#860 Milking Capital

As the sinkhole of Wall Street continues to suck every last little bit of retirement out of ordinary people’s pockets, the cries for regulation are growing.
Cry like a baby.
You can’t build a boat when you’re already drowning.
The time for regulation was long ago, when it looked like something might happen based on an analysis of the over-leveraged under-overseen market. But as the Arkansas hillbilly of yore explained to the traveler about why he didn’t fix his roof when it was sunny; the cabin doesn’t leak when it doesn’t rain.
The last few years have seen the deregulators dismantle acts created during the depression that might have prevented today’s debacle. So Wall Street has excelled at making money off money. Leverage off leverage, packaging and repackaging mortgages into securities of almost infinite derivation.
And making money off fees with every transaction.
Capitalism has the tendency to be like a self-cannibalizing snake; every now and then biting itself in the backside because it gets too greedy.
Unfortunately, it needs regulation because it gobbles up the rest of us poor schmucks too.
Regulation is a polarizing word. Some rise in anger when they hear it. Other embrace it. But the truth is we all fit somewhere on the spectrum between total anarchy and total totalitarianism. Between wildness and civilization. Laws are after all, regulations.
Think of them as ways to tweak the capitalist carburetor for maximum efficiency.
I heard someone say recently that we need to make money the old-fashioned way. The old-fashioned way to make money was to lend it to an entrepreneur who would then set up a factory and make something with it. Like a widget or a melamine plate.
Unfortunately, the old-fashioned way was ravaged by greed too. Like today’s China, when instead of making plates, farmers and dairies add that same melamine to their milk and baby formula to simulate protein content. Capitalism at its rawest. Doctor the product to make extra money.
Okay sure, we’ve poisoned a few babies.
But it’s better to let the industry regulate itself. The market will correct itself eventually—when there’s no one left alive to add in melamine.
America, ya gotta love it.