For the past several weeks, the U.S. has gone through a series of "Black" Mondays, each weeks' market opening looking more bleak than the lasts'. With the failure of Merrill Lynch and Washington Mutual, the U.S. economy seems to be vanishing right before our eyes, like some twisted game of whack-a-mole. Yet, the economy might not be as "depressed" as it might seem.
John McCain was criticized recently for the comment that the fundamentals of our economy are "sound". This media and liberal blitz on the Arizona senator is actually an insult to the "middle class" that the Democrats say they fight for. The "fundamentals of our economy" are us: the working class of America! We are the ones who pay the bills and pay the merchandise and produce the goods and services. When McCain made that statement he was expressing his confidence in the American people; a confidence which the Democrats apparently find ludicrous.
The economy in the U.S., to a large degree, depends on you and me. This makes sense when you remember that much of the crisis of the Great Depression was public panic and bank rushes. The most important thing for us to do right now is to remain calm and work at being wise with our money. The market is not collapsing. In fact, what is truly happening is that we are seeing the actualization of the economy: the bubbles are popping.
In the process of dealing out mortgages to people who could not afford the house they were buying, banks and investors inflated the housing market. Homes and real estate were valued at much higher than they were actually worth because more people were given the money to buy them. As these prices rose, we left the realm of fiscal reality. The situation was not helped by the incessant slashing of interest rates by the Fed, discouraging savings and encouraging buying... when we still couldn't afford it.
So what has happened? The bubbles are popping; the market is returning to its true size and companies which hoped a ride on the runaway credit line are paying the price or biting the dust.
Do we really need a $700 billion bailout then? In my opinion, absolutely NOT. The last thing we need is the government trying to fix our problems; they do a fine enough job creating and then complicating them. And, as this bailout talk has shown us, the U.S. government has only one source of income: the American people (actually, they have another source: China. That's right. They are pretty adept at selling us into the debt of the great [communist] Peoples' Republic.)
I say that we leave these bad mortgages alone. We would be foolish to buy them; its a terrible investment. Instead, let's insure mortgages much like the FDIC does banks. Things are going to be a little shaky for a while as the markets settle down to normal, but we will recover. Let's not forget that the market was up on Friday, without any government intervention.
Americans must be more responsible and we MUST payoff our debt to China, a debt which is the greatest security threat in the U.S. today.
3 comments:
Just a couple of observations:
First, it is interesting to me that you chose "Don't Need A Weatherman" as the title for your blog. I am assuming it is a reference to the same Bob Dylan song that the Weather Underground used back in the late '60s. The irony I see is that your political views seem to be at odds with their "New Left" ideology by at least 162.4 degrees. Of course, they could have benefitted from some help in determining which way the wind was blowing. Is this a blatant jab at them?
Second, I agree with the gist of you argument. Our government has proven itself very competent at making mountains out of mole hills in its attempts to intervene in the private sector. I will admit that some of its efforts in "bailing out" companies were successful-- at times even earning the government returns of as much as 33% on its investments in the long run. At other times it has broken even, and still at other times it has failed to recover the money it invested (i.e. money it took from tax payers).
[For some interesting stats, see this site: http://www.propublica.org/special/bailout-aftermaths#nyc]
Bottom line: A "bail out" would be a hit on the pockets of taxpayers in the short run. And the history of this kind of thing has been ambiguous in the long-run. Even without reference to economics, I am with you: seems like the more government we come across the more problems we see.
I am glad you are keeping this blog. I respect your thoughts and, even if I didn't, I would probably still read just because you are such a talented writer. Kudos.
Thanks for the comment akgoodman.
I'm very impressed that you picked up on the Bob Dylan reference and even more impressed that you caught the ties to the Weather Underground. And yes, it is a jab at the "New Left", that is, post-america.
Hey Blakeford.
I agree with you and Ron Paul. Let the economy liquidate/resolve on it's own. The popping bubbles illustration gives the best mental picture that Ive heard thus far.
Interesting fact; I was reading the Constitution again today and ran across something very cool:
"We the People of the United States, in Order to ... promote the general Welfare, ... do ordain and establish this Constitution for the United States of America."
(Also, "Welfare" is used in Article 1, Section 8)
What I find most interesting about this is the definition of "welfare" in America today that is NOT the definition originally. According to www.usconstitution.net/glossary :
Welfare
welfare n. 1. health, happiness, or prosperity; well-being.
Welfare in today's context also means organized efforts on the part of public or private organizations to benefit the poor, or simply public assistance. This is not the meaning of the word as used in the Constitution. [END]
I find that amazing that our precious little government is taking the liberty to protect our welfare [programs and programming].
Ok, I'm getting off this high horse now.
The one who calls you Blakeford.
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