perfect examples of this phenomena.

As a recent WSJ editorial notes the Dodd bill is improving draft by draft at a glacial pace so we still have hope. But the mindset of the Obama control freaks is opposite the welfare of the American people.The solution is to separate high risk businesses like proprietary trading  from government guarantee businesses like bank deposits or alternatively, eliminate all government business guarantees. We must have the freedom to fail as well as succeed without government interference in either case. That is what makes us competitive and what has made us great.

Welfare be it individual or corporate only makes us dependent in a world that will not tolerate dependence. It puts us near the end of the road to serfdom.