Topic: A Political Rant

[Geoff]

Whenever a Great Bipartisan Consensus is announced, and a compliant media assures everyone that the wondrous actions of our wise leaders are being taken for our own good, you can know with absolute certainty that disaster is about to strike.

The events of the past week are no exception.

The bailout package that is about to be rammed down Congress' throat is not just economically foolish.  It is downright sinister.  It makes a mockery of our Constitution, which our leaders should never again bother pretending is still in effect.  It promises the American people a never-ending nightmare of ever-greater debt liabilities they will have to shoulder.  Two weeks ago, financial analyst Jim Rogers said the bailout of Fannie Mae and Freddie Mac made America more communist than China!  "This is welfare for the rich," he said. "This is socialism for the rich. It's bailing out the financiers, the banks, the Wall Streeters."

That describes the current bailout package to a T.  And we're being told it's unavoidable.

The claim that the market caused all this is so staggeringly foolish that only politicians and the media could pretend to believe it.  But that has become the conventional wisdom, with the desired result that those responsible for the credit bubble and its predictable consequences - predictable, that is, to those who understand sound, Austrian economics - are being let off the hook.  The Federal Reserve System is actually positioning itself as the savior, rather than the culprit, in this mess!

•    The Treasury Secretary is authorized to purchase up to $700 billion in mortgage-related assets at any one time.  That means $700 billion is only the very beginning of what will hit us.

•    Financial institutions are "designated as financial agents of the Government."  This is the New Deal to end all New Deals.

•    Then there's this: "Decisions by the Secretary pursuant to the authority of this Act are non-reviewable and committed to agency discretion, and may not be reviewed by any court of law or any administrative agency."  Translation: the Secretary can buy up whatever junk debt he wants to, burden the American people with it, and be subject to no one in the process.

There goes your country.

Even some so-called free-market economists are calling all this "sadly necessary."  Sad, yes.  Necessary?  Don't make me laugh.

Our one-party system is complicit in yet another crime against the American people.  The two major party candidates for president themselves initially indicated their strong support for bailouts of this kind - another example of the big choice we're supposedly presented with this November: yes or yes.  Now, with a backlash brewing, they're not quite sure what their views are.  A sad display, really.

Although the present bailout package is almost certainly not the end of the political atrocities we'll witness in connection with the crisis, time is short.  Congress may vote as soon as tomorrow.  With a Rasmussen poll finding support for the bailout at an anemic seven percent, some members of Congress are afraid to vote for it.  Call them!  Let them hear from you!  Tell them you will never vote for anyone who supports this atrocity.

The issue boils down to this: do we care about freedom?  Do we care about responsibility and accountability?  Do we care that our government and media have been bought and paid for?  Do we care that average Americans are about to be looted in order to subsidize the fattest of cats on Wall Street and in government?  Do we care?

Times like these have a way of telling us what kind of a people we are, and what kind of country we shall be.

[Todd]

I watched part of hearings before Congress yesterday, but couldn't because I had to leave for work. However, I don't think the bill that was sent won't be passed. Pretty much the bill that was sent was a typical power grab the Bush administration makes during a crisis. It is a God awful bill. Luckily Democrats and Republicans seem to be against it. Republicans probably because of the likely hood of an Obama Presidency that reminded them that they are supposed to be for small government and checks and balances. Honestly, I don't care for their reasons are long as they are against since if the Democrats were standing alone they'd collapse and pass the bill as is.

There is going to be a bail out though, and I don't think there is much we can do about it. Opinion polls are already showing strong opposition against the bail out yet both parties are going through with it.

Whether we should be I am two minds about. I don't want the economy to get worse and possibly affect my job, which it could if there is no bail out. But I don't want it done because those companies don't deserve a bail out, and we have a debt that Bush since he became President has almost doubled and this will only add more debt. Our economy was already being seriously affect by inflation because of our debt before the housing bubble burst. A bail-out can only make that part of the problem worse.

The bail out truly is bad news from every angle.

