Government

I’m sure you’ve been reading a lot recently, yes? I’ve discussed many of the books I’ve been digesting in The Investment Edge and in my blog — 13 Bankers, No One Would Listen, plus others. After you have read three or four books about the credit bubble, you begin to get the idea that most of the problems come from government.

Of course, government always blames greed or businesses. Government hardly ever takes responsibility for anything.

What happens seems to be this: Lobbyists petition members of congress to liberalize things (an example would be the removal of the Chinese wall that separated investment banking from banking, otherwise known as the Glass-Steagall Act); then congress and the president maneuver things so that the deed gets done. Glass-Steagall was defanged at the end of the Clinton presidency.

When a mess ensues, congress and the president never own up to the fact that they created the legislation that caused the problem. Think about it. Moving on to oil and the mess in the Gulf of Mexico, The New York Times had this to say on May 13th: “The federal Minerals Management Service gave permission to BP and dozens of other oil companies to drill in the Gulf of Mexico without first getting required permits from another agency that assesses threats to endangered species — and despite strong warnings from that agency about the impact the drilling was likely to have on the gulf.”