The Sheer Pointlessness of the Dodd Plan (Why this stock market is pricing in gov't intervention)

Real Clear Markets ^ | 05/25/2010 | John Tamny

[SeekAndFind]

Last week's passage of the Dodd finance reform plan dredged up bad symbolism, none of it good. Indeed, the Wall Street Journal front page headline touted legislation that would be the "Biggest Regulatory Overhaul of Wall Street Since Depression".

Though most of us didn't suffer the federal government's persecution of the productive back in the ‘30s, basic history tells us that reforms back then did nothing to revive an economy on its back thanks to too much government. In that sense, we perhaps shouldn't pin all of the stock market's recent ill health on problems in a country as economically irrelevant as Greece.

Instead, it's fair to suggest that some of the market cratering in recent weeks can be tied to investors slowly, and sometimes violently, pricing aggressive economic intervention the likes of which didn't end the Great Depression, and that won't solve our present problems.

To put it simply, not only is the Dodd Bill scaring investors, it's also completely pointless. To see why, it's useful to address some of the legislation's main bullet points.

First up is the establishment of "a new council of ‘systemic risk' regulators to monitor growing risks in the financial system." A nice idea, but wholly superfluous considering that's what hedge funds and investors already do. Reduced to "speculators" by politicians and commentators, in truth the investors made rich by declining markets in recent years were the very individuals whose successful investing styles exposed where market risk existed.

[April Lexington]

Market off another 180 or so at the moment. This Bill is not good for freedom...