Here's what I mean: You've got people in the Republican Party whose philosophy is one of cynicism towards government and one of complete disrespect towards particular branches of government. ... They've run these branches of government completely in reverse, put people in charge of them who don't believe in the mission, and done everything else to make government accountable not to the voters, but to the business community.
This has resulted in disaster in numerous cases. Now, when you look upon the disaster, do you say this is because government doesn't work? Or do you say, this is because a philosophy of government doesn't work? The obvious conclusion to anybody watching this stuff unfold is to say government just can't do anything right -- look how badly it's botched this job.
But the correct answer is that government obviously does work in certain circumstances, in other countries, and it's even worked here when it wants to. What they're doing right now at the Fed and the Department of Treasury is they're playing the game exactly right -- they're intervening decisively, quickly -- they're doing it exactly right. When the chips are down and when it's something conservatives care about, they can make government work.So, if Europe is the shining star of where "government regulation works", why would England need a BIGGER percentage bailout then the US? Wouldn't that mean that the "standard story" is wrong? The issue is NOT the "free market economy" if in fact in MORE socialist oriented, more controlled economies the situation is WORSE??
I become more and more convinced that what we are seeing is a "tipping point". In the US, the MSM and the Democrats have moved completely beyond any sense of reality on a list of fronts so wide that it defies description -- Iraq/Surge, Economy/Markets, Rights/Responsibility, are all examples.
In the late '90s we were CONSTANTLY lectured that "Bill Clinton has brought us prosperity, if you keep hounding him, the market might drop". The market dropped because the "prosperity" was nothing but the Internet bubble, BUT, the MSM had a point they really didn't realize--it is DANGEROUS for a nation/world to lose all confidence in their leadership and institutions.
It appears that we may now be beyond that tipping point where people have enough confidence to allow the system to continue to operate. My personal belief is that BO and the Democrats have realized that they WANT to get back to the 30's, for them that was the BEST OF TIMES!! They see BO as a "new FDR", sort of an "inverse Reagan", but in order to get what they want, they NEED to have DISASTER, and they NEED to "blame it on Republicans / the market / business"!!!
The worst part of the slump in the '30s happened between the 32 elections and FDR taking office the following spring. Hoover had lost all confidence from the public and the congress and the government stood idly by and let all manner of institution fail. Hoover begged FDR and company to help him do something, but in a way that only Democrats can do, they realized that it was in their political best interests to let things get as bad as possible before they came in so they could look better when it improved. Sadly, it never did improve until WWII -- none of the stuff that FDR did ever worked!!
Bush has been as powerless as Hoover was since '06, and the Democrats have worked him like a puppet on everything but the Surge. Barney Frank and company kept the pedal to the metal on Feddie and Fannie, giving as many seedy loans as they possibly could. The Dems took credit for the "stimulus", but gave Bush the blame for the deficit it added to. Economic numbers ceased to make a difference--we were in a RECESSION, no matter how much growth there was. Normally, trying to claim that our economy was "broken" when it obviously wasn't (and still probably isn't except for CONFIDENCE) would seem absolutely stupid for people that live here as all the media people do, but the MSM emotional hatred for Bush / Republicans has blinded them to the effects of a complete destruction of confidence in the both the Government and Business systems.
Two things that made the 30's as bad as they were was the constant thrashing of new government programs that added uncertainty to the economy coupled with the criminalization of normal business behavior. We are deep into both of those problems at this point. If we could have acted quickly and decisively on the underlying liquidity problem with the bailout when it first came up, MAYBE it would have been enough to get a re-start, but we couldn't. We needed to play a bunch of politics first. When both the far left and the far right are in agreement -- as they were against the bailout, my rule of thumb is "watch out".
So, we have heard a bunch of braying about "CEO Pay", "golden parachutes", "billions for Wall Street, nothing for Main Street", etc. Unfortunately we have heard it from both parties and McCain and Palin have joined in to suggesting more programs and blaming "Wall Street and not Main Street". Maybe emotionally satisfying for some, but this plays right into the Democrats hands in pushing us over the cliff.
