“Your money is insured by the federal government . . .”

Guess who offered this reassurance?

Your money is insured by the federal government, you’re not gonna lose a dime.

It wasn’t a “credible” talking head on CNBC.  It wasn’t your stock broker.  It wasn’t a politician running for Messiah in Chief.  It was Robert DeNiro‘s character, Neil McCauley, in the 1995 Michael Mann movie “Heat.”  He was a bank robber.  The clip of that (anyone have a link to it?) should be a commercial on CNBC, CNN and Fox News.

We already have laws on the books that criminalize theft.  Who knew?  But when government “safety nets” make a thief’s crime easier (or even encourage it, or “incentivize,” as an economist might say), the problem may be with existing laws, not the absence of new ones.

We never learned our lesson from the S&L scandal.  The problem is not Charles Keating of old or Richard Fuld of today.  (Why cry over spilled Napster when an iTunes can come out of left field.)  The problem is the endless government “plans” to “solve” problems best left to free markets.  Government intervention ALWAYS creates unintended consequences that geometrically expand the existing problem.  Don’t get angry at common criminals masquerading as capitalists.  Get angry at any government “solution” that pretends to solve the problem.  Such counter-productive legislation is what needs to be “unwound”, not just investment positions poorly chosen due to the dearth of market information (courtesy of said legislation).

A week or so ago, legislation in California was vetoed that prohibited mortgage brokers (a former profession of mine) from offering option ARM or “neg am” loans (good sophisticated loan products doomed to the dustbin of history, but that’s another blog posting).  I laughed my ass off as I heard certain folks bemoan this great tragedy.  Why did I laugh?  The market had already effectively eliminated those products.  The two major lenders who offered neg am loans had shut down their wholesale channels (where mortgage brokers accessed the mortgage products) months ago.  The lenders?  Wachovia and Washington Mutual (Countrywide had already reincarnated).  Self-appointed Merlins and their useful idiots continue to peddle fake Halloween horror to the ignorant.  Meanwhile investment capital sits on the sidelines as villagers with torchs cry for more timeouts amid an existing delay of game.  How does this fix the broken capital markets?  Ah, but that question recklessly guides us towards a solution.  Apparently we need to hate the players and stall the game for the good of the country.

Why let ignorance of basic economics prevent the triumphant march of democratic progress in this country?  Saviors are entitled to their elected office and the trappings therein.  God bless America, dontchya know?  Populist democracy brought us the Federal Reserve, Fannie Mae, Freddie Mac, FHA, FDIC, the Securities and Exchange Commission, Sarbanes-Oxley and many other glorious “plans”.  Those plans worked so well that George W. Bush, Nancy Pelosi, Barack Obama, Barney Frank, Joe Biden and John McCain have just “rescued” us . . . again . . . for only $850 billion . . . as of the last billing statement.

So why again should I vote?  What exactly would be the difference?

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