Tuesday, December 29, 2009

The Way Business Is Done In The USA & Congress

Yesterday's blog had a lot of stuff crammed into a few lines. Today, let us move on from there. With Monetary Policy in the United States geared towards economic growth, which also leads to the creation of new jobs, we can understand that there is a national purpose in our central bank's desire to see to it that there is enough money in the banks to grow the economy. By keeping interest rates (Fed funds) low and by not raising the reserve requirement for commercial banks, our central bank can help the large corporations, that borrow on a daily basis, have the necessary financial environment in which to grow. With all this said, is it necessary that they also get Corporate Welfare as well?

What is Corporate Welfare? Corporate Welfare in my book is any special legislation from Congress that gives a corporation or a group of corporations an advantage that otherwise, without the special legislation, would not be there. Take for example Health Care Insurance Companies that are exempt from anti-trust laws so they can control a piece of the insurance business. The fact that the consumer can not shop outside his or her state for a better and cheaper insurance product is a form of Corporate Welfare. The weakened laws regarding the sale of financial products and a weakened Securities & Exchange Commission are also another form of Corporate Welfare, in my opinion.

The history of the capital markets in the United States is one of trying to control greed and unethical behavior. The Congress knows this only too well. Until they suffer huge financial loss, the Level Playing Field is only going to be an idea. But, more importantly, Congress must be made to suffer for their lack of concern by being voted out of office. Only when the electorate wakes up to the fact that Corporate Welfare in this country has come before the security of the family, we will see some meaningful change.

The TV news shows are not going to educate the masses to what ROI, IRR, EPS and Corporate Welfare have to do with the economic crisis and the fact that so many people have lost their job, or their retirement. The American people are going to have to get this themselves, and want this themselves, if they are going to see a change in the way business is done in the United States and in Congress.

Stay tuned.

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