After this is all done we really need to decide what kind of economy we're going to have. Is it going to be complete free market, meaning Economic Darwinism, or are we going to have a regulated economy? Free market economies mean NO bail outs, and I am looking at you Republicans who preach the religion of free markets and then grudgingly support bail outs of the SNL and now all financial institutions. Free markets with bail outs mean that self regulation of which you preach will never happen, because you've taken out the risk of failure, and reward short term profits. We can't continue to mix economic philosophies.

I personally support a regulated economy, which may not support the higher highs of a free-market, but it also doesn't contain the lower lows.

[Todd]

This whole thing is turning into high comedy. The more I think about the bail out the less I am for it. But here is the funny part.

Congressional Democrats: We're not going to vote for this bill unless Republicans vote for it.

Congressional Republicans: We want this bill to pass, but we don't want to vote for it because we want to be able to go back to our districts and say we opposed it. There are a lot of votes to be had there. Plus we want to be able to blame you in 4 years if this blows up in our faces. If it works nobody will care that we voted against it, but if it doesn't they will care that you voted for it.

Democrats: F*ck you.

And here I am thinking, if this bill is so toxic why would anybody even consider voting for it.

[Todd]

I don't really remember how I got signed up for this newsletter, it was probably during the time I was trying to learn more about the FISA bill. But here is what some democrats are saying about the bail out. It contains a lot of venom.

TODAY: March Against Paulson's Plunder

On Wednesday, George Bush went on TV to sweet-talk Americans into letting him steal $700 billion of our tax dollars - $2,333 for every man, woman, and child - to bail out his greedy rich friends on Wall Street.

Today (Thursday) Bush will meet with Democratic and Republican leaders to finalize a deal that gives Bush nearly everything he wants, but nothing America needs:

    * The people who caused the problem or profited most should pay for it
    * Re-regulate to prevent this from happening again
    * Include Main Street in the bailout and invest in a new productive economy

Worst of all, it's another massive fraud. Bush lied to our faces when he promised to buy toxic securities "at their current low prices... and we expect that much, if not all, of the tax dollars we invest will be paid back."

Bull. This is the same administration that promised the invasion of Iraq would pay for itself through lower oil prices. The cost of that disaster is now $3 trillion and climbing, not to mention millions dead, maimed, or exiled.

So make no mistake: every penny we give Bush now will be used to greatly overpay for securities that will lose most of their value. We will pay the price for decades, which is why dozens of economists oppose Bush's fraud.

Democrats.com members have sent nearly 100,000 emails to our Senators and Representatives opposing Paulson's Plunder. But Congress is moving fast, so we must too.

Today (Thursday) there will be emergency afternoon street protests across the country. Please find the nearest protest and bring a sign and a friend:
http://tinyurl.com/3sh2cb

And call your Senators and Representative right now to say "No $700 Billion Bailout for Wall Street" - dial the Capitol switchboard at 800-473-6711 or 202-224-3121 or dial direct using the instant phone lookup on the right side of http://usalone.com

And if you have not emailed your Senators and Representative, please do it now:
http://www.democrats.com/stop-paulsons-plunder

Thanks for all you do!
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[Todd]

Woohoo! Stealth bailout of Ford and GM.

http://money.cnn.com/2008/09/24/news/economy/house_bill.ap/index.htm

[Todd]

lol Thanks to McCain and his political theater a deal may not get done anytime soon, after a deal already being done before he got to Washington. I'd thank McCain for that if that had been his actual intention.

[MalorGradan]

I want my bailout now, please, federal government. Just give me about $10,000 and I'll e good.

At least whatever debts I have were incurred simply because I needed medical care I couldn't pay for. It's not like I was, you know, speculating on housing or shooting the market in the foot with subprime mortgages and questionable investment practices.

And that's another thing...didn't good old Dubya veto a $7 billion healthcare bill last year because it would "cost the country too much money?" Yeah, and $1.6 trillion in corporate bailouts doesn't.

This whole episode disgusts me.

