Skip to comments.Maybe the Economy Should Wait
Posted on 09/24/2008 9:52:10 AM PDT by Reagan Man
Never has the United States had to make such a momentous decision so quickly, except on more memorable dates such as December 7, 1941 or September 11, 2001. Is this really that urgent?
Our betters tell us that the financial meltdown leaves us only two choices: Either put this nation in hock in unspeakable amounts to who-knows-whom for how long. Or bring on another Depression. And we must pick our poison right now -- no looking for reasonable alternatives. All the key players agree that weve got no time to spare; all us bit players cant fully understand why.
If it were up to me, and, thankfully, its not, Id rather ride out the storm instead of selling myself and my country to the lowest bidder. Id rather count on the reliability of economic cycles (minimally managed) to bring us out the other side of the storm than to turn an entire free market economy -- or at least a good chunk of it -- over to the management of one person, the American government in general, or to the government of whatever country or countries decide to bail us out. (Somehow, France is nowhere to be found. Theyre always there when they need us.)
How appropriate is the term bail out as applied to the present crisis. A bailout doesnt look beyond the immediate concern of keeping the boat were all riding in afloat. Bailing out the boat might save it and its occupants -- providing we can bail faster than the water thats rushing in -- for the time being, but it doesnt necessarily repair the leak, make the boat ship-shape to resume its intended course or guarantee its passage to its next port.
We have to realize that we are on the brink of a fundamental change in our economy and system of governance, and were going into it with our eyes closed. Not just us, but the entire world. What our government does in this global economy will be felt way beyond our borders, with the significance for global free markets uncertain at best. If its fair to consider the consequences of doing nothing, it should also be fair, if not necessary, to consider the longer-term consequences of doing something, especially when that something amounts to economic jury-rigging. Truth is, were being jammed up by panicky Wall Street traders and other assorted practitioners of financial voodoo, as well as politicians who are running like crazy from any implication that theyre letting all those poor sub-prime borrowers descend into financial hell.
Perhaps the wisest thing Ive heard anyone say about this mess came from my son-in-law, George: A character from a movie once said liberty dies with thunderous applause. The government has acted (and will continue to act) as a public insurer of risk. It will grow even worse as the stakes in this economic game of chicken grow further. The government will most likely have no choice but to further destroy the U.S. dollar. Absurdly, at least 50 percent of America will welcome it. An unenlightened electorate was Thomas Jefferson's fear. It was probably the primary reason the founding fathers established us as a democratic republic rather than, contrary to current popular belief, a pure democracy.
The stampede is on, and theres no stopping it. Once the crisis was dropped into the hands of the politicians, the political costs of appearing to be doing nothing, are way too high. Thoughtful, wise reflection is no longer virtuous. Just as the motivations that got us into this mess, the personal cost to the people in power is way too much for a calm search for a solution. Oh, but were told, we cant let us slide into the kind of economic disaster were surely headed for. Treasury Sec. Hank Paulson told Congress that he has studied the Depression, and thats where inaction will lead us.
Im not convinced, but Paulson and others sure have me scared, as I watch my retirement savings dwindle. And in such a state, its hard to be the one to say, Hold up.
The concern for the American homeowner in the mess is nearly universal, even though too large a number of American homeowners was the main beneficiary of inexpensive, too-easily-obtained mortgages. If you think its too mean to suggest that the American borrower should pay the price along with the goniffs who took advantage of them, then allow us to consider the longer-term impact of the bail out not just on sub-prime borrowers, but on American consumers and taxpayers in general. Common sense tells me some things, such as becoming the biggest debtor in the worlds history will further weaken an already weak dollar. With the U.S. facing the necessity of borrowing $1 trillion or more, how many lenders do you think will be rushing forward with their money? How many banks would be glad to lend you $60,000 to buy a luxury car when youre already up to your ears in debt?
A weak dollar is nasty business, for everyone. Its been shrinking for years and has devalued the labor of every American, cutting into his wages and assaulting his savings. We keep hearing complaints about how real income hasnt advanced enough. Okay, but a weaker dollar reduces consumers real spending power, which amounts to a reduction in real income.
A weaker dollar, by increasing the cost of imports, will add to inflation. And a weaker dollar helps American exports and could help reduce the trade deficit. But a worldwide cheapening of U.S. products and services is not the direction we should be going. And theres this: the cheaper the dollar, the more it costs us to import energy because it will take more of our dollars to buy a barrel of oil.
The greater cruelty to the American public, consumer, and taxpayer is to ratchet up our debt to astronomical levels. Crushing interest payments already make many of the social goals valued by Democrats difficult, if not impossible. The burdens of paying off the debt, if that can ever happen, will gravely reduce the choices, quality of life and financial stability of coming generations. But everyone already knows this, even Republicans that have dumped their once-sensible economic concepts in favor of the immediate gratification.
But this is the nature of panics. Weve got to do something, anything, and weve got to do it now. Even if it means trampling on our own best interests while stampeding into a blind canyon.
