Pat Buchanan: Socialist Republic (Spot on!)

Human Events ^ | November 27, 2008 | Patrick J. Buchanan

[2ndDivisionVet]

Barack Obama and George W. Bush seem to have come away from their study of the Great Depression with similar conclusions:

To wit: After the Crash of 1929, the Federal Reserve did not move fast enough to save the banks and inject cash into the economy. Second, the New Deal, far from being wastrel deficit spending, was not bold enough. So it was that America wallowed in depression for a decade until the unbridled spending and mammoth deficits of World War II pulled us out.

Bush and Obama seem determined not to make the same mistake.

We are all Keynesians now.

Thus, we have the $700 billion Bush bank bailout, the $700 billion "stimulus package" Obama wants by inauguration to "jolt this economy back into shape" and the $800 billion fund Hank Paulson created to get consumers borrowing and buying again.

These come on top of Bush $455 billion deficit, the $29 billion bailout of Bear Stearns, the $105 billion in pork to grease the $700 billion bailout, the $100 billion to $200 billion to keep Fannie and Freddie afloat, the $140-billion-and-counting for AIG, the $25 billion for the greening of GM, Ford and Chrysler, the $25 billion more to save the Big Three and the $20 billion for CitiGroup.

Now much of this overlaps, and some will be retrieved. But we are still staring at a deficit that could approach $2 trillion.

How would this stack up historically?

A deficit of $1.4 trillion would be 10 percent of gross domestic product, dwarfing the postwar record 6 percent run by Ronald Reagan in the Jimmy Carter recession.

Bewailing the "Reagan deficits" has been a staple of Democratic oratory. This will stop. But the politics of this is not the point, the policy is.

Consider what we are about to do. Bush in 2008 spent 21 percent of GDP. States, counties and cities spent another 12 percent. Thus, one third of GDP is spent by government at all levels. Obama and Co. propose to raise that by another 10 percent of GDP. We may soon be north of 40 percent of gross domestic product controlled and spent by government.

That is Eurosocialism.

And where, exactly, are we going to get the money?

Americans save nothing. We spend more than we earn. Thus the levels of consumer debt, credit card debt, auto debt and mortgage debt. U.S. foreign-exchange reserves amount to a piddling $73 billion.

The only nation with the kind of cash on hand we need now -- if we don't print the money and invite another gigantic bubble -- is China, with its $2 trillion in foreign-exchange reserves.

Will Beijing lend back the dollars it has piled up by selling to us?

China certainly has an incentive to keep Americans spending. For our purchases of Chinese-made goods have often been responsible for 100 percent of China's growth. China does not want to kill the American goose that lays those golden eggs -- until the goose can't lay any more eggs. Then they won't need the goose.

But should China decide to lend us the money, what will Beijing demand in interest rates and assurances that we will not default. After all, the U.S. debt is 70 percent of GDP, our savings rate is near zero, and our merchandise trade deficit is still running at 5 percent to 6 percent of GDP.

Unlike the 1950s, we are today dependent on foreigners for two-thirds of our oil and for much of our manufactured goods -- toys, TVs, radios, cameras, cars, shoes, clothes, bikes, motorcycles -- and for the $700 billion to $800 billion we borrow each year to pay for these imports.

With U.S. homeowners, consumers, companies and banks now going bust, why must the nation borrow trillions more to bail them out? So we can maintain our status and standard of living as the last superpower.

Bush and Obama are competing to shovel out trillions of dollars, so we can return to the good times of yesterday.

But wasn't yesterday the root cause of today? Didn't saving nothing and spending more than we earn, purchasing what we cannot afford in cars, consumer goods and houses, buying far more from abroad than we sell abroad -- didn't that cause this crisis and crash?

A family man in America's condition, awash in debt, spending more than he makes, would cut back consumption, find a second job and get out of debt. Or declare bankruptcy, accept the shame and humiliation, change his wastrel ways and start anew.

Is it different for a nation?

Yet we seem to believe we can borrow and spend our way out of a swamp of unpayable debt into which borrowing and spending have plunged us.

We are headed either for default on our debts and bankruptcy as a nation, or something less honorable: a quiet cheapening of the debts we have incurred by inflating and destroying the dollar, robbing our creditors of what we owe them and robbing our own people of the value of what they have earned. And so it has come to this.

What would the Founding Fathers think of us now?

[2ndDivisionVet]

When Pat gets it right, he hits a home run.

