Financial markets tumbled this week amid disappointment the Fed didn't do more and general disgust with the lack of action from European policymakers.
Which brings us to another installment of Taken to Task.
For all the talk about how traders love the free market and believe in the principles of unfettered capitalism, the folks on Wall Street can't seem to get enough of government bailouts.
After Ben Bernanke pledged to spend $400 billion on Operation Twist this week, I heard many more complaints about how the Fed didn't do ENOUGH vs. any chatter about how they've gone too far, are out of bullets and pushing on a string. That's so "first-half of 2011" before the stock market turned south, that is. (See: Fed Action Fails To Boost Animal Spirits: "Marginally Helpful," Says Former Fed Governor)
It seems the bold champions of free markets on Wall Street only like laissez faire capitalism when the markets are RISING.
This weekend, traders are hoping for some plan — ANY plan — to deal with Greece, whether it comes from the ECB, the IMF, the World Bank, Poseidon or Zeus. But nobody seems to be wishing to just let the chips fall where they may. Haircuts for bondholders? Write-downs for banks? Egads! The pain must be avoided at all costs! (See: Apocalypse Now? Markets Tumble as Europe Approaches "Tipping Point")
Of course, a generation of traders has been conditioned to believe the Fed — or some other institution — will come riding to their rescue if things get really dicey, or even just a little bit uncomfortable. So we can't blame them for taking on too much unhedged risk and (not-so) secretly hoping for yet another bailout, can we?
Just like there are no atheists in foxholes, the really are no libertarians on Wall Street. The only ideology traders believe in is making money and if that means more government intervention, bring it on! Someday, maybe, we'll get back to something approaching a free market. But if such a thing ever really existed, it was a long time ago in a galaxy far, far away.
- Taken to Task: The Cult of Warren Buffett
- Taken to Task: Jamie Dimon's House of Ill Repute
- Taken to Task: President Obama Needs to Back Elizabeth Warren
- Ben Bernanke