Jonathan Hoenig explains perfectly the "real deal" in the sudden need for the federal government to take-over everything.
There was a time I wrote extensively about promising sectors and stocks. I looked at companies' new products, analyzed earnings and tracked moving averages of securities big and small. I miss those days.
In recent weeks, those fundamentals have all but ceased to matter now that politicians are pulling the economy's strings. From restricting trade, such as through the short-sale ban that was just extended, to outright seizure, as was the case with AIG (AIG: 4.39*, +0.37, +9.19%), we are witnessing the biggest expansion in government power since the New Deal.
Power is precisely what the "bailout" bill, which cleared the Senate Wednesday night, is ultimately about. Uncle Sam wants even greater control over the economy, your money and your life.
Whatever securities Treasury Secretary Hank Paulson or his successor choose to purchase, whatever prices they choose to pay, they'll be made with taxpayer dollars but without taxpayer consent. In permitting him to do so, our government is taking an enormous leap of faith, assuming that bureaucrats in Washington are better investors than the individuals and corporations who, unlike Sen. Chris Dodd (D., Conn.), Sen. Mitch McConnell (R., Ky.) or even Secretary Paulson, actually do this for a living.
Suddenly control of those assets, and indeed an even bigger swath of the American economy, is no longer dispersed among millions of individuals making decision based on their own best interests, but centralized in the nation's capital, and being managed by those without a direct economic interest in the game.
Their goals are vague and undefined. But as I've pointed out repeatedly over the past few weeks, what has caused the market's volatility isn't the lack of government action, but fear of it!
After all ... it's the short-sided, pragmatic rush to pass a bill -- any bill -- that spawned Sarbanes-Oxley and the Patriot Act.
How can I or anyone else invest for the long term when the rules are being rewritten on seemingly a daily basis?
What Americans don't get, however, is that the goal of the bill isn't to help Wall Street or Main Street, but to centralize power in Washington. Not surprisingly, that's where its biggest proponents just happen to reside.
Excellent post.