Government Regulations Help Big Banks

JP Morgan, one of the largest, if not the largest, Banks in the world is now going to be allowed to do a “stock buy back” plan. The federal government, when it gave money to private banks to keep them from collapsing, the federal government also bought stock in those private banks. JP Morgan was one of those private banks that had some of their stock bought from the private bank. Now JP Morgan was given the okay to buy back their stocks from the federal government.

Here is a video on that story from NBR (Nightly Business Report):


Now I want people to try to remember back to 2008 and 2009. Around these times, some of the largest private banks in the world and which operated in a global market, happened to hit into a financial crisis. There were some bad investments that the banks took on or were holding, which no rational actor would have chosen. The federal government wanted to prevent a “financial meltdown” from happening and gave tax payer money to those private banks to keep them from collapsing. At the same time the federal government took stock on those companies. The private banks, once they got through the “financial meltdown” would be allowed to buy back the stock options in the bank that the federal government owned.

Some people were made about the banks and wanted to institute regulations to keep these “too big to fail” banks that helped to cause the financial meltdown. Laws were passed and executive orders were given, and banks had more restrictions placed on activities they cannot do. People were very angry at the big private banks and wanted these big banks to fail. But something interesting appears to be happening with wanting the private banks to pay that helped to cause this situation, by institution “more” regulations on these private banks that helped to bring about the financial storm.

The person being interviewed in this story happens to bring up something very interesting. These private banks did not want Barack Obama or Elizabeth Warren to be elected. They did not want them to be elected because of these “regulations”. But what happened because of these “regulations”? They helped to expand the market power, or how much of the piece of the pie they have, and kicked out some of their competition. These regulations helped “small” private banks go under. But this “big” banks that helped to cause the financial problem can afford these regulations and they can obtain more market power since they have one less potential rival for your money. So “small business”, as “small banks”, are not being helped with the regulations. Instead, these regulations allow for there to be less competition between these “too big to fail” private banks.

How about that? You try to hurt someone and it only makes them stronger. Are they Goku?


Socialized Healthcare v. The Laws of Economics

Interesting article on healthcare and economics.

“The government’s initial step in attempting to create a government-run healthcare monopoly has been to propose a law that would eventually drive the private health insurance industry out of existence. Additional taxes and mandated costs are to be imposed on health insurance companies, while a government-run “health insurance” bureaucracy will be created, ostensibly to “compete” with the private companies. The hoped-for end result is one big government monopoly which, like all government monopolies, will operate with all the efficiency of the post office and all the charm and compassion of the IRS.

Of course, it would be difficult to compete with a rival who has all of his capital and operating costs paid out of tax dollars. Whenever government “competes” with the private sector, it makes sure that the competition is grossly unfair, piling costly regulation after regulation, and tax after tax on the private companies while exempting itself from all of them. This is why the “government-sponsored enterprises” Fannie Mae and Freddie Mac were so profitable for so many years. It is also why so many abysmally performing “public” schools remain in existence for decades despite their utter failure at educating children.

The more money that has been spent on government-run healthcare, the less healthcare we have gotten. This kind of result is generally true of all government bureaucracies because of the absence of any market feedback mechanism. Since there are no profits in an accounting sense, by definition, in government, there is no mechanism for rewarding good performance and penalizing bad performance. In fact, in all government enterprises, exactly the opposite is true: bad performance (failure to achieve ostensible goals, or satisfy “customers”) is typically rewarded with larger budgets. Failure to educate children leads to more money for government schools. Failure to reduce poverty leads to larger budgets for welfare state bureaucracies.”

Continue reading here.