After reading news of the US Treasury department's proposal for "the most far-ranging overhaul of the financial regulatory system since the stock market crash of 1929 and the ensuing Great Depression," it really left me scratching my head...
The plan, as communicated by Treasury Secretary Henry Paulson, would change how the government regulates thousands of businesses "from the nation's biggest banks and investment houses down to the local insurance agent and mortgage broker."
What's more, the U.S. Senate Banking Committee said the proposed plans are "not even close" to resolving the financial crisis...
Who is the greater fool?
I do not expect logical thought and government actions to be included in the same sentence but I can not help myself from asking a few logical questions to remind myself of my own sanity in the face of poor judgment chasing poor judgment:
- Greed always seems to "find a way." Can it be contained with government regulation? Has it ever been contained? Does greed not always manifest itself into different forms?
- Do politicians really believe that they can make lasting "change" or are they just reacting just to prove they are "doing their job?"
- Have we forgotten that the current crisis was largely a result of greed finding money through derivative sources? Those corporations and institutions wishing to find capital found their way around traditional sources, such as banks, and found venture capitalists, hedge funds, various secondary markets, and complex debt structures more than willing to fill their hungry appetites. Won't greed just find another way, as it always does, to find what it wants after any forthcoming "rules" are established?
- Does government intervention, as with the Bear Stearns case, encourage more risky behavior or discourage it? Does Fed intervention keep financial markets "orderly" or does it prolong an agonizing end?
- Is the capitalist structure not sufficient enough at correcting its own behavior without "help" from the government?
- Are there really that many "unwilling participants" or "innocent bystanders" out there that may be deserving of a "rescue" in the wake of financial turmoil?
Here's another thought worth noting: As I was perusing The Wall Street Journal this morning and shaking my head at the foolish games being played between the federal government and financial institutions, I found a quite interesting article that reminded me that greed never really dies and will do whatever it can to survive:
At a minimum, I should not be surprised at the fallibility of human emotion but I will always remain fascinated by it, especially by the power and clever tenacity of greed...
Perhaps some of you readers can help me rationalize this or perhaps I would be wise not to look for reason where there is little or no reason to find. What are your thoughts?
TFPAuthor, Kent N. Thune, QPFC, is the President and founder of Atlantic Capital Investments, LLC (ACI), a 'fee-only' financial planner and Registered Investment Advisory firm located in Mount Pleasant, SC.