CEO pay and golden parachutes are about CONTRACTS. The BEDROCK that allows our current western civilization to live even close to the manner that we have become accustomed is the enforceability of contracts!! When the government decides that it is going to break existing contracts that people have negotiated in good faith and legality at the time they negotiated them, then NONE of our contracts are safe. Say GE is in dire straits and decides that Lou Gerstner, former CEO of IBM, now retired, is the best man to get them moving. Lou looks at the situation and sees that, yes indeed, the odds are very long and the work will be very hard. Does a guy that is already worth 100's of millions have to work for potentially FREE in order for him to come on board?
The most logical thing for both parties is for GE to give him a "golden parachute" of say "50 million", but stock options / etc that are POTENTIALLY worth 100's of millions if he can pull it off. If Lou takes the job, there is no doubt he wants to win, but one isn't going to give up retirement with 100's of millions to go do a very hard job that may well be impossible knowing that if it can't be saved you walk away with nothing. If GE and Lou negotiate that contract, but the government now says "no golden parachutes", how many decades will it before there is enough faith in the rule of law to allow the retention of such talent for needed activity? A very long time to NEVER is the right answer, and even worse, if that contract isn't safe, why is ANY contract?
Essentially, all the Government involvement can be lumped under that same idea. The government is able to change the rules of the game during the game, and they have now decided to do that on a daily basis. The most likely effect of that kind of uncertainty is to have more and more people sit on the sidelines waiting to see when the game is going to stabilize. Why jump in when you aren't really even sure what game you are jumping in on? Worse, things like Sarbanes Oxley and other laws now being contemplated may put you in JAIL for actions that you took that were LEGAL at the time you took them, but are LATER declared illegal!!!
There isn't such a thing as "risk free business or investment". The riskiest things tend to have the highest potential for BOTH loss and gain. Sometimes there are boundaries put on that say "that has so little chance of return, it is illegal" ... the folks that are selling that are just making money off the selling, they aren't selling a legitimate product. Society certainly CAN make those kinds of laws, but it does so at the peril of missing some excellent opportunities for innovation and growth. Today's "stupid idea" in finance like technology, may well be tomorrows "big deal". OR, as in mortgage backed securities, yesterdays great idea may well be pushed beyond some boundary and become today's debacle. AFTER THE FACT a whole bunch of things look completely obvious. I ought to have bought Microsoft Stock in '85 and sold it right before the 2K crash. OBVIOUS, but only in hindsight.
So, the markets are in free fall, and all the kings horses and all the kings men can't put confidence back in again. In my opinion, starting in the '30s we set ourselves on the road to become a nation where a whole bunch of things were "rights and entitlements" vs "responsibilities and privledges". We had a "right" to retirement without savings (FICA), free medical care for the aged (medicare), food, shelter, clothing ... and eventually, even a home of our own(CRI, Sub-prime). Only problem is that very very few things are ACTUALLY "rights". About the only "right" that can be given all the people is the "right to opportunity", which is essentially the "right to work and keep the vast majority of what you earn". That is the only fundamental right that a government can really provide, and by providing it, the magic of free enterprise produces wealth beyond compare.
Apparently, the "right to home ownership" as expressed by the Community Investment Act proved to be "one fake right too far", BUT both parties and the MSM have decided to "blame the market" rather than blame the producers of fake rights -- the government (and those that elect it and avail themselves of the fake rights, US). The reason for that is because as the critics of the American experiment had predicted long ago, the reason the government did what it did is because the politicians were elected by people that wanted a lot of fake rights. We ALL really "want them" if we don't look too deeply at the COST of those fake rights. Ultimately, that cost is the loss of our freedom, our prosperity and any security that we thought we had.
So, will people come to their senses prior to that happening, or will they go on blaming the business and markets that make all the money that has created the greatest living standard in the world, or will they realize that all the supposed "rights" that they have created are completely illusionary without the business and market activity that produces the resources needed?? I'm completely unsure at this point, and obviously, so are a whole bunch of other people. Say your prayers, and do your part to try to get people to understand that paying attention to reality is critical to the financial health of the whole world.
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