Like ripples extending from the splash-down of a rock in the water, the (un)intended consequences of Bailout Nation keep growing and growing with more and more dubious outcomes.
Financial experts say the perception that the government will backstop certain losses will actually encourage some firms to take on even greater risks and grow perilously large. While some financial instruments will come under tighter control, others will remain only loosely regulated, creating what some experts say are new loopholes. Still others say the regulation could drive money into questionable investments, shadowy new markets and lightly regulated corners of the globe.
In congressional testimony last month, Treasury Secretary Timothy F. Geithner laid out the principles of the administration's proposals. He called in part for designating a federal agency that would be responsible for identifying financial companies whose failure could endanger the wider economy and for giving the government greater authority to wind down troubled financial firms. He also proposed new regulations for hedge funds, venture capital funds and private-equity funds, as well as for complex financial instruments known as derivatives.
In reality, how is this any different to what got us here in the first place? Instead of Congress manipulating the housing market to achieve artificial goals and political ends, this function is now merely entrusted to the Treasury Department under the direction of the two-time tax cheat.
It won't be the market that dictates the winners and losers but rather a political appointee.
The very crony capitalism we saw destroy the market is being repeated on a much grander scale.
Yep, we’re in good hands.
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