[Uncle Mordy]

I'm with you all on this; the last thing we need is to remove all risk from their investments. Also: http://www.youtube.com/watch?v=S27yitK32ds

[Archelous]

No real comment to be had I think. *sigh*

[Geoff]

We need to just let the damn thing crash.  All we're doing with this bailout is propping the banks up with more false credit and putting off the inevitable for a few more years.  Every dollar spent to save the banks now will come back to us 10-fold when the market finally does collapse.

Things fall apart; the center cannot hold.  Yeats was a very smart man.

[Geoff]

The financial meltdown the economists of the Austrian School predicted has arrived.  We are in this crisis because of an excess of artificially created credit at the hands of the Federal Reserve System. The solution being proposed? More artificial credit by the Federal Reserve. No liquidation of bad debt and malinvestment is to be allowed. By doing more of the same, we will only continue and intensify the distortions in our economy - all the capital misallocation, all the malinvestment - and prevent the market's attempt to re-establish rational pricing of houses and other assets.

Wednesday night the president addressed the nation about the financial crisis. There is no point in going through his remarks line by line, since I'd only be repeating what educated people have been saying over and over - not just for the past several days, but for years and even decades.  Still, at least a few observations are necessary.

The president assures us that his administration "is working with Congress to address the root cause behind much of the instability in our markets." Care to take a guess at whether the Federal Reserve and its money creation spree were even mentioned?  We are told that "low interest rates" led to excessive borrowing, but we are not told how these low interest rates came about. They were a deliberate policy of the Federal Reserve. As always, artificially low interest rates distort the market. Entrepreneurs engage in malinvestments - investments that do not make sense in light of current resource availability, that occur in more temporally remote stages of the capital structure than the pattern of consumer demand can support, and that would not have been made at all if the interest rate had been permitted to tell the truth instead of being toyed with by the Fed.

Not a word about any of that, of course, because Americans might then discover how the great wise men in Washington caused this great debacle. Better to keep scapegoating the mortgage industry or "wildcat capitalism" (as if we actually have a pure free market!).

Speaking about Fannie Mae and Freddie Mac, the president said: "Because these companies were chartered by Congress, many believed they were guaranteed by the federal government. This allowed them to borrow enormous sums of money, fuel the market for questionable investments, and put our financial system at risk."  Doesn't that prove the foolishness of chartering Fannie and Freddie in the first place? Doesn't that suggest that maybe, just maybe, government may have contributed to this mess? And of course, by bailing out Fannie and Freddie, hasn't the federal government shown that the "many" who "believed they were guaranteed by the federal government" were in fact correct?

Then come the scare tactics. If we don't give dictatorial powers to the Treasury Secretary "the stock market would drop even more, which would reduce the value of your retirement account. The value of your home could plummet." Left unsaid, naturally, is that with the bailout and all the money and credit that must be produced out of thin air to fund it, the value of your retirement account will drop anyway, because the value of the dollar will suffer a precipitous decline. As for home prices, they are obviously much too high, and supply and demand cannot equilibrate if government insists on propping them up.  It's the same destructive strategy that government tried during the Great Depression: prop up prices at all costs. The Depression went on for over a decade. On the other hand, when liquidation was allowed to occur in the equally devastating downturn of 1921, the economy recovered within less than a year.

The president also tells us that Senators McCain and Obama will join him at the White House in order to figure out how to get the bipartisan bailout passed. The two senators would do their country much more good if they stayed on the campaign trail debating who the bigger celebrity is, or whatever it is that occupies their attention these days.

F.A. Hayek won the Nobel Prize for showing how central banks' manipulation of interest rates creates the boom-bust cycle with which we are sadly familiar. In 1932, in the depths of the Great Depression, he described the foolish policies being pursued in his day - and which are being proposed, just as destructively, in our own.  Instead of furthering the inevitable liquidation of the maladjustments brought about by the boom during the last three years, all conceivable means have been used to prevent that readjustment from taking place; and one of these means, which has been repeatedly tried though without success, from the earliest to the most recent stages of depression, has been this deliberate policy of credit expansion.

