Wikipedia begins one entry in this way:
The statement, "There are no atheists in foxholes," is used to imply that many avowed atheists really do believe in God, and that in times of extreme stress or fear, such as when participating in warfare, the belief will surface, overwhelming the less substantial affectation of atheism.
As an atheist, I'd disagree with that. And I know I'm not the only Freethinker out there.
So considering all the bad news now being reported from Wall Street, I would like to replace that statement with one that is more accurate.
There are no Libertarians in recessions.
I'll give an example from one Wall Street CEO, below the fold...
Meet Laurence Fink. CEO of BlackRock Incorporated, an investment management firm formerly a part of PNC Bank, that today manages in excess of $1.3 trillion. He was recently in the news for being considered the top candidate to replace departing Morgan Stanley CEO, Philip Purcell. These talks fell through, however, and shortly thereafter a deal was unveiled in which Merrill Lynch would merge its money management business under BlackRock, and that's how Larry (to his friends) is head of a firm managing nearly $1.3 trillion in assets.
Larry is a little bit scared right now. The mighty financial companies on Wall Street are looking as stable as a house of cards, propped up with spit and denial. And having Bank of America take over 49% of your assets probably didn't help when Merrill Lynch went belly-up in the past week.
Larry was on CNBC yesterday. And he asked for something that not a lot of Wall Street CEOs have ever asked for.
Regulations. Lots of them. And fast.
Click here to watch the video. The quote starts 9'12" into the video...
LARRY FINK: Marie - one thing I'd like to say about AIG in terms of the federal involvement: I believe what we are seeing now speaks volumes towards the need to have a Federal Regulator who will regulate not only banks, not only security firms, but we need a National Regulator for insurance companies, for investment banks, for security investment firms like BlackRock... and even indeed private equity and hedge funds.
You see, those damned socialists of the 1930s set up regulations that safeguard your personal savings and mortgages... but they don't safeguard your insurance policies. Or, come to think of it, Larry's job security. The Libertarian ideal is that the government just gets in the way of making money. The way to make money is by moving into markets that deregulate.
Who thinks so? Larry Fink of 1999 thinks so!...
TOKYO/NEW YORK--(BUSINESS WIRE)--March 30, 1999--BlackRock, Inc. and Nomura Asset Management Co., Ltd., announced today plans to form Nomura BlackRock Asset Management Co., Ltd., a Tokyo-based asset management company that will serve Japanese institutional and investment trust investors. This is the first joint venture between a U.S. and a Japanese asset management firm.
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Nomura BlackRock Asset Management will bring together Nomura Asset Management's extensive marketing network in Japan with BlackRock's highly regarded asset management and risk management capabilities, enabling both firms to aggressively pursue new business opportunities in the recently deregulated Japanese financial industry.
Laurence Fink, Chairman and CEO of BlackRock, said, "BlackRock is very pleased to be expanding its relationship with Nomura Asset Management, and we view this joint venture as an important strategic step in expanding BlackRock's international presence. We are confident that Nomura BlackRock Asset Management will enable BlackRock and Nomura Asset Management to build upon our successful efforts to date and to deliver even more effective products and services to Japanese investors."
The Asian markets had been devalued after the mini-crash of 1997. And now Japan was loosening regulations on investment companies. Fill your boots with money, Larry!
He cemented this view in a 2007 interview he gave along side Blackstone Group CEO Steve Schwarzman, again with CNBC's Maria Bartiromo...
Fink, whose BlackRock recently reached an agreement with Merrill Lynch that put assets under his control to $1 trillion, told Bartiromo that debt markets and bank loans are financing bigger and bigger mergers--and private equity is playing a much bigger arbitrage role.
Schwarzman praised the private equity sector not only for its profitability, but for the "enormous good" it does for the economy. He said that the sector can undertake "certain things" that publicly traded firms cannot, citing the squeamishness that public companies' "emphasis on quarterly earnings" creates.
Schwarzman lamented the timid "compliance culture" engendered by the Sarbanes-Oxley Act, saying it exacerbates the tendency of boards to shy from long-term strategies as they try to "please shareholders" in the short-term.
Fink agreed with the dangers of quarter-to-quarter planning, declaring it "not a good thing for America, New York City or our exchanges."
Ah yes. The markets will do it all by themselves. Give bigger and bigger loans to finance bigger and bigger plans. Because the private sector can weather storms the public sector can't, and it does "enormous good" for the economy. Those public companies have too many regulations with their "compliance culture", too much oversight, not enough freedom to --
-- oh, the Dow Jones is already wiping out yesterday's small gains and on the way down again, thanks to private companies not having regulations or oversight. Never mind.
BlackRock were in the middle of it all just before Bear Sterns hit the fan, helping to try and defuse the situation...
One Saturday morning in March, Laurence D. Fink got some urgent news: Wall Street needed his help.
Mr. Fink runs BlackRock, a money management company whose name probably rings few bells outside financial circles. But on that March weekend the Federal Reserve, moving to defuse a crisis threatening the American financial system, began turning to BlackRock to play a critical role in the government-brokered rescue of Bear Stearns, the faltering investment bank.
Now, under the aegis of the Fed, BlackRock is managing $30 billion of hard-to-sell assets from Bear Stearns, part of the central bank’s unprecedented deal with JPMorgan Chase under which JPMorgan took control of the investment bank.
...which explains why an investment CEO on Wall Street would be saying things like "I believe what we are seeing now speaks volumes towards the need to have a Federal Regulator". Those phone calls asking you to take some charge and responsibility in a system that rewarded you so highly when times were easy is too much stress, I guess. I mean, come ON. It's SATURDAY. Who helps people on Saturday?!?
When the situation was right, deregulated markets and investments were the way to go for fiscal conservatives and Republicans that worship at the alter of Milton Friedman. The two leading ‘think tanks’ in Washington, the Brookings Institution and the American Enterprise Institute, were active in holding seminars and publishing studies advocating deregulatory initiatives throughout the 1970s and 1980s.
But now the people that made all that money are looking down the barrel of a gun. Those that are in industries not safeguarded by regulations suddenly realize what we all knew from the beginning: it's called a safety net for a reason, and it's there for a reason. It's not there for the times you don't need it, it's there for the times you DO need it.
Paul Krugman, as always, got it right. This is what Krugman wrote about Milton Friedman and his philosophies...
A similar sequence seems to have happened in Milton Friedman's advocacy of laissez-faire. In the aftermath of the Great Depression, there were many people saying that markets can never work. Friedman had the intellectual courage to say that markets can too work, and his showman's flair combined with his ability to marshal evidence made him the best spokesman for the virtues of free markets since Adam Smith. But he slipped all too easily into claiming both that markets always work and that only markets work. It's extremely hard to find cases in which Friedman acknowledged the possibility that markets could go wrong, or that government intervention could serve a useful purpose.
Friedman's laissez-faire absolutism contributed to an intellectual climate in which faith in markets and disdain for government often trumps the evidence.
And we're seeing the evidence right now. As even Wall Street CEOs are telling us: there truly are are no Libertarians in recessions.