Hedge fund fallout & Other Merry Weather

Brad De Long delong at econ.Berkeley.EDU
Thu Oct 1 11:17:08 PDT 1998

>James Farmelant wrote:
>>A short while ago I was watching some of Al Greenspan's testimony
>>before the House Banking Committee concerning hedge funds.
>>Greenspan was arguing that hedge funds should be regulated by
>>the free market rather than by the government but as Barney Frank
>>pointed out this argument was inconsistent with his defense of
>>the government's facilitation of the bailout of LCTM. Apparently,
>>for this one-time disciple of Ayn Rand government intervention
>>is fine when it benefits wealthy investors.
>Oh, but there was systemic risk! If you're really rich & you fuck up, you
>can take out enough innocent bystanders that the government just *has* to
>step in, you see. With the less fortunate recipients of public welfare, the
>morally debilitating effects of dependency are foregrounded.

Some of us used to argue to Congresscreatures that Head Start and money for midnight basketball were anti-crime programs worth funding precisely because they diminished the chance that someone would take out innocent bystanding members of working American families who play by the rules with a Glock...

A... friend of Jack Kennedy's told me that he judged it an interesting but ultimately futile attempt at policy judo: "The argument only has real purchase when the innocent bystanders you save look like major campaign contributors..."

Brad DeLong

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