The title above captures the current topic pretty faithfully, with one exception.
To explain briefly, note that today's bugged-out commentary was prompted by a recent post left at Carpe Diem by Prof. Mark Perry of the University of Michigan. In line with libertarian inclinations --- if markets perform poorly, there must be some fault of the government to explain it --- Prof. Perry cited and linked to an op-ed in the Wall Street Journal that noted how, during the Great Depression in the United States, there were several thousand bank failures in the initial years of that economic collapse --- US GDP down nearly 30% between 1929 and 1933 at the economy's trough in negative growth --- but in Canada, by contrast, there were only 10 national banks and branches and not a one collapsed.
The Governmental Culprit Here?
According to the WSJ op-ed, it was the McFadden Banking Act passed in 1927 in the Calvin Coolidge era that prevented national banks as in Canada to expand and dominate banking by buying up local banks across state borders. And that law stood in place until 1994, when President Clinton signed a new Congressional law --- the Riegal-Neal Act --- that allowed national banks to expand by merging anywhere in the US with local banks.
The implication is clear, at least for libertarians. As it did earlier in the century to deepen and prolong, maybe even cause, the Great Depression, so anything the government does now --- whether the original Secretary of Paulson bank-rescue or any version Congress comes up with --- will very likely mess things up again and cause large-scale harm to the US financial system and our nation's economic performance.
Prof Bug Disagreed
And he did so, among other things, by delving deeper into the causes and depth of the Great Depression in Canada, compared it with the US, and showed how in fact the Canadian financial system performed poorly in the 1930s, with the Canadian economy doing worse than the American. A few other bugged out comments --- well, some spun-out paragraphs --- then extended that analysis to the present financial crisis that has emerged in the last few months.
Click here for Prof. Perry's post, the lengthy quotes from the WSJ article, and prof bug's extensive commentary.