Ditto here. And while we're at it we need to clean house in DC.
Put all these failing banks in the hands of banks that are doing things right. Break up the financial outfits that are pulling our economy down. May hurt for awhile but we can handle it.
This the usual way governments increase their power over the people. They just have to wait or create the latest panic and the masses will beg for regulation and less freedom—all in the name of feeling safe.
Finally, someone who puts pen to some of my thoughts.
I would like to know just one thing...
Where in the hell is our collective CREATIVITY?
It makes no sense at all to think we can pour money into and spend (indebt) our way out of this!
Damn straight.One thing to remember if we do go into a depression:We'll all be in it together.We can all help one another out.
Using One-Trillion which 700 Billion is pushing.
If you had a business that began loosing 1 Million every day since the day Jesus was born you would reach a Trillion dollar deficit around 2037.
Hugh Hewitt was going on last night saying that Congress’ inaction was exacerbating the situation and caused the late day decline in the stock market. He noted the market was spiraling up until the Senate began speaking.
He had it absolutely backwards. The market was spiraling up early in the day because Congress had done nothing the previous day. This gave the impression this discussion would at least get some intellectual vetting. The market began its later day decline when Paulsen and Bernake started talking. The entire hysteria is a self-fulfilling event.
P&B are yelling “fire” in a crowded theater when we haven’t determine the extent of any aledged fire. They are deliberately creating a panic so we will hand over this unprecedented authority to the Executive. Clearly we have a problem but knee jerk reactions creating the illusion of motion is not leadership.
My fear is that no one knows quite what to do, or that everyone feels the need to be seen as doing something even though inaction might be better (elections in six weeks, after all). Among those who don’t really follow politics much, Obama’s “let’s change our leadership” mantra may be more appealing than anything McCain could say.
We have our work cut out for us. I’m hoping the debates show McCain and Obama in their true light.
Has anyone accused Soros of precipitating this financial crisis yet? :)
Just throw money at the problem and don’t forget Barack’s and Chris Dodd’s cut.
My thoughts exactly!
No one can even say the ‘bailout’ won’t prevent a depression. I’ve been ready for this since the Dems were elected in 2006. (I tapped out in Feb. 2007)
It may not be pretty in the short term, but it would be better than prolonging a total collapse.
The ‘progressives’ always cited “Those Who Sacrifice Liberty For Security Deserve Neither.”
It applies to the financial mess too!
However, Bernanke repeated his belief that troubles in the subprime mortgage market are "unlikely to seriously spill over to the broader economy or the financial system." Bernanke-June 05,2007
The US economy is 'healthy' and transitioning to a soft landing after blockbuster growth in early part of last year, Treasury Secretary Henry Paulson said today. Paulson-March 01,2007
This mess was created by Congress but these companies did not have to buy these securities. Congress should lend a hand to lenders perhaps by loosening accounting rules temporarily like Dave Ramse suggested to free up the credit market.
He also suggested we guarantee those securities, which is a step further, perhaps much further but apparently would be much cheaper than 700 BILLION DOLLARS.
Well, it was a George Lucas movie, so maybe "I've got a bad feeling about this" is just as relevant a quote. ;)
I've been thinking all along that Jar Jar Binks was working for Lehman...
One thing is certain. Throwing $700-billion at this problem isn't the answer. Liberals have been taking this approach for the last 45 years and it doesn't work. Why should the taxpayers have to save lending institutions that took a risk and failed. That isn't fiscal conservatism or remotely responsible either.
How we got into this mess is more clear, then how we're going to get out. Lending institutions gave loans to people who couldn't afford the downpayment, let alone the monthly mortgage payment. Those lending institutions sold the mortgages to WallSt investment banks, who then repackaged them and resold them to other investment institutions. Obviously, they created an evil cycle that came crashing down. The paper the loans were written on became worthless.
I have to say,it’s reassuring to see that most Americans(excluding bankers,politicians,etc.,,)see this bailout for what it is.It makes me proud to see that some Americans would rather do without,maybe struggle to make ends meet,or maybe just lose everything,in order to keep their freedom.It’s the one good thing that is coming out of this.The cream is rising to the top,so to speak.
Exactly. The stock market, especially over the last 5 - 10 years, has become nothing more than an elaborate "shell game", with people inventing "products" to sell at exhorbitant prices to suckers lined up to purchase them. It's nothing more than a glorified casino, and I for one do not want to pay for it, nor my 4 year old daughter to pay for it.
Saw something posted earlier about what the Swedes did in the early 1990's over a similar situation. Sounded to me like it needs looking at. They got most, if not all, of their money back. Slow this mess down, and get it fixed properly. These so called "capitalists" on Wall St. will be glad to fleece the American taxpayer. They're disloyal, "dollar is God" types, who for the most part aren't worth the bullet it would take to give them justice. They could care less about me, you, or their own mother. They worship money and power, period, end of story. Slow this train down, and don't give these pigs public money with no strings attached. If we do, they'll only do it all over again.
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