The Market Is The Problem, Not Government

Most of you probably do not know that I used to manage global fixed income money and work on Wall Street, nor that I have written op-ed for The NY Times, Barrons and others.

The waste, inefficient and bloat are not a big problem in government, they are a huge problem in the market which is ripping us for trillions of dollars annually for years, as I note in the following article published in Counterpunch today.

Click to read the whole thing:

How Many Stock Brokers Does It Take to Change a Lightbulb?

The Musk and Trump cuts to government programs are part of a larger movement towards ‘free markets’ began a little over fifty years ago when we abandoned fixed exchange rates (rates set by the government) in favor of floating exchange rates (the Float). In other words, the government past the decision making for determining the rate of exchange between two currencies to the market (those buying and selling currencies).

The Float was a watershed moment. It began a shift away from government in favor of business and letting the market sort it out. This coup was a victory for the Johnny Appleseed of free markets, Milton Friedman. The Friedman Doctrine held that business had no social responsibly except to maximize profits.^[1] He felt government programs initiated by FDR to help the average American, such as the minimum wage and Social Security were wrong.^[2]

Labor who had benefitted from New Deal programs like the Wagner Act saw their power begin to wane; while business gained. Conservative and pro-business groups like the United States Chamber of Commerce began advocating for market-based solutions, arguing government regulations and taxation were business impediments.^[3]

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High Risk Climate Locations To Be Shut Off By Insurers

An article in today's  Guardian,  'Climate crisis on track to destroy capitalism, warns top insure',  predicted climate change will bring an end to capitalism. Noting that,

The world is fast approaching temperature levels where insurers will no longer be able to offer cover for many climate risks, said Günther Thallinger, on the board of Allianz SE, one of the world’s biggest insurance companies. He said that without insurance, which is already being pulled in some places, many other financial services become unviable, from mortgages to investments.

Basically, places deemed uninhabitable, or close to it, will be shut out from the insurance market and further investment. 

Günther Thallinger, added  this is bad for the overall financial sector,

“This applies not only to housing, but to infrastructure, transportation, agriculture, and industry,” he said. “The economic value of entire regions – coastal, arid, wildfire-prone – will begin to vanish from financial ledgers. Markets will reprice, rapidly and brutally. This is what a climate-driven market failure looks like.”

For years I have been talking about how climate change will devastate certain areas and encourage climate migration. The inability to buy insurance and a dearth of investment to a local  is going to devastate certain parts of America and the world at large. More publicity like this will push people to move and create a self-fulfilling prophecy.