Bear Stearns bailed out by the government. Stock market off 504 points. Insurer AIG seeking a $40 billion loan. Lehman Brothers bankrupt. Merrill Lynch bought by Bank of America in a fire sale. And former Federal Reserve chairman Alan Greenspan calling the current fiscal crisis a “once in a century” occurrence.
It all sounds dire, does it not?
Shades of the great depression?
Yes, but only shades.
And clearly a time for calm.
Obviously there are problems in the economy, and it is time to take stock. We have survived before and we will survive this. Perhaps the American economy is entering a new phase, and it is time for a fresh start; out with the old and in with new industries and technologies and growth. The loss of the venerable Wall Street names like Lehman Brothers and Merrill Lynch is alarming, but then again Andrew Carnegie’s steel mills are now gone too. Things change.
We need to avoid making the same errors of the last 60 years over again, all of which centered on incrementally empowering the Democrats and their big-government friends. The only thing that has grown consistently over the past 60 years is government itself. And that is at the heart of our current problem. Since 1945 with the victory over Japan and Germany, America has had a great run. In the 1940s and 1950s, with European and Japanese economies hobbled, America produced 50% of the world’s finished goods. Anyone who wanted a good job could have one.
The 1960s ushered in a decade of plenty, and a decade of questions. Who wants to work in some dreary factory? they wondered. We needed to liberate ourselves with drugs and fantasy, they said. And that was the beginning of the end.
Millions of people took all of our good fortune with a grain of salt. And today, opportunity is slipping away because we allowed it to happen in a utopian haze of false promises.
The government began to tax everything in sight. Where there’s money, you will find the tax man with his greedy hand out.
Other liberals decided that the wealth we were creating needed to be redistributed and they set up unwieldy and ever-growing government programs to “serve” the poor. Mostly they empowered the slothful bureaucracy and left poor people dependent and adrift.
Environmentalists amassed power and lectured us that our very existence threatened the planet. And so we stopped doing efficient things to create more energy, and now we are paying the price.
Our public education system has been taken over by radicals in the Democrat party who care not a whit about education, but only about their own wages and benefits and early retirements.
Fannie Mae and Freddie Mac were given taxpayer guarantees to buy securitized home loans made to people without the wherewithal to repay.
Now Lehman Brothers and others are on the way out. Must be those greedy Republicans, the average observer might think. But no. Lehman employees have given huge amounts of campaign cash to Democrats like Hillary Clinton and Charles Schumer, the same far-left Schumer who sent California’s IndyMac Bank into receivership by publicly questioning its liquidity. The former chairman of Goldman Sachs is ultra-liberal New Jersey governor John Corzine.
The myth of the ‘conservative banker’ is as outdated as the DeLorean sports car. Today the investment banking and brokerage industries no longer are the old boys’ clubs of lore, but are loosey-goosey, metrosexual, politically-correct, postmodernist behemoths that toss caution to the wind. Meanwhile, the credit binge unleashed by “genius” Greenspan’s low interest rates of 2001-2005 gave pots of money to anyone with a pulse, which socialist dogma says is a good thing.
It is not. It is a bad thing.
Poor people have been extended massive amounts of credit under government fiat, and cannot repay, setting off the housing crisis, which has fueled the Wall Street crisis. Middle-class people buy houses they cannot afford simply because the money is there. Homeowners are promised something for nothing – buy a house and watch your money double.
That is not the rational way to build wealth. That is the easy way. And the bottom always falls out when you over-promise, with the government guaranteeing it all.
The Democrat party has moved farther and farther to the political left in the last 60 years, assuming that all “needs” like health care and housing are now “rights” that must be supplied overtly or covertly by the government.
But the Founders of our nation never intended that mere needs be codified into, or confused with, the set of God-given rights on which our freedom is based – a right to speak our minds and to assemble, to defend ourselves from harm, to worship as we please. They never believed that we could get something for nothing, or a big return on a small investment. They believed that you got what you worked for. And today few believe much in that old adage.
Today, America spends trillions in government money on everything from buying risky mortgage loans to financing millions of illegitimate children born to mothers with no education or skills to bailing out investment banks that no longer heed the rigors of the market, but only the fashionable dictates spotted on the editorial page of The New York Times.
Our nation currently is suffering from all the excesses of the past 60 years in which we believed that everyone could have everything. But they cannot. We have a Social Security system that is going bust, a $10 trillion debt besides, and a sense that we all are owed something. And it is this sense of entitlement that is clouding our abilities to create wealth the old fashioned way – by earning it.
Obama & Co. are offering more of the same old prescriptions that got us into this mess in the first place; more mandates, more taxes, more agencies, more spending. They are blaming Bush for the housing meltdown when in fact it was borrowers with easy credit who took us down this road.
It is time for calm. It is time to act rationally. We need to allow this current mess to pass naturally, and avoid intervening and trying to fix every little thing. There will be pain. But that too shall pass.
On the rebound, as we build an economy for the 21st century, we need to root out corruption, stop the hemorrhage of government spending, trim back federal agencies that guarantee that failure is not an option, take control of our schools, put our energy supplies in order and let business grow itself without undue interference from Big Brother.
Our present woes are like a disease. If we over-treat them, that only will make things worse. We should take a deep breath, sort out the problems, take appropriate actions, study how we got here and avoid the same mistakes over again. And if we heed the call of our Founders and let the people lead in a free economy, we will see a new century of peace and prosperity built on learning from the mistakes of our current misfortune.
Please visit my website at www.nikitas3.com for more.