Our Best Economic Sectors Remain Safe From Government "Help"

It's been a tough last two quarters for the American capitalist system.

Uncle Sam forcibly took stakes in the nation's largest commercial banks, induced the publicly-held investment banks to become chartered commercial banks, took over AIG and lent billions to GM and Chrsyler.

The good news is that these are not the engines of growth of our economy. In fact, information technology, bio-medicine and other innovation-fueled sectors have studiously avoided involvement with Washington.

You don't see Google or H-P taking government money.

In the banking sector, it may well be time to correct the country's historic vulnerability to a legion of small, poorly-run and failure-prone community and local, state-chartered institutions. As such, nationalizing the sector might well close a recurring weak spot in our nation's economic system.

The most recent bout of financial-sector induced US economic troubles stemmed from inept and jealous CEOs and senior executives in the financial sector attempting to make it a 'growth' business.

Unfortunately- for all of us- the financial services sector, being a derived business of a nation's economic activity, cannot be a growth sector over the long term. Individual products, over short timeframes, can achieve 'growth' status akin to a technology business. But, beyond that, with above-economic-growth rates come excessive risk.

Something with which we are now all familiar.

As for US-domiciled auto assemblers, they are ready for the scrap heap. Contrary to the protests of their defenders, Ford, GM and Chrysler have little role in defense production. Better cars are made by foreign-based producers in southern US plants.

Like it or not, putting all three of these firms into Chapter 11 bankruptcy was and remains the right thing to do. Profitable parts of them would be merged or acquired. The loss-making parts would be closed. Shareholders would bear the capital losses, while government could provide modest but necessary stipends to displaced employees.

Losing the corporations that are GM, Ford and Chrysler doesn't mean losing all of their products, nor all of the jobs associated with them.

I'm as sceptical of government intervention as the next person, and probably moreso. But in these cases, the damage could be much worse. As it is, some tens of billions will be lost in a last gasp to help the auto assemblers. But, fortunately, it's not as if a vital, value-creating industry is being corrupted and hijacked by Washington- yet.

Of course, time will tell whether the current administration meddles in the successful, high-growth, value-adding portions of our economy. But, for now, those parts are safe and operating without further Federal "help."