To combat the depression by a forced credit expansion is to attempt to cure the evil by the very means which brought it about; because we are suffering from a misdirection of production, we want to create further misdirection - a procedure that can only lead to a much more severe crisis as soon as the credit expansion comes to an end.  It is probably to this experiment, together with the attempts to prevent liquidation once the crisis had come, that we owe the exceptional severity and duration of the depression.

The only thing we learn from history, I am afraid, is that we do not learn from history.

The very people who have spent the past several years assuring us that the economy is fundamentally sound, and who themselves foolishly cheered the extension of all these novel kinds of mortgages, are the ones who now claim to be the experts who will restore prosperity! Just how spectacularly wrong, how utterly without a clue does someone have to be before his expert status is called into question?

Oh, and did you notice that the bailout is now being called a "rescue plan"? I guess "bailout" wasn't sitting too well with the American people.  The very people who with somber faces tell us of their deep concern for the spread of democracy around the world are the ones most insistent on forcing a bill through Congress that the American people overwhelmingly oppose. The very fact that some of you seem to think you're supposed to have a voice in all this actually seems to annoy them.

H.G. Wells once said that civilization was in a race between education and catastrophe. Let us learn the truth and spread it as far and wide as our circumstances allow. For the truth is the greatest weapon we have.  If you haven't called you congressional representatives yet, do so!

[Genia]

Ah, yes. What we need in order to deal with the failure of rampant capitalism is... more capitalism. Not that the New Deal rescued America from the Great Depression of 1929, not that the socialist economies everybody over there likes so much to lampoon are turning out to be, albeit not as flamboyantly gargantuan, at least considerably more stable.

No. God help any government which, if it sees disaster brewing, tries to put a damper in front of the American market. We must let the natural course of economis - whatever it is - to have its way. Even though most Economists and scientists today are aware that not only Adam Smithian, but even Keinzian Economics are outdated systems, and that a supervision of the market is necessary to create a system that doesn't gobble up its own consumers.

No. We'd all rather have another 1929-style wave of mass suicides than release the potential "ghost of Communism".

[Todd]

Explain to me how giving 700 billion dollars to the ex CEO of Goldman Sachs, a man who helped crater this economy while in the private sector, will help save our economy and I might support this bailout.

The problem with our economy is that we have all the bad parts of socialism coupled with those of the free market. We award short sighted CEOs who go for the quick profit with bailout years later. All we've done is privatize profits and socialize losses. Under no economic theory can that work.

[Uncle Mordy]

There're a whole lot of things wrong with our current system, and the sum of it is this: we live in a country of the corporations, by the corporations, and for the corporations. It's been that way for years and years and... Actually, it's always been that way in America, it's just that periodically we wind up in a situation where the needs of the corporations coincided with the needs of the people (like during the Cold War, when "patriotism" meant doing your best to make this country look better than others).

In some aspects, we need more regulation, in others, we need less. The problem is that right now, the choice of what to do where is done with the interests of Wall Street and lobbyists, not America. There's this thought that "what's good for Wal-Mart is good for America" and that is the approach that Congress is taking. So the Music Industry is trying to get itself put on the Protected Species' list and doing their damnedest to get powers that should only be reserved for the police (Issuing your own subpeonas? Christ!), and all the big investors are setting up a system where they get the American government to foot the bill for their failures (but they get to keep all the money for their successes).

What I'm trying to figure out is, where are all the big economists? Why is it that we've got all these idiot Congressmen sitting around and no people who actually know what the hell they're doing? During the Great Depression we had people like John Maynard Keynes and it worked because of it.

[Todd]

Oh, epic fail. House Democrats and Republicans reject bail out.

http://www.nytimes.com/2008/09/30/business/30bailout.html?bl&ex=1222833600&en=78e47e85adbe5725&ei=5087%0A

And the markets crash. On the bright side the dollar is rebounding.