LLR Pages

Sunday, March 16, 2008

The Bear Sterns Bailout Epitomizes Our Ever-Growing Economic Fascism

The recent federal bailout of Bear Sterns by pro-state, pro-government financial firm JP Morgan and the Federal Reserve (a quasi-public central bank that was propped up by the U.S. federal government and many international bankers in 1913) epitomizes and even unveils our never-ending growing system of economic fascism, which is currently under the rubric of "capitalism."

Bear Sterns, for those of you who are not aware, is a colossal mortgage investment bank which has been crumbling financially because of its ties to securities firms supported by shady subprime mortgages. This firm, which has been in business for 85 years, also had two hedge funds that drowned in a sea of red ink last summer, shows exactly how the U.S. federal government, under the rule of George Bush II, has embraced capital as an excuse for the government to intervene with capitalism.

Let's call a spade a spade for once and for all. The subprime crisis has always been the by-product of the wedded government and business intervention. The policies, which are the heart of the problem, are devised to bring assistance to the housing industry and financial lenders who are responsible for writing the mortgages. Unsurprisingly, the economic and financial chickens are coming home to roost. The huge lenders and investors, which have always been attracted to the globs of federal government intervention in the financial sector and the subsidies attached to them, are now mired in this mess. After all, although they are specialized in securitized mortgages, they are completely in over their heads, yet they will collect their bailout check under the "we the big firms can't fail" doctrine. This undoubtedly will set the stage for another round of government interventions in the already government-coddled, government-regulated financial sector that will result in poor decisions. Moral hazard is what it is.

Does this have anything to do with the free market? Yes and no. This certainly is not a free market, but leftists, socialists, and many populists will call out against laissez faire. Why would they? Because corporatism, which is a government-subsidized, government-protected, government-assisted brand of capitalism, will erroneously, although understandably, be associated with laissez-faire capitalism. Kevin Carson, who describes himself as a "free market anticapitalist," is known to have said, "If this is the free market is, then I'm against it."

Why is this not a free market? Because the free market is a profit and loss system devoid of government involvement, control, and regulation, including privilege. If a business fails (and many do), it is supposed to fail, not to be handed over to the taxpayers to underwrite its losses. All we have at this point is a corporatocracy (which is a fusion of Big Business and the government), which is also identified as corporatism, ecoonomic fascism, and state (or crony) capitalism.

If we want to help allies of libertarianism, we must study and understand economics ourselves as well as our own history. One fact that substantiates the existence of this system is that profits are private, yet the losses are socialized. The term "socialized" means that taxpayers are coerced -- at the barrel of a gun -- to cover the losses without actually possessing any political clout.

We must reject vulgar libertarianism and embrace the free market and a return to limited government, personal responsibility, human liberty, and a foreign policy of interventionism. The recognition of abject failure in government because of its interventionistic policies -- both domestic and abroad -- will hopefully pave the way back to the federal republic that we once had.