If you believe in the free market and you read the Wall Street Journal news pages, you will very soon come out hating Wall Street and banks, as the enemies of free enterprise, and the champions and beneficiaries of socialism.
Some choice nuggets from today’s WSJ:
On S&P’s downgrade of U.S. banks and upgrade of two Chinese banks:
S&P’s action was based in part on its view that governments in China, Japan, Korea and India are “highly supportive” of its banking system whereas the U.S., U.K., Germany and France are only “supportive” and will come in only when there is significant distress in the market.
“Government support is a big, big factor,” [S&P analyst] Mr. Maheshwari said of the ratings changes.
“Government support is a big, big factor,” [S&P analyst] Mr. Maheshwari said of the ratings changes.
And from a WSJ story on EuroBailout:
The psychological impact of coordinated central bank action … appears to have had a big impact on market sentiment. Michael Feroli, an econmist with J.P. Morgan, said Wall Street traders took the move as a sign that “the Fed and central banks are there to support things” and that “these guys have our back.”
These sorts of stories highlight how much the financial sector’s pursuit of profit is grounded not so much is creating value, but in regulatory arbitrage. It’s why folks like Jon Hunstman might gain conservative support for his plans, which I discuss in my column today, to break up the big banks.
