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Three Blind Bankers: Reflections on the House Financial Services Committee Hearings
Three blind banker mice defend unconstitutional interventions:
A. Bankers suggested our economy would be much worse if they had not artificially lowered interest rates and borrowed even more to bail out and stimulate their friends, (even though profligate borrowing and spending caused the problems.)
B. Bankers defended impoverishing little taxpayers with bailouts of big bad bank boys.
C. Bankers awarded themselves bonuses after ruining clients, companies and institutions and not paying taxes due.
D. Bankers lobbied to change financial safety rules in place since the depression of 1933, gambled with derivatives, created financial monopolies and violated the US Constitution.
Economist Henry Hazlitt observed in Economics in One Lesson (or online here):
The art of economics consists in looking not merely at the immediate, but at the longer effects of any act or policy; it consists in tracing the con- sequences of that policy not merely for one group, but for all groups.
Government corporate lobbies calling themselves public servants increased borrowing and taxes to the point of inflationary depression, notwithstanding those very policies got US into today’s mess.
Now they want even more debt and taxes to fix the economy they burdened and broke with too much debt and taxes.
An Illinois Congressman asked the three bankers:
Exactly how were they helping taxpayers whose retirements had been cut in half?
The three bankers responded they had prevented even greater losses of 70%. Did they indeed? How would they prove their negative?
In fact, our real economy still swoons, despite the few economic Swallows of Spring that do not a Summer make.
We know not how far or long prices go down, until these bankers, their political enablers and funders are long gone from the stage of public accountability, with private profits from the public trough.
Readers of our market history, The Gift, which accurately predicted the current financial panic, know government intervention not only exaggerated booms, but also aggravated busts, despite official pronouncements to the contrary.
Gift readers learned markets correct the amount they are financed.
In 1929 the economic correction was 90% with 10% down payments. It took 25 years to recover from drastic unconstitutional government interventions under Hoover, FDR and Truman.
This generation, the decline may be 99% from 100:1 derivative leverage, or even more and longer, with 125% GM Ditech Loans to Value and even more big government by crisis.
