Yesterday we experienced more vintage Obama rhetoric while he announced the proposed financial system overhaul. "Millions of Americans who have worked hard and behaved responsibly have seen their life dreams eroded by the irresponsibility of others and by the failure of their government to provide adequate oversight. Our entire economy has been undermined by that failure." Truer words have never been spoken. But his policy has been to bail out the irresponsible while ignoring the damage done to the responsible.
Has Tim Geithner, President of the monetary policy implementing and Wall Street bailout managing New York Federal Reserve Bank at the time the major commercial banks were conducting their irresponsible activities, suffered any consequences from his participation in the debacle? No, he was rewarded by being appointed US Treasury Secretary by Obama even though he was discovered to have cheated on his taxes.
Did Alan Greenspan and then Ben Bernanke, Chairmen of the Federal Reserve while the economic system was becoming overleveraged due to the Fed's accomodative monetary policy, suffer any consequences from their central position in the financial catastrophe? No. Alan Greenspan managed to get out before the crap hit the fan and Ben Bernanke is still the Fed Chairman.
Have Barney Frank or Christopher Dodd, perhaps two of the most blameworthy protagonists responsible for creating the housing bubble by being the Congressional mouthpieces and cheerleaders for Fannie Mae and Freddie Mac, ever suffer any consequences for their actions? No, they remain in their jobs as chairmen of the House Financial Services Committee and Senate Banking Committee, respectively, and spend their time blaming everyone but themselves for the disaster.
Have top bureaucrats at the federal regulatory agencies that were asleep at the switch in providing oversight for the financial industry suffered any consequences of their negligence? Not that I know of.
How about the top executives at the major banks, insurance companies and Wall Street investment firms who were the major players in the fiasco? Less than a handful at the very top lost their jobs, but received exceedingly generous severance packages. Others may see their compensation packages temporarily curtailed, but they will still have jobs making much more money than those they fleeced.
The mega-rich hedge fund and pension fund managers who played the game of investing in the worthless crap have also not exactly had to sell their multi-million dollar apartments in New York and London, mansions in Greenwich, homes on the French Riviera, yachts or corporate jets. Many took some hits, but they should have been wiped out. Most will soon be back taking advantage of the gullible victims again.
All of this is what is so infuriating about Barack Obama. He is skilled at saying the right thing, but does the opposite. You have to watch what he does, not listen to what he says.
Will the new rules announced yesterday about overhauling the financial system make any difference? The Wall Street Journal said it best. "The main idea behind the Obama Administration's new financial revamp is essentially this: With more power and a modest reshuffling of the bureaucratic furniture, the same regulators who missed the last credit mania will somehow prevent the next one."
Most of the "historic" proposals were things the government was already supposed to be doing. The plan is really nothing more than public relations damage control by changing a few names and reassigning responsibility. Dealing with the financial collapse should not be that difficult or complicated. It is not hard to recognize the one common thread running through the whole meltdown - debt. Debt should be less easily obtained, and the consequences for default should be more severe - for both the borrower and the lender. Let the bankruptcy laws work, and stop meddling. But the government won't. And over time, the financial vultures will again capitalize on the incestuous relationships with regulators or catch them asleep at the post and figure out new ways to devour the public.
Thursday, June 18, 2009
Friday, June 12, 2009
The Death Of Liberty
Historians of the future will point to the year 2008 as the year America's world leadership began to fade away. It is the year the country's traditions of freedom and economic prosperity generated from private enterprise, individual rights, equal opportunity and impartial justice started to erode. It would take a number of years for the evidence of decline to become obvious to all, but eventually even the diehard believers of utopian promises could not deny that their personal liberties and standard of living were being confiscated by the newly empowered oligarchs whose promises they believed.
The spark of the flame in 2008 was the "historic" election of the Democratic Party and its most ideologically socialist radicals to total control of the government. It certainly was historic, but not in the way most of the believers imagined. As soon as these autocrats took over in January, 2009, they began to take control of the economy, starting with the financial and automotive industries and eventually moving on to health care and energy. American citizens began to lose their free choice in the lifestyles they wished to pursue and the goods and services they wished to purchase. Government began to direct nearly every aspect of citizens lives, mandated through both edict and oppressive tax rules.
