Lately, the bigwigs in Washington are acting more and more like those college boys he would speak of. Our “leaders” have been telling the taxpayers that they need to indebt themselves and rescue private companies. They say the turmoil that would ensue should the financial institutions (and now automakers) be allowed to fail. My grandfather, were he still alive, would unequivocally disagree, having once told me that if you had to borrow money in order to pay your debt, you were as good as out of business.
Sadly, the United States is seemingly headed out of business.
Two months ago, the Federal Reserve Bank (a private corporation) seized the assets of AIG (the world’s largest insurer). The media called it a bailout – yet it was a seizure, whereas the Fed took over the assets of a corporation and the taxpayers were sent the bill. Yet the real gem was the $700 billion transaction also being called a bailout. Again, no bailout – our leaders riding to the rescue of their friends on Wall Street. Again, you are being sent the bill. They now they speak of the automakers. Soon it will be the airlines. Then the retailers. Will it ever be about the people? Will the people demand it be about the people?
We’re going to need to let businesses fail. To actually go bankrupt. We need to bottom before we can rise again. Yes, there will be pain, possibly even some chaos. Yet there must be endings for there to be new beginnings. Those who are sound will buy out those who are unsound, and at the proper price. Only then might we begin all over again. Such is the way things have always worked in the world. There is a defined life span for all things have on this planet – for you, me, your car, my hot water heater. And so too should it be for the banks, brokerage and auto firms.
Enrico Orlandini of DT Analysis SAC doesn’t mind not mincing words: “The United States is in real trouble and there is no one who has any credibility anymore; not on CNN, not in the White House or the Treasury, and certainly not in the Fed. The American people have yet to figure out that they have been sold down the river by the very officials they elected to prevent just such a calamity.”
There will be no easy solutions. Never before in history have people been able to buy a house (or three, four or five of them) with no money down. This situation will take time to unravel and unwind, and will only worsen with politicians delaying the day when our bills come due. This strategy wouldn’t work for your household or mine, and it won’t work for the United States. Man can try to intervene, yet nature will always win in the end.
The game of excess money has come to a screeching halt. Now comes the reckoning. Orlandini also writes, “Perhaps the biggest disappointment of all is the Federal Reserve Chairman, Ben Bernanke. He is supposed to be the most knowledgeable authority on the Great Depression, was brought in precisely to prevent such a disaster, and look what he did. He let the deflationary devil in the door and now there is no way to exorcize the creature. In order to fight deflation effectively you must have reserves, and the United States not only lacks capital, it is the largest debtor nation in the world. When you mix a staggering debt load with deflationary pressures, you have the recipe for an unparalleled financial disaster, and that is what we are witnessing now.”
With Barack Obama moving into the White House in a couple of months, it would be nice to believe in the new directions he constantly spoke of in his campaign. I remained optimistically skeptical as the election approached – disappointed in him for voting for the bailout bill. He had the opportunity to become a true leader. I believe he took the wrong position.
That said, Obama’s true colors are now beginning to emerge. With his selection of Timothy Geithner to be his Treasury Secretary, the status quo has apparently prevailed. I think Obama should have chosen either Ron Paul or Dennis Kucinich. Dr. Paul, in the days after the passage of the bailout bill, wrote on his website, “It has not been a good week for the Republic. It took quite a bit of trampling of the Constitution, but the bailout bill passed, as I suspected it would.” Meanwhile Mr. Kucinich wrote, “We have come a great distance in seventy-five years; from the New Deal to the Raw Deal; from having nothing to fear but fear itself, to being afraid of everything. We traded democracy’s warm heart containing the ideals of faith, fairness and frugality, for the greedy, cold calculations of the Dow Jones ticker.” Picking Ron Paul or Dennis Kucinich would be a bold move for Obama. Imagine a politician who understood the People are supposed to issue their own money – and through the Treasury, not a bank – as the new President’s Treasury Secretary!
Yet the politicians – who are the problem – will not solve the problem. What will solve it will be nothing less than Americans stepping up and taking back the power that is rightfully theirs under their Constitution. Maybe, similar to the homeowner who is given a bill by the plumber that he’s not happy with, we will refuse to pay the bailout bill as given to us by the fix-it specialists in Washington.
Japanese steel decimated the U.S. steel industry by the 1970s. My grandfather was lucky, or wise – he got out in the late 60s. I wonder what he would say about GM being on the verge of bankruptcy. Knowing he couldn’t compete against the Japanese, would he be surprised that the auto industry wasn’t able to either? One thing however would be for certain: He’d tell you that the college boys ran a grand company into the ground. Just as they’ve done with the U.S.A.