Intel vs. Advanced Micro Devices (AMD). It’s like the epic battle between Luke Skywalker and Darth Vader. This battle helped bring down the price of a CPU, speed up the adoption of new technologies, and increase the feature set and speed within a computers main brain. And it was all brought to you thanks to market regulation.

There, I said it. If the markets were unregulated, AMD would have never had a chance.

That’s because Intel is big and powerful. If markets had been unregulated, Intel would be a monopoly (according to AMD, Intel has monopolistic tendencies). That means AMD would have never had a chance to compete.

The only real way to prevent a monopoly is through government intervention. After all, it took government intervention to break up U.S. Steel, Standard Oil, and even AT&T.

So you see, the right kind of government intervention in the markets isn’t that bad of a thing. Really, it’s good. Yet so many people don’t see the need for regulation. Maybe that’s because they’ve never been in an unregulated market.

Of course, there are government interventions that are totally backwards. Like the Plunge Protection Team (PPT), which is a government ‘working group’ that helps ‘stabilize’ markets during crashes. In other words, they buy up the futures market to give the appearance that a big buyer is snatching up shares during a market crash.

Pretty dirty if you ask me. Plus, it destroys the mechanics of a free market. That’s not to say that all intervention is bad.

It was intervention that forced public companies to standardize their reporting practices. It was intervention that saw the need for making insider trading illegal. And it was intervention that told banks that they had to alert you anytime your interest rate changed on your credit card.

You can’t deny that these things are all good. They all try to level the playing field between powerful corporations and the consumer. Yet many economists and market players believe that all government intervention is akin to being punched in the face.

Case in point – my interview with Peter Schiff. The guy is smart. In his opinion, any government intervention in the markets is a bad thing. He goes on to say that government intervention helped cause the mortgage mess we are in (through fixed interest rates and expanding money supply).

Now, I won’t argue the interest rate or money supply points. Both are good points. But the truth is we got into this mortgage mess because the financial industry has been slowly deregulated for the past 30 years.

The Gramm-Leach-Biley Act (which your Monday editor, Rick Pendergraft talked about) was the final nail in the coffin. It freed banks to consolidate with insurance and securities companies. And it gave Citigroup and other banks the perfect incentive to begin packaging mortgages into CDO’s and then sell them through their financial services arm.

Alan Greenspan – much like Peter Schiff – didn’t believe in regulation either. So he turned a blind eye when banks – who were supposed to be conservative – started issuing risky no-documentation, zero-down payment, subprime, and even interest-only loans.

That brings up a little bit of irony on Mr. Greenspan’s part. Alan essentially screwed the consumer by refusing to intervene and tell banks to stop being idiots and to stop loaning money to people who might not even have a job. After all, he was anti-interventionist!

Yet, it was his very intervention – of putting interest rates UNDER the level of inflation – that helped balloon the housing market into a huge bubble.

What was Alan doing while the bubble was inflating? He was wondering about the ‘conundrum’ of low long-term interest rates during an expanding global economy. In other words, he wasn’t paying attention.

We all know where that led the industry. Hundreds of billions in losses, thousands of job cuts, and a flagging economy. Had Alan gotten off his ass and taken his nose out of his ideological beliefs, maybe he would have been able to regulate better what was going on in the mortgage industry. Maybe then, he would have thought to himself how crazy the financial industry was being and how it would lead to HUGE trouble later on.

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