Previously, and sneakily, published here.

The invaluable Wall Street Journal editorialists provide a clear explanation of the kind of free market that the entitled 1% want: one where all risks are on the backs of the people who work for a living while all rewards are reserved for "investors". Stockton California is moving towards bankruptcy and, grab yer hankies 'cause this is sad:

... leaves the city's bondholders as the likeliest targets. Creditors who thought that lending to cities was a risk-free exercise are learning the ugly reality of modern public union politics

"Creditors who thought that lending to cities was a risk free exercise" is a phrase that one normally might finish with " are stupid". Why do municipal bonds pay more interest than US Treasury bonds? Because of the "risk premium". That word "risk" is an important clue. The probability that a small town in California with shaky economics or the Government of Greece or Lehman brothers will not be able to repay debts is higher than the probability that the US Government or the German Government will not be able to repay debts. That's why when the first three entities went to borrow money on the bond market they paid higher interest rates - because investors wanted compensation for higher risk. But in the world of the Wall Street Journal, investors in municipal bonds get higher interest rates - because they are investors. They don't have an obligation to examine the finances of Stockton and decide to possibly not lend it money. That would be too much like work. Instead, these wealth creating investors should be able to make a risk premium without any risk. What an advance.

So what happens to the risk? Well, in Wall Street Journal Capitalism, the risk should be for the municipal workers whose contracts gave them pensions in place of higher private industry salaries. Apparently, when the Investors chose to lend Stockton money, under Wall Street Journal Capitalism, the workers and pensioners of Stockton selflessly assumed the risk of that investment!. But, imagine this, the Communist influenced Calpers, the public employee pension fund

"insists that pensions are contracts protected under state and Federal law"

So here's the deal that the Journal thinks is in place: having exempted themselves from most taxes, the investor class is entitled to risk premium inflated interest rates on municipal bonds with first dibs on taxes paid by other people, with risks shifting to firemen and teachers who did not actually participate in the bond transaction and who have contracts that are more like suggestions than contracts. That's Rupert'Murdoch's Free Enterprise and it should be familiar to anyone who has seen the European Central Bank generously pay off bank bondholders time after time.

The same theory motivates the despicable business model of vulture capitalists like Paul Singer who buy government bonds at a fraction of their face value and then demand that the US or British governments, at the expense of suckers who pay taxes, act as enforcers and extract the money from poor people in foreign countries. For example Singer is now demanding that the current government of Argentina pay back in full, plus interest, loans that were made to the Argentine dictatorship. Some people were immoral enough to lend the Argentine Dictatorship money to pay for it to torture and murder its citizens, and now the US Courts are being used to make the successor government pay it back. Wealth creators in action! Because nothing builds the national prosperity more than investments in lawsuits. At least that is what the Journal's owners and serfs think.