Bill Laggner: US government is running the US markets

Laissez faire means: Let the common man choose and act; do not force him to yield to a dictator.

Ludwig von Mises, page 730, Human Action

Bill Laggner is the Co-Founder of Bearing Asset Management and was recently briefly interviewed by Eric King on the subject of the recent US stock market rally, some of whose effects have been spilling over into the UK:

Laggner believes market speculators may think the Federal Reserve has changed gears in the last few weeks, and especially that the Bulls may be gambling that the Fed will come in next week and begin discussing the implementation of quantitative easing Round Two, to the benefit of the major money centre banks.

Bears are becoming frustrated because without quantitative easing we would be looking at stagnation or even declines in the market, but the government has now become the major player in the markets and governments need positive market news to play well with electorates.

With US mid-term elections coming up, some speculators may even be betting that the US government may forgive some Freddie Mac and Fannie Mae debt, to make things look better in the mortgage market. Whatever the case, 90% of the upward movement in the US stock market is being propelled by speculators front-running government or central bank interventions.

[The questions Austrians have to ask is thus ‘Do we have a market left at all, when the government plays such a major role?’ It would seem that the free market of the individual is thus dead, or dying, because the coercive market of the central planners at the central banks is alive, and kicking.  The Road to Serfdom grows shorter.]