Marketilism isn’t capitalism

I’m genuinely curious how those who regularly – and wrongly – equate Wall Street and the financial industry with “capitalism” are going to explain the latest government measures intended to prop up the great zombie beasts of the various stock and bond markets:

When back in August, Europe declared a short selling ban of any financials (here we are willing to channel Romney, and make a $10,000 bet with anyone that said ban will never be lifted), and which as we predicted has had no favorable impact on bank stocks which have since tumbled, we suggested that the next step will also be the final one: the passage of laws prohibiting sales of any kind. As usual we were partially joking. And as so often happens, we are about to be proven right again. As the FT reports in its headline article today, whose gist is simple enough, that Europe is on the verge, it is the tactically-placed final paragraph that is of particular curiosity. It says the following: “Speaking on the fringes of a start-of-year retreat of her Christian Union lawmakers in the city of Kiel, Ms Merkel said she would consider calls from her party colleagues for legislation to bar institutional investors such as insurance companies from selling bonds when ratings were downgraded, or fell below investment grade.” Allow us to recopy and repaste the key part: “legislation to bar institutional investors such as insurance companies from selling bonds.”

And there you have it: after everything else has failed, the state, not the politically independent, if at least on paper central bank, is about to formally enter the capital markets. And yes, first it will be a ban of selling on downgrades, then it will be a ban of selling on any downtick, and finally it will be a ban of selling anything and everything.

I don’t recall anything about it only being legal to buy things at a certain price or more under a capitalist system. In fact, the idea of government-fixed pricing has rather more in common with socialism, if I recall correctly, although there is nothing very socialist about the idea of fixing prices in order to protect private government-guaranteed profits. As I’ve pointed out before, that smacks of the standard practice of the royal mercantilists.

Is it progress to go from royal mercantilism to democratic marketilism? Instead of the king’s ministers picking the lucky winners, now the federal bureaucrats do.