Think Freely Media presents Common Sense with Paul Jacob

Economic news, these days, seems to be driving home some very old economic wisdom — about foolishness.

In an essay on banking from the 19th century, a writer quipped, “The ultimate result of shielding men from folly, is to fill the world with fools.” This basic lesson — that it is dangerous to shore up bad practices with bailouts and specially tuned central banking policies — is being borne out, once again, in the American economy. Thank the L.A. Times’s sad, sad article “Forget too big too fail: some banks now too small to succeed.” The article’s blurb nicely synopsizes smaller, non-bailed-out banks’ plight: “Small banks are finding it increasingly tough to survive, in part because of the cost of complying with regulations stemming from the financial crisis.”

Remember that 2008’s financial implosion led to a double whammy of governmental overkill:

  1. Bailouts for the biggest fools and
  2. Regulations for everybody, including the wisest players.

The former kept the fools in place and ready to do more damage, since their folly had basically been rewarded. The latter burdens all players, but the costs are hardest for smaller outfits to bear, while bigger outfits can easily jump those regulatory hurdles.

The details of all this constitute “news,” but the principles are old (I’ve discussed them here many times). Bailouts reward the biggest fools, and regulations protect the biggest players from competition from smaller ones.

Yes, indeed, the ultimate result of shielding bankers from the effects of their folly is to fill the world with foolish bankers.

This is Common Sense. I’m Paul Jacob.

By: Redactor

5 Comments

  1. John F Brennan says:

    Spot on. There is no such thing as too big to fail, as that foolish thought only leads to TOTAL and castistrophic failure eventually.

  2. Dagney says:

    I’ve often had the funny (or, not so funny) image of every person in the Democrat party as a vicious child behind the Whack-A-Mole hammer and everyone else is the mole trying to pop up and improve their lives and the lives of others. The Democrat child, busybody that he is, is quick to whack that mole back down into his hole.

  3. drrik says:

    Call it Whack-a-little-“r”-republican, because everyone trying to succeed on their own is espousing those values.
    Regulations do more to protect big business from competition by making it too expensive for startups than they do to protect consumers. Very little protects consumers as much as lots of well-publicized competition.
    And before doing too much denigrating of the foolish large bankers, don’t forget that most of the foolishness that they participated in was mandated onto them by the government.

  4. Rick says:

    Stanley Druckenmiller and George Soros broke the Bank of England in 1992. Here’s what he has to say about Berdonkey and his inability to back off the free money party:

    http://www.zerohedge.com/news/2013-09-19/druckenmiller-blasts-biggest-redistribution-wealth-poor-rich-ever

  5. Rick says:

    If you’d like a sense of what’s really going on in jobs here’s a website that does an okay job of tracking the public news on layoff/closing activity. There are a LOT of jobs going *poof* right now despite all the money printing:

    http://dailyjobcuts.com/

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