[Gator113]

It frightens me when I find myself agreeing with Pat. ;>)

[traviskicks]

ping

[Canedawg]

What would the Founding Fathers think of us now?

They'd be ashamed of us for not electing a natural born citizen as POTUS.

[trumandogz]

Pat is a little behind the curve on this matter. So, yes we are all socialists, from the President of the United States and the Sec. of the Treasury to every CEO in corporate American and of course the bankers.

Our government wrote a Trillion Dollar Check using our dollars to make us the biggest Socialist State in the history of the world.

And worst of all it was done by a GOP President and far too many Republican members of Congress.

[sickoflibs]

Except he wants to ban Japanese cars and give UAW endless welfare. Try :

Video of Schiff when he predicted this disaster. Watch the other guy offer him a bet that the economy is in great shape.

http://www.youtube.com/watch?v=2I0QN-FYkpw

No one knows what the future holds, or do they? It looks like celebrated investor Peter Schiff might have a crystal ball.

The Prediction
Almost two years ago he predicted that the financial markets were heading for crisis. At the time he told CNBC, “We’re on the verge of a major, major recession that’s probably going to start by the end of this year, maybe early next year. The housing market is just beginning to unravel. We’re seeing the tip of the iceberg here.”

In fact he went on to compare the economy to the Titanic then added, “I am here with the lifeboat trying to get people to leave the ship.”

According to Schiff, investors believed asset prices, real estate prices, and stock prices would go up indefinitely. But, as you know, it was a bubble. Now, markets are correcting for these imbalances.

http://www.cnbc.com/id/27823932

[Piranha]

As a sign of how topsy-turvey the world has become, here I am agreeing with Pat Buchanan! He is spot on, and I grieve for the loss of our great country to internationalism and corporate socialism.

[SoCalPol]

Spending, GDP, whatever.
Obsessing on the economy is like cleaning your home
when a tornado is ready to hit it.

Don’t think Bombay, India is thinking of GDP, deficits, etc. right now and a reminder the enemy has not gone
away.

[fortunate sun]

Well, Pat is wrong on the “Americans don’t save count” —
1. They are forced to save via the payroll deduction into Social Security.
2. Americans probably have the highest level of home ownership on the planet. A mortgage payment could be considered savings as a majority of mortgage payers have an honest intent on payment.
The failure of both is lack of access to funds or ease of access to funds in the case of a house.

[Theodore R.]

which is 99 percent of the time

[wastedyears]

What would the Founding Fathers think? They would consider (I hope our “elected leaders, and our modern-day Liberals) us unfit to live in a free republic.

[Theodore R.]

As the American idol “Bill” Clinton would say, it dependes on the meaning of “savings”.

[Theodore R.]

that must be because you never really knew where Pat stands on everything

[tbpiper]

When Pat gets it right, he hits a home run.

It's a 'blind squirrel and nut' thing.

[paul51]

This article is dead on.Why can't the congress, the fed and the people controlling the treasury understand this?

[Boiling Pots]

Right, and when it all comes crashing down into the ground, burning along the whole way, the Democrats will be able to pin the blame on the GOP.

[Viking2002]

Yeah, he's the conservative stopped clock that's right twice a day, but when he gets it, he gets it. I take personal exception to this, though:

'Americans save nothing. We spend more than we earn. Thus the levels of consumer debt, credit card debt, auto debt and mortgage debt. U.S. foreign-exchange reserves amount to a piddling $73 billion.

While he is right in a larger context, my wife and I broke out of that cycle as a matter of long-term planning and simple common sense. We know our income; we know our debts; we know what we wish to accomplish, and the future time-frame that we have to work with, or have set for ourselves as a personal goal. We're not millionaires, but we don't worry about the bank account being in the red two days before payday, or with getting hit with an unexpected bill. By living within our means (yet not denying ourselves the creature comforts we have richly earned through knuckle-busting labor), we can not only keep the wolf from the door and two counties away, but we can also feel confident that we'll realize our future goals.

[ari-freedom]

SS isn’t really savings and a house isn’t an asset that produces anything.

We’d have a much more balanced political economy if everyone was invested in the stock/bond market for retirement, as is the case in Australia. Politicians would not be able to demagogue against the producers because everyone would have a share in their success.

[trumandogz]

No, they are all to blame.

Each and every one of them that voted for the bail out or signed their name to the bail out.

[ari-freedom]

you’re doing the right thing but there are a lot of people that expect to be bailed out. They don’t even care about the crashing dow because they never owned any stock. They voted for Obama.