Goldman Sachs is a Scapegoat for Uncle Sam

Over the past few days I have witnessed behavior in the halls of Congress that makes me sick to my stomach. The Goldman Sachs hearings are nothing short of a crucifixion. Without question the financial giant deserves both scorn and punishment, but this should come at the hands of wronged clients--not government minions. Even former President Clinton noted that while there was no perceived merit in Goldman's behavior, he was "not at all sure they violated the law." So how do we explain the actions of Congress?

What makes the harsh words and congressional ridicule levied at Goldman Sachs so upsetting is the misplaced blame across the board. Listening to the congressional hearings, one would think that the financial giant single-handedly caused the economic collapse. Apparently, Goldman has d-bags working for them; this fuel poor investment; that led to our economic ruin; and now we need to strictly regulate financial markets.

I'm sorry to sound like an apologist for the financial institutions, but their actions were mere symptoms of a greater evil, not the problem itself. Sure malinvestment was to blame, and that malinvestment was fueled by the government.

By continually betraying free-market principles and wedding the actions of these giants of Wall Street with those of the federal government, an atmosphere of poor business practice was created and rewarded. When failed policies are rewarded through bailouts, grants, loans, and unrealistic interest rates, there is little incentive for responsible business practice. And, of course, our old friend the Federal Reserve was the chief actor in causing the the economic turmoil we now face. It kept interest rates at ridiculously low levels, fueled malinvestment, and encouraged poor behavior.

So what is the solution proposed by Congress in the financial reform package before the Senate? More bailouts, more government intervention, and more power to the FED. Such would be a grave mistake!

Michele Bachman comments:

Sen. Reid thinks he can paint Republicans as in the pocket of Wall Street, but that’s not going to cut it because it’s flat out wrong. This bill is seriously flawed and only perpetuates a “too big to fail” mentality through permanent bailouts of Wall Street, with or without the $50 billion reserve fund. Sen. Reid has painted himself into a corner, and I think he is drastically overestimating the American people's support for his approach to financial reform. There are better ways to go about it like those proposed by Republicans that will stop the Democrats’ permanent bailouts, protect taxpayers and create jobs, address Fannie Mae and Freddie Mac reform, and rein in the out-of-control Federal Reserve.

Back to the Goldman Sachs hearings, it is obvious that the timing is a tool to stir up emotional support for the Democrat's reform package. People should be upset at the matter, but they should be upset across the board without letting emotion driving bad policy. Even President Clinton notes the timing of the Goldman Sachs suit is "suspect." He is right, and the approach of those behind this financial reform package is definitely suspect.

Once again we face misdiagnosis of the problem, a bad subscription, and another attempt for a Washington power grab by our "leadership."  

Principle, Not Preference Should Inform Policy

Please check out my newest post at The Humble Libertarian.

So often when arguing against statist programs and privacy violations I hear many of the same contentions: "It doesn't bother me, personally." "I don't mind it, so why should I care?" "I am too busy to do it myself, so I'm glad to let the government handle it for me." "I have nothing to hide." "As long as someone's not breaking the law, they have nothing to fear." The list goes on and on, but the gist of each is a lack of concern for liberty violations based on personal opinion.

However, one's personal feelings should never guide policy and never trump the protection of liberty. Yes, personal feelings are at play in any matter. They inform our decision making processes and are important in a number of ways. But in the ultimate scheme of things, principle--not preference--should be the deciding factor in all we do.

In order to flush out this idea, let us look to some examples. (Continue reading here.)

Underwater Mortgages

Please check out my latest post at The Humble Libertarian in regards to "underwater" mortgages and contractual obligation.

 It begins:

The “Great Recession” has hit almost every sector of the economy. Times are tough, people are out of work, and paying the bills is no easy task for most. Therefore, many are falling increasingly behind on their mortgages, paying for homes that are worth substantially less than when they were first purchased. In light of this, Washington Post columnist Brett Arends advises readers behind on their mortgages to stop making payments altogether in his recent article.

Mr. Arends contends that you should neglect your payments, offering that “No, you shouldn't feel bad about it, and you shouldn't feel guilty. The lenders would do the same to you—in a heartbeat.” Likewise, he claims that you should not worry about meeting your obligations because “the economy is fundamentally amoral.”

Needless-to-say, I am fundamentally opposed to Mr. Arends’ opinion. I understand the hardship, and I do not want people to suffer in order to make payments. Moreover, many of these people are victims of the government’s intervention into the economy, which makes the situation even worse. But the solution is not to shirk responsibility. Rather, if a contractual agreement was made, that needs to be honored. We should sympathize with those who have legitimately fallen on hard times, but we should not encourage bad behavior.

Contracts are an important part of a free society. They protect our relationships and property, while providing for commerce and employment. In fact, our Founders valued the right of contract so much that they inserted a safeguard against the government violating contractual obligations into Article 1 Section 10 of the Constitution. That being said, a free society can only operate when contracts are honored—whether it be a contract between the government and the governed or between individuals conducting business. Therefore, when we refuse to uphold contractual obligations, there are always consequences.

(Read the rest here.)