The American economy in 2008 was in recession. That made it easy for the radical left-wing politicians to take advantage of voters apprehension and make promises that could not possibly be kept, because promises of economic recovery and a return to stability were what the voters wanted to hear. Most did not seem to know or care that recessions have always been a normal consequence of economic development and occur from time to time on a regular cyclical basis, each time recovering without any drastic government measures and moving on to even greater heights of prosperity.
In a society of free choice and an economic system of dynamic change and progress, some companies and industries always go out of business if their products become obsolete or they cannot remain competitive with their rivals. Bankruptcy laws have been on the books for generations to deal with either corporate restructurings or dissolutions. Government intervention in the process cannot work, because all a rescue or subsidized support of a moribund, unproductive organization does is attempt to sustain the unsustainable and defeat the progress engendered by the process of creative destruction.
But this time, once elected, the extremists in charge began to dismantle, ignore and overturn the fundamental principle's underlying the traditional capitalist economic system. They took over major companies, fired their executives, decided what products they could and could not produce and sell, and firmly entrenched themselves in every aspect of private businesses. They directed the policies of the Federal Reserve System, the supposedly quasi-independent central bank of the United States, and forced them to undertake unprecedented money creating policies that were hyper-inflationary. They increased federal spending to such outrageous levels that all Americans for generations to come would be required to live a much more modest lifestyle than their predecessors in order to service the massive resulting debt. And the retirement and health benefits that were promised to them were simply not affordable.
American citizens themselves were responsible for all this. With the assistance of the major media organizations, the public believed the snake oil promises fed them by a rhetorically skilled, relatively unknown politician with a minimal but definitely socialist track record, and no experience managing anything but political campaigns. They believed the outrageous accusations and character assassination tactics of congressional democrats against their opponents, even though it was readily apparent the congressional democrats themselves were the primary contributors to the economic implosion due to their support and promotion of imprudent real estate lending policies. The campaign of deceit worked, the radical socialists gained total control of government and immediately began implementing their overhaul of the American economic and social systems.
There is little question that the United States, through the economic growth engine of capitalism, had achieved a remarkably high standard of living as a country but at the same time suffered a disparity of wealth and income among its citizens that needed to be addressed. In a society of abundance there was no legitimate reason for those at the bottom to be left out. If future economic growth had to be marginally sacrificed through higher taxes on the wealthy in order to provide support for the disadvantaged, underprivileged and disabled, then a society of advanced affluence could certainly afford it.
But in order to actually provide assistance to the unfortunate, the money needed to be spent wisely, not thrown away to some favored interest group, politically correct crusade, or government programs that didn't produce results. And it should never have been used to interfere in private enterprise. Unfortunately, the newly empowered oligarchs were more interested in consolidating their power than helping the people. They autocratically seized the power to abrogate contracts, set financial industry lending policies, reward their benefactors at the expense of the public, and unilaterally determine such formerly free choice basics as how much money people could make, what car they could drive, what energy sources they could use, and on and on.
With little to no opposition, a cabal of the president and a few of the most powerful congressional leaders gained control of American industry and decided how taxpayer dollars could be confiscated and redistributed. Instead of free markets, private enterprise and equal opportunity, America gradually deteriorated to a system that depended on favoritism, central government allocation of resources, and, inevitably, even more graft and corruption. Instead of the market determining who won and who lost, the president, legislators and bureaucrats in Washington did.
American business under government run industrial policy degenerated into bribe paying supplicants vying to be rewarded with contracts to supply public goods and services as determined by the overlords in the political bureaucracy. As socialism gained its stranglehold, industrial production and productivity experienced a downward tailspin that ended in complete government control of society and the economy. The predictable result was that the folks on the bottom of the economic ladder did not advance, those in the middle and most of those on the top gradually fell to the bottom, and all that was left at the pinnacle were the well-connected, priviliged elite who dictated how American citizens were to live their lives. In the end, the pyramid of living standards collapsed on its sides into a narrow middle finger pointed directly at the American public.
The spark of the flame in 2008 was the "historic" election of the Democratic Party and its most ideologically socialist radicals to total control of the government. It certainly was historic, but not in the way most of the believers imagined. As soon as these autocrats took over in January, 2009, they began to take control of the economy, starting with the financial and automotive industries and eventually moving on to health care and energy. American citizens began to lose their free choice in the lifestyles they wished to pursue and the goods and services they wished to purchase. Government began to direct nearly every aspect of citizens lives, mandated through both edict and oppressive tax rules.
