Philosophy over coffee

Nationalization? Maybe.

In Headlines, Size: Venti on March 2, 2009 at 3:23 am

(A brief update)

Lately, I have been lurking around just two places on the web: twitter (username: blueblooded) and Paul Kedrosky’s blog (paul.kedrosky.com). Twitter has unexpectedly been… entertaining. It’s perhaps one of the easiest ways of receiving various information from various people about various subjects. Not to forget it’s the quickest way to blog.  Quite a convenience for people like me who tend to be lazy bloggers most of the time.

Paul Kedrosky is a regular on CNBC. A very smart man who enthusiastically gives me and thousands more our daily dose of interesting readings. He is a research consultant for Ten Asset Management and a senior fellow at Ewing Marion Kauffman Foundation.

I’ve also been busy reviewing for the CFA (just about to move to the 5th book, just after 2 months and 3 more left for the 2 remaining books and review), but the pace at which I’m going, fast as it may be, is enough to scare me. I may be reaching the 250-hour minimum suggested review time but it doesn’t quite bode well for me that I’m finishing a book, on average, in less than 2 weeks when each should at least take three. The current book I’m on, I began reading just exactly a week ago.  And now I’m down to reviewing the last chapter and I’m ready to move on.  It’s one thing to understand the concepts, it’s another to retain them along with the eerie collection of formulae that are slapped to everyone studying for the exam. Somehow. I take comfort knowing that I did understand pretty much everything I’ve read and I have enough time to review and master everything. I hope to be very well prepared come June. Let that be my gift to myself.

———————————

Things are not yet fixed. Far from it should I say.  Left to right, there are debates about nationalization, the role of economists, how to fix the recession, the bailing out of central and eastern Europe, just to name some.  Each of them has their own points of contention. For now, let me focus on nationalization.  I am probably oversimplifying, but I am simply not very welcoming of the idea of the government playing a role managing private institutions.  There’s definitely a reason why the markets are, until recently, best left to themselves.  Let’s go back to Reagan: government is the problem.  Even with the best intent (or not), it becomes simply a cause of inefficiency.  Taxes? Subsidies? Ceilings and floors? If you understand basic economics, then you would understand that those are the simplest illustrations of the kind of inefficiency the government creates.  (If you want more examples, read James Bovard’s Lost Rights and you’ll understand why I hold this position.)  And I’m sorry to include this, but with a Democratic administration in place for the next four years, this isn’t something you want to allow to happen so easily.  Seen how many times Pelosi hopped from her seat during Obummer’s state of the union address? That could only scare me. (It actually also annoyed me.) BTW, I’m neither a fan of Limbaugh nor Jindal.

I am not claiming that government regulation is completely unnecessary, but their involvement cannot go beyond a certain extent. There has to be limits.  I still believe in the forces of the demand and supply at work, and in survival and market failure. If strings had to be attached to the bailouts of certain institutions, then I believe there similarly has to be strings attached for the government.  So nationalization? Maybe. But if it enters the picture, it does so only to do what it has to do. And that is not to control the institutions and instruct them what to do.  Protect taxpayer money and check that it’s used appropriately? Remember the housing plan? I wonder how that protects taxpayers’ money. You’ve probably heard of Rick Santelli.

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