Words of Advice:

"Never Feel Sorry For Anyone Who Owns an Airplane."-- Tina Marie

If Something Seems To Be Too Good To Be True, It's Best To Shoot It, Just In Case." -- Fiona Glenanne

Flying the Airplane is More Important than Radioing Your Plight to a Person on the Ground
Who is Incapable of Understanding or Doing Anything About It.
" -- Unknown

"There seems to be almost no problem that Congress cannot, by diligent efforts and careful legislative drafting, make ten times worse." -- Me

"What the hell is an `Aluminum Falcon'?" -- Emperor Palpatine

"Eck!" -- George the Cat

Monday, March 17, 2008

George W. Bush, Proprietor

Since 2001:

(H/T to Political Cat via Alternate Brain)

Here is the scary thing, which Political Cat picked up on: Foreigners (banks, investment houses, governments) had routinely been purchasing a quarter of the Treasury bonds offered for sale. The last Treasury action saw the percentage of foreign purchasers drop to less than 6%, a falloff of 75%. In short, the foreigners are losing their stomach to finance the spendthrift policies of the Bush Administration. The problem is that as the U.S. economy melts down, in part due to the ministrations of Herbert Hoover George Bush, our economic disaster will spread like a pandemic around the globe.

If foreigners are unwilling to finance U.S. debt, then the the ability of the Federal Reserve to do anything now may be crippled. The Federal Reserve cannot reassure the global financial markets if those markets have lost faith in the Dollar as a currency. If the markets continue to lose confidence, then a global economic meltdown is not far away.

This is the part where, in a just world, you would see George W. Bush and Alan Greenspan being frog-marched out to the Washington Mall to be publicly executed on the lawn in front of the Capitol, watched live by a world-wide television audience. It was more Alan Greenspan who gutted banking regulations under an ideologically driven belief, which he apparently took from the writings of Ayn Rand, that given total freedom, the market would ensure that bad things never happened. It was George W. Bush's administration that removed banks from control of state regulators and placed them under the Office of the Comptroller of the Currency, an agency whose main job was the approval of the location of banking branches.

Greenspan has shown himself not to be the "Sage of Wall Street", but an ideologically driven fool. The current melting down of the financial institutions as a result of the reckless lending of banks who were free from effective regulation could have been foreseen by any economist who looked at what happened when other regulated industries were deregulated (can you spell "Enron").

By way of an analogy, this is what happened:

During the winter of 1943-44, the US Army was faced with having to fight in severe winter conditions in the mountains of Italy. The Army sent over a sufficient supply of warm winter coats and boots to equip the soldiers fighting on the front lines. The problem was that as this huge supply of warm clothing made its way to the front, the REMFs (I think they called them "Pogues" in that war) helped themselves to what seemed to be an endless supply of warm gear. None of the rear-echelon soldiers thought they were doing anything wrong and certainly they didn't realize that there was not enough gear to go around. But the end result was that a lot of GIs in the mountains spent a miserable freezing winter wearing outdated winter uniforms while the REMFs were toasty warm.

Certainly none of the people at the subprime lenders or those who "securitzed" those loans into mislabled triple-A rated securities thought they were doing anything wrong. They saw a way to make a lot of money from a housing market they thought was going to go up forever and they jumped at the opportunity.

But if history has proven anything, it has shown that there is another word for complete deregulation, and that word is "anarchy." We do not "deregulate" the flow of traffic on the highways (imagine removing every traffic light from a city and letting the traffic flow sort itself out). Anarchy in food and medicine production was the reason why the FDA was created a century ago. Recently we have seen how well reducing regulation of slaughterhouses has worked out, which is why massive recalls of beef are becoming more and more common. We do not trust the stores to have fair scales or the service stations to fairly meter out gasoline, which is why there are government officials whose job it is to check those things.

Like it or not, there is a place for government in ensuring that that there is a level of fairness and disciple and that good practices are followed. The Ayn-Rand level of free-marketeers are as misguided and ideologically blinded as were the classical Marxists. Both schools of thought should be consigned to the dustbins of history.


Bustednuckles said...

LMAO. we were at the Brain at the same time and didn't know it!

The Earth Bound Misfit said...

I expanded on things after posting it the first time.

BadTux said...

If I have any economic philosophy, it is that of pragmatism. Where free market economics works, use it. Where it doesn't (such as, say, for the provision of local streets or police services), don't. People who believe in -isms of any sort (other than pragmatism) are anathema to me, because they end up hurting real people with their ivory tower bullshit. Do what works -- not whatever your particular ideology says to day. Bushevism, Bolshevism, bah humbug. Both -isms that need to be consigned to the dustbin of history.

- Badtux the Pragmatic Penguin