It’s credit and banking policy: maturity transformation in particular. You could call this entire economic calamity “Von Mises’ Revenge.”

Where have I read this “Free” Market screed before…hmmm….sounds like a templated talking point…

Capitalism and cheap energy has driven high-paying jobs offshore. Bubble creation is a function of unregulated markets, thus the long, long history of countries adopting laws to prevent them. The new administration is making a lot of noise about creating green jobs – with federal stimulus. This is, historically, how things work.

Deregulation – viz. Enron, Global Crossing, etc – has generally bad outcomes. We see the cost savings of regulation when we examine the positive public health outcomes of the Clean Air Act, for example.

Sure th’ gummint can misallocate. No one is saying they can’t. But deregulation pushes capital upward, as the expense of the bottom.

Meanwhile, according to a recent 9-page Portfolio.com expose on the calamity we all refer to as Wall Street, things like this were happening in our glorious “free” market:

“In Bakersfield, California, a Mexican strawberry picker with an income of $14,000 and no English was lent every penny he needed to buy a house for $720,000.”

Terrible decision #1: Fed keeps interest rates too low, too long, in an effort to inflate an asset bubble that would replace the dot-com bubble

#2: Graham Leach Bliley breaks down the “Chinese Wall” between investment banking and retail banking, allowing additional leverage into the banking system and creating the system by which “financial engineering” could create the toxic mortgage securities we are dealing with now

#3: Government refuses to regulate CDS, or even creating a transparent marketplace for CDS, which places companies in the positions of being counter-parties to so many swaps that they are “too big to fail” – AIG.

#4: Fannie and Freddie are able to gear up to 40-1 leverage, becoming de factor hedge funds, all in the name of housing “affordability”. They are supported by an “affordable housing” constituency of do gooders who have apparently never taken economics class (and some crooks)

#5: Gov’t responds with absurd, inconsistent policies like TARP, an alphabet soups of Fed lending programs, and nationalization of key industries intended to support the financial system but come at the cost of trillions ($7.7 at last count all told including guarantees) that will hamstring our recovery with additonal debt, especially as borrowing costs will eventually be forced to rise.

#6 Now, having cut rates as far as possible and spent almost all of the TARP authorized to date, deflation is still banging on the door and Bernanke now is wants to have the Fed by long-date treasuries to aid borrowing (eg reinflate the bubble), but which will, eventually, trash the currency, as the Treasury sells bonds, to raise money to lend to the Fed to buy bonds. Hugely inflationary once this long, painful bout of recession ends.

Basically the taxpayers and savers are being robbed blind by crony capitalism to the benefit of a few elite monied interests – which is just as much a failure of governance as it is a failure of capitalism.

Oh, wait – I sound like a libertarian. Scratch what I said above.

I’m a fan of safety nets (unemployment insurance, universal health care, cheap/free schooling etc.) and am generally supportive of unions. But I believe the only thing wrong with our capitalism is that we let the capitalists write their own rules.

If none of those buildings come to be, I’m going to be seriously bummed. Even if just one of the three sights are developed, I’ll be happy at this point.

According to all historical evidence and most ways of knowing,

no.

But surely some will call me a ’socialist’ fer sayin’ this. Thus the problem.