The American economy in 2008 was in recession. That made it easy for the radical left-wing politicians to take advantage of voters apprehension and make promises that could not possibly be kept, because promises of economic recovery and a return to stability were what the voters wanted to hear. Most did not seem to know or care that recessions have always been a normal consequence of economic development and occur from time to time on a regular cyclical basis, each time recovering without any drastic government measures and moving on to even greater heights of prosperity.
In a society of free choice and an economic system of dynamic change and progress, some companies and industries always go out of business if their products become obsolete or they cannot remain competitive with their rivals. Bankruptcy laws have been on the books for generations to deal with either corporate restructurings or dissolutions. Government intervention in the process cannot work, because all a rescue or subsidized support of a moribund, unproductive organization does is attempt to sustain the unsustainable and defeat the progress engendered by the process of creative destruction.
But this time, once elected, the extremists in charge began to dismantle, ignore and overturn the fundamental principle's underlying the traditional capitalist economic system. They took over major companies, fired their executives, decided what products they could and could not produce and sell, and firmly entrenched themselves in every aspect of private businesses. They directed the policies of the Federal Reserve System, the supposedly quasi-independent central bank of the United States, and forced them to undertake unprecedented money creating policies that were hyper-inflationary. They increased federal spending to such outrageous levels that all Americans for generations to come would be required to live a much more modest lifestyle than their predecessors in order to service the massive resulting debt. And the retirement and health benefits that were promised to them were simply not affordable.
American citizens themselves were responsible for all this. With the assistance of the major media organizations, the public believed the snake oil promises fed them by a rhetorically skilled, relatively unknown politician with a minimal but definitely socialist track record, and no experience managing anything but political campaigns. They believed the outrageous accusations and character assassination tactics of congressional democrats against their opponents, even though it was readily apparent the congressional democrats themselves were the primary contributors to the economic implosion due to their support and promotion of imprudent real estate lending policies. The campaign of deceit worked, the radical socialists gained total control of government and immediately began implementing their overhaul of the American economic and social systems.
There is little question that the United States, through the economic growth engine of capitalism, had achieved a remarkably high standard of living as a country but at the same time suffered a disparity of wealth and income among its citizens that needed to be addressed. In a society of abundance there was no legitimate reason for those at the bottom to be left out. If future economic growth had to be marginally sacrificed through higher taxes on the wealthy in order to provide support for the disadvantaged, underprivileged and disabled, then a society of advanced affluence could certainly afford it.
But in order to actually provide assistance to the unfortunate, the money needed to be spent wisely, not thrown away to some favored interest group, politically correct crusade, or government programs that didn't produce results. And it should never have been used to interfere in private enterprise. Unfortunately, the newly empowered oligarchs were more interested in consolidating their power than helping the people. They autocratically seized the power to abrogate contracts, set financial industry lending policies, reward their benefactors at the expense of the public, and unilaterally determine such formerly free choice basics as how much money people could make, what car they could drive, what energy sources they could use, and on and on.
With little to no opposition, a cabal of the president and a few of the most powerful congressional leaders gained control of American industry and decided how taxpayer dollars could be confiscated and redistributed. Instead of free markets, private enterprise and equal opportunity, America gradually deteriorated to a system that depended on favoritism, central government allocation of resources, and, inevitably, even more graft and corruption. Instead of the market determining who won and who lost, the president, legislators and bureaucrats in Washington did.
American business under government run industrial policy degenerated into bribe paying supplicants vying to be rewarded with contracts to supply public goods and services as determined by the overlords in the political bureaucracy. As socialism gained its stranglehold, industrial production and productivity experienced a downward tailspin that ended in complete government control of society and the economy. The predictable result was that the folks on the bottom of the economic ladder did not advance, those in the middle and most of those on the top gradually fell to the bottom, and all that was left at the pinnacle were the well-connected, priviliged elite who dictated how American citizens were to live their lives. In the end, the pyramid of living standards collapsed on its sides into a narrow middle finger pointed directly at the American public.
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