Today’s conventional wisdom is: If the government does not fork over or place at risk hundreds of billions of taxpayer dollars, then our financial markets will “seize up” or “meltdown.” If I hear one more Wall Street-Washington talking head proclaim this, I’m going to throw up.
Absolutely no evidence exists that markets will simply shut down. Based on both economics and history, it is an absurd assertion.
In this economist’s view, these unprecedented governmental intrusions are not about government saving the market. Instead, they are about both Washington and some on Wall Street tapping the taxpayer to bailout their own mistakes and failures. Generating fear smoothes the way for the bailouts.
Unfortunately, among those being squeezed between these Washington and Wall Street behemoths are American small businesses. On one side, the resulting tighter credit and higher borrowing costs will restrain small business growth. On the other, small businesses will get socked when the government hands these massive bills to the taxpayers.
All taxpayers are in a bad spot – stuck between large financial companies seeking government bailouts and backing, and politicians and their appointees quite willing to dole out those favors.
These are not pretty times, and the government is making them even worse.
Raymond J. Keating
Chief Economist
Small Business & Entrepreneurship Council
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