“Friends, Romans, countrymen, lend me your ears; I come to bury Caesar, not to praise him.”
I was writing a post about my ten favourite military blunders (did you know Custer’s men were drunk?) but seeing as the collapse of the west’s financial system is a fairly important story, I thought I’d press on with that. I’ve done more reading, and many thought provoking comments were left on my last post, so once again into the breech. Bush and Paulson still want $700 billion, a lot of people are getting their backs up, though how serious resistence is remains to be seen. In no particular order, more thoughts and observations on Bush/Paulson’s demand: “$700 billion or the economy gets it.”
Someone pointed out that when people say “you have to take this offer right now,” it’s usually a sign that you are being handed the short end of the stick. In fact it’s a used car salesman tactic. It’s also a bit suspicious that this is being presented as the “only” option. I’ve done a lot of reading and there are a lot of ideas about what to do about this financial crisis from people with expertise on the subject, and handing Bush a blank check isn’t very high on the list of proposed solutions. Just for starters, how about letting the people who made this mess go bankrupt, and help out the Americans who were screwed by unscrupulous lenders?
Speaking of which, a commenter pointed out that while greed in high places led to this, lots of poor people took loans they couldn’t afford in their own attempt to get rich. Isn’t it their fault as well? Well, yes and no. Yes, in the sense that everyone is ultimately responsible for the consequences of their actions. No, and it’s a resounding no, in the sense that one half of the population is below average when it comes to judgement and intelligence. Is it OK for smart educated people to manipulate lesser intellects into ruinous agreements? No. If a society allows the rich to simply prey upon the poor, everyone suffers ultimately. It’s called usury, and even the ancients understood how destructive it could be.
Moving right along, another commenter pointed out that capitalism pretty much has to have credit to keep going. I mean, buying a home or a car requires credit. And both small and large businesses require it, at least for the most part. So of course we have to bail out the finance industry so that they may continue to provide credit so that business may continue. Right? Wrong. The idea that bailing out the big guys is the only solution assumes that the centralized credit market that has grown over the past few decades is the only way to go. That’s a hell of an assumption, especially considering its performance. At the core centralized banking creates something called malinvestment, I recommend studying the Austrian Business Cycle Theory to understand the concept.
I certainly agree from my readings that the centralization of the credit market is the problem, not the solution. So propping up the centralized credit system may make things better in the short run, but at best it is a stopgap measure that just continues a failed system at public expense. It’s not that there isn’t any money out there to be loaned, it’s that we have allowed only the central pools of money to be the entire nation’s (and by extension the western world’s) source of credit. Not only did there used to be regional banks, there was a time a few decades ago when interstate banks weren’t even allowed so that a bank failure would only be a regional problem. This centralization of USA/western credit is what the Chinese are talking about when they say that the bailout is an American attempt to rule the world’s financial systems.
And it’s an attempt that is doomed to fail, because the system it is meant to revive is already dead. The bailout is just a Frankensteinian effort to animate a corpse for a few more months until the whole mess can be passed on, or to dump blame on Congress if they fail to pass the bailout. Ahmadinejad may be a out there in some ways, but his comments that we are seeing the end of the American Empire are sadly right on the mark. China and its friend’s finances are in great shape, it’s America and its allies that are going down the tubes.
“Hath given forth upon usury, and hath taken increase: shall he then live? he shall not live: he hath done all these abominations; he shall surely die; his blood shall be upon him.”
(The above image and quotes are both safely beyond copyright protection. The title quote is from Shakespeare. The bible quote is from the King James Bible. And the image is of a painting painted in 1798 by Vincenzo Camucci. It’s a painting of Caesar being assassinated, though I chose it to represent the seriousness of the current situation, the possible death of the Republic…and the end of our current would-be Casar’s reign. I don’t know what is going to happen after Bush leaves office, but it’s going to be a hell of a ride.)