With the November elections at hand and extreme polarization between party lines, the current economic crisis is being leveraged and exploited by pundits as a means to gain political advantage. Most us probably don't realize how bad the situation has become and how close the United States is to disaster. William Kristol's recent message is sobering:
I've received phone calls in the last hour from two economists I respect, one of them Larry Lindsey, the other in a position where he'd prefer not to be named. Both have government experience, neither is alarmist by nature, and they say this:
The huge European bank Fortis is apparently about to fail. The ripple effect on the American banking system could be disastrous, with bank runs, liquidity crises, and stock sell offs possible Monday. Wachovia may well fail next week. As Larry put it, this really will be 1933 soon if we don't move rapidly to stabilize the banking system.
And here's the bad news: the current bailout bill, whatever its merits and likelihood of passage, does nothing to address this.
Update: Quick, give all power and money to the state and my friends in finance, or the earth will crash into the sun. Do it now. Fast. Right now. It's WMD. It's Osama-like. Immediately. Hurry up. No time to waste. The end is nigh. It's getting closer, closer, CLOSER! The bailout? A mere bagatelle. Pass that too, of course.
But who's to blame? Although some bear more guilt than others, both parties have contributed to the economic crisis (Pat Buchanan):
Big Government is riding to the rescue - saddlebags full of our tax dollars - to save us from the consequences of the stupidity and folly of Big Government. New York and Washington, the twin cities responsible for the crisis, are now being hailed by the media as the 7th Cavalry, coming to rescue a beleaguered nation.
Had there not been a steady and constant infusion of easy money and credit into the U.S. economy by the Fed, for years on end, a housing bubble of the magnitude of the one that has just exploded could never have been created.
Had the politicians of both parties not coerced and pressured banks, S&Ls, Fannie Mae and Freddie Mac to make all those sub-prime mortgages, then to tie this rotten paper to good paper, convert it into securities and sell to banks all over the world, there would have been no global financial crisis.
Had they seen this coming and acted sooner, the Federal Reserve and U.S. Treasury would not today, like Henny Penny, be crying, "The sky is falling!" and the end times are at hand, unless we give them 5 percent of our gross domestic product to buy up suspect securities backed by sub-prime mortgages.
And there's much more that cannot be easily captured in a short post. It's really a systemic problem that has no easy short-term remedy.
American's are going to suffer. The poor will be hardest hit. As conservative pro-life Christians, we've often been criticized for not carrying about kids after they are born, this despite our extensive charitable work and outreach. I'd like to point out that big government, the kind with a program to solve every societal ill and help every depressed individual, is responsible for the current financial crisis.
The tender mercies of the monstrous government that brought us the Community Reinvestment Act has jeopardized the future of the very people they said were being helped.
The audacity is that our "leaders" have not learned their lesson. Democrats are attempting to skim their 20% of profits first and foremost off the top of any enormous financial-bailout benefit. It's like reading a non-fiction version of Atlas Shrugged.
In Ronald Reagan's words, "Government is not the solution to our problem. Government is the problem." ....
The economic ills we suffer have come upon us over several decades. They will not go away in days, weeks, or months, but they will go away. They will go away because we as Americans have the capacity now, as we've had in the past, to do whatever needs to be done to preserve this last and greatest bastion of freedom.
In this present crisis, government is not the solution to our problem; government is the problem. From time to time we've been tempted to believe that society has become too complex to be managed by self-rule, that government by an elite group is superior to government for, by, and of the people. Well, if no one among us is capable of governing himself, then who among us has the capacity to govern someone else? All of us together, in and out of government, must bear the burden. The solutions we seek must be equitable, with no one group singled out to pay a higher price.
We just made billions and billions! What a profitable year (from Forbes):
Congress Saturday agreed to finance a $25 billion loan package to help troubled automakers as part of a mammoth spending bill that will keep the government running until early March 2009.
The U.S. Senate approved the more than $630 billion spending bill 78-12. The bill was needed to finance defense, education, farm, health, foreign aid and other government programs after the current fiscal year expires on Sept. 30.
TheHouse passed the legislation earlier this week and it now heads to the White House for President Bush's signature.
Congress passed the bill as lawmakers continued negotiations on a $700 billion bailout for Wall Street that lawmakers say is needed to free up credit markets and avert a steep economic downturn.
The spending legislation allows a ban on offshore drilling to expire on Sept. 30. Democrats had hope to extend the ban, but did not have the votes in the face of stiff opposition from Republicans.
The bill sets aside $7.5 billion in taxpayer funds needed to guarantee $25 billion in low-interest loans to help struggling General Motors Corp. (nyse: GM - news - people ), Ford Motor Co. (nyse: F - news - people ) and Chrysler LLC produce more fuel-efficient cars and trucks.
Congress rushed to pass the massive spending bill before the new fiscal year begins Oct. 1 because lawmakers failed to approve any of the 12 spending bills Congress needs to act on every year to fund the government operating.
Yikes! Out of Gold?
The U.S. Mint is temporarily halting sales of its American Buffalo 24-karat gold coins because it can't keep up with soaring demand as investors seek the safety of gold amid economic turbulence. The 1-ounce coin has a face value of $50 but is priced for sale according to the fluctuating value of gold.
Politicians are principally to blame for the impending financial collapse of the World Economy
For why is it that governments around the world did nothing until financial death was knocking on the door?
For they were told at least five years ago about the dire state of the international financial markets. In this respect clear examples of this knowledge that they had at the time were,
1. In 2003 the former US Federal Reserve chairman Alan Greenspan warned of the forthcoming financial collapse if Fannie Mae's activities were not reined in. The government did nothing and Fannie Mae was allowed to continue operating until only last month, some five-years after the warning from the US’s top banker was given. Indeed, the 30% of mortgages in the US, which are toxic mortgages, equates to losses for the banks of $3.1 trillion. Therefore how could politicians overlook such a failure it has to be asked? The only answer can be incompetence and complacency at the highest level.
2. In 2006 the Bank for International Settlements, the world's most prestigious financial body and the central banker’s ultimate bank, stated that the financial world was in a diabolical state and that it had to change its current ways and activities. No government throughout the world intervened until it is was too late and where caution was not on the agenda for them just a mere two years ago.
Clearly therefore it is the politicians who are to blame for all the mess that we all now find ourselves and due to them not taking any action years ago. Indeed, the dire problems that we are now starting to witness are a direct result of their total complacency for years and where eventually it will cause the worst financial crash that we have ever witnessed. For this is already transferring into the economy and where the wheels of industry are now steadily but surely starting to slow to a full stop.
It is not only the bankers therefore who need sorting out but their bed pals the politicians as well. For both have made enormous financial benefit out of this unprecedented, irresponsible and appalling personal greed.
Dr David Hill
World Innovation Foundation Charity (WIFC)
Bern, Switzerland