Philip Giraldi, at the American Conservative's blog:
I don't understand much about economics and even managed to sleep through most of a Milton Friedman introductory course as an undergraduate, though I probably do know more than Governor Palin, who has felt compelled to provide expert commentary. But even I do understand in a childlike way that that the past seven years have been a catastrophe for the US economy and that the ship is now going under. Two unfunded wars and another being planned, unprecedented government deficits, social security in trouble, prescription drug benefits that will bankrupt the medicare system, and now a trillion dollar bailout paid for in funny money. Both political parties have been united in their desire to transfer the country's wealth from the lower and middle classes to those individuals who understand how the "system works" and have consequently been able to manipulate our financial institutions to their benefit. And, as has always been the case in every catastrophe from 9/11 to Iraq to Katrina to the impending financial meltdown, no one is held accountable. No one is to blame. As the congressmen and presidents who make and enforce the rules are by-and-large part of that monied and privileged class that will never feel the consequences of its bad decisions, should anyone expect less?
I assume we're going to have a massive bailout. Whether or not it works, it's too late in this year's election cycle to do much about the politicians of both parties that led us to this morass. But 2010 is coming. I sincerely hope that the grassroots on the left and the right will use this moment to start to get themselves organized, and to field candidates in the party primaries who will throw out the bums -- every last one of them, Republican or Democrat -- who turned a blind eye and let those who know how to work the system do their profitable work. Every. Single. One. God knows they have it coming to them, and hard.
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re Huey Long: There's one important difference. FDR didn't bail out Wall Street. He bailed out farmers who couldn't pay their mortgages, and clamped down on Wall Street. Thus Huey Long and Father Coughlin had followers but never got anywhere near a majority.
Things could be different this time, when Wall Street gets all the advantages and none of the punishment. It's pure Marie Antoinette, just begging for a revolt.
Mr. Dreher @ 5:04 PM writes:
"I assume we're going to have a massive bailout. Whether or not it works, it's too late in this year's election cycle to do much about the politicians of both parties that led us to this morass. But 2010 is coming."
Don't be so sure about that bailout. From what I see, there is enough quarreling to delay this ripoff for at least a few days, if not longer.
One hopes that the GOP faction in the House will cause enough havoc to either seriously modify this bailout or kill it outright.
Will it work ? Give unto me a break. First, let's decide what we want to accomplish. The current proposal is set up to expand central-government power, insulate the top cadre at the major financial firms from the consequences of their actions, and "protect" their customers from the knowledge of their real conditions of life. How is any of that desirable ?
What we should be thinking about doing is threefold:
a) finding a way to encourage new capital into the American economy, and to encourage this capital to find productive uses;
b) prevent the further expansion of the authority of the central government; and
c) allow the American commoner to have an awareness of their real economic situation, particularly in regards to debt and housing;
We can accomplish the first two by an immediate reduction in both the short- and long-term capital-gains tax rate to 10-12 percent. Reducing this rate will put the US on at least an equal footing with other major nations in terms of attractiveness for investment. (We can also change the IRS code to equalize the taxation of US firms' foreign and domestic profits; the present code is set up to deliberately encourage outsourcing and investment far-foreign over investment domestically.)
Changing the corporate tax code and capital-gains tax will also have the advantage of not extending central-government authority over the financial sector through the purchase of equity shares in said firms, and through avoiding the mass purchase of supposedly non-performing assets.
The third objective can be realized by: repealing laws such as the Community Reinvestment Act (which encouraged deliberate malinvestment by giving loans to non-creditworthy borrowers), returning the capitalization requirements to what they were before the current Administration, and eliminating the tax exemption for advertising and public relations. Actions like these will encourage making (and taking out) loans based on actual creditworthiness and availability of funds....and will also discourage the deliberate goading of consumption that underlies large parts of this problem.
Not that I expect any of this to happen; that would imply that the State/Corporate lords are more concerned with the prosperity of the country as a whole than in lining their own pockets and maintaining their tenures in office.
Your servant,
Lord Karth
Is a financial dark age upon us followed by an economic dark age? I hope not. A vast majority of people are employed, paying their mortgages and credit card debt.
However the experience we had from the 1940's until about 1970 with lunch-box driven growth is long over and all too much of the current "growth" has been by credit expansion.
I say it is time for a new Britton Woods system with fixed exchange rates, some kind of adjustable commodity link to currency (maybe a combo of gold, Platinum, silver, petroleum,..."pork bellies") and good ole fashioned rules about credit with 20% down for a house. The mountain of "toxic" debt has to be liquidated orderly; not rolled over again. The role of government can be to make this a more orderly process but this bail out should not happen. We need to take our medicine, the economic system of capitalism is seasonal and it is now fall going into winter. We have to get the system purged for new real growth with expanded technology, power systems, doubled food production. And the credit orgies of the past decades have affected personal behavior in many ways. Example: When I was a child the common notion was that the lower middle class people could not afford divorce like the upper classes could. All this had to be changed to make the world more "fair and equal".
In our time Democracy does not allow much of this to happen.
I suppose my sentiment are now somewhere between Ron Paul and John McCain.
Goodguyex @ 1:08 AM writes:
"We need to take our medicine, the economic system of capitalism is seasonal and it is now fall going into winter. We have to get the system purged for new real growth with expanded technology, power systems, doubled food production. And the credit orgies of the past decades have affected personal behavior in many ways. Example: When I was a child the common notion was that the lower middle class people could not afford divorce like the upper classes could. All this had to be changed to make the world more "fair and equal".
In our time Democracy does not allow much of this to happen.' "
This is why I am not a democrat. IMO, "democracy" is simply a fraudulent term used to disguise the robbery of the commoner for the benefit of the elite, with the elite claiming a halo for their actions.
Call me a firm believer in limited-government aristocracy, if you will.
Your servant,
Lord Karth
re Huey Long: There's one important difference. FDR didn't bail out Wall Street. He bailed out farmers who couldn't pay their mortgages, and clamped down on Wall Street. Thus Huey Long and Father Coughlin had followers but never got anywhere near a majority.
Granted, the Dark Valley isn't my area of expertise, but my gut instinct is to concur here. One can quibble about the New Deal's execution & legacy, but one reason I'm not quite so hard on FDR as others is because I suspect that, that absent FDR's election & policies (however flawed), we would likely have ended up with someone even worse (e.g., Huey Long).
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