LLR Pages

Saturday, February 21, 2009

Chrystia Freeland: Economic Activity "Will Ground to a Halt"

Bill Maher, whose show Real Time debuted its seventh season on HBO last night, had three panelists - Chrystia Freeland of the Financial Times, Tina Brown of The Daily Beast, and Congresswoman Maxine Waters -- who took issue with Dr. Ron Paul's argument against the Federal Reserve and the socialist view that the laissez-faire capitalism is the root of the U.S.'s economic and financial woes.

Here's the clip of the first part of the panel discussion. However, watch it from 1:14 to 2:41, where Freeland and Waters criticize Ron Paul's "extremist economic view" that we must reject the "too-big-to-fail" doctrine and that there should be no regulations on the banks:

Maher asserts to the women on the panel that they are "well-versed in economics." Freeland, talking about the Austrian/freedom lovers, says that she "wouldn't want to live in a country that tried that experiment." She goes on to make this ludicrous yet misguided statement that is the central thesis of this blog post:

I mean, there is this sort of very extremist view called the Austrian school that says what Congressman Ron Paul was saying...that, you know, absolutely these companies got themselves in trouble. We should be absolutist free marketeer; let them all go broke. But would you like to live in a country where economic activity grinds to a halt? I think it's too risky an operation to try."

And, as Brown asks whether economic activity will grind to a halt, Freeland then naively states:

No, no, it would be, it would be a lot worse. If, if you let the banks go broke, imagine what would happen."

Then Waters chimed in with her nonsensical tripe, saying that she likes Ron Paul and has "shaked up, ya know, the Congress," but he is a "true believer" (after Maher says it). But then she really "parts" with him on his view that there should be no regulation. Yet ths is the same Congresswoman Waters who supported the government-propped up Fannie Mae and Freddie Mac institutions -- yup, that's right; the New Deal programs that Democrats love and want to preserve -- that encouraged the reckless "no-money-down," overextension of the housing market/bubble that burst within the last couple of years. These are the same institutions that purchased malinvested "bad" loans and resold them to banks that would lend them out to credit-risky home buyers. These same home buyers would put "no money down," accruing interest while their loans were deferred and would end up paying high mortgage payments that they knew they couldn't afford.

Waters, Brown, and Freeland are wrong about Ron Paul, the Ausrian school of economic thought, and the "absolutist free marketeer" position on the "too-big-to-fail" doctrine and the regulatory state. Big banks like Citigroup and Bank of America can get past these regulations (they are supporters of the corporatist state as well, as they have lobbied for banking and other financial service regulations), and the smaller banks that are even nationalized as well as the big ones have a difficult time getting past the regulations. No one person can simply start up a new bank without reviewing and agreeing to abide by a myriad and a web of regulations that make it cost prohibitive to do business in the U.S. And the big banks get corporate welfare because they have become insolvent and are unprofitable ventures (although the executives are profitting from the taxpayers at their expense). Those business' losses are heavily socialized, thus cementing a future where today's generation will face their future being heavily mortgage that they will be stuck paying all the way to their own graves.

Isn't socialism grand?

[Cross-posted at The Freeman Chronicles.]