Comforted

It sure is a comforting thing to know that the people at the top of our economic and financial systems are on top of things.  This statement from Janet Yellen, head of the San Francisco Federal Reserve branch on Tuesday: “Growth in the fourth quarter appears to be weaker yet, with an outright contraction quite likely,” she said. “Indeed, the U.S. economy appears to be in a recession.”

This on Tuesday 14 October 2008. It sure is good to know that the people in charge are ahead of the curve on this.

How can cynicism not become the national philosophy in a time like this.

von Rum

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Check Please.

I am sure you know about the market turmoils on Wall Street this week.  I am sure you know about the ongoing mortgage “crisis”.  You have certainly heard of some government bailout programs.  But have you actually seen the bill for all this?  In case you have not seen it all in one place I suggest you sit down and pour yourself a strong one.

Lets just run down the list since the Bear Stearns bailout then their buyout in March:

Ready?  Here goes.

Bear Stearns: $29 billion

Freddy Mac and Fannie Mae: est $200 billion

AIG: $85 billion

The “Stimulus Package”: $150 billion

A Federal Reserve cash pump this September: $180 billion

A combined US-Euro-Swiss-England-Canada-Japan central bank flow of $247 billion

Seems to me that excepting the last which is multinational, the US government is footing the bill for this economy for something in the neighborhood of $650 billion.  Senator Shelby of Alabama said it could hit $1 trillion.  Yes that is with a “T”.  This is money we do not have and can not raise quickly without either a large tax increase or foisting the bill off to a future (not so distant) generation when it in fact will be a much larger bill due to the interest.

Either way we loose.  Tax increases have historically been shown to be economic killers.  The last thing we need is to tax those who create the most jobs and spend the most money.  The alternative of putting the whole thing off for years is perhaps even worse because it only creates a larger problem in the future.

I am no economics major but I do know a failure when I see one.  If you or I ran a small business the way these financial corporations operate we would be in jail.  If we ran a business the way the Federal government operates we would be hanged.

We have arrived at a crossroads.  Either we accept lower standards of living, crushing European style taxation and government regulation for the sake of maintaining a massive welfare state or we start cutting and slashing deep and now.  The only realistic way to avoid catastrophic debt later on is to drastically reduce government expenditure now.

The time to scale back and then end the massive government handout and aide programs has come.  This may be too much for anyone of a liberal persuasion to swallow but the alternatives are even worse.  If sensible spending had been used over the last decades we might have avoided this.  That ship however has long since sailed.  We can no longer afford cradle to grave care for millions who have come to depend on the government to solve all their problems.  That is not the purpose of government nor is it what it is best equipped to do.

In the meantime there should be a lot of CEO’s on trial for fraud and embezzlement.  That first step should be followed by the outlawing of the sub-prime mortgages largely got us into this.  The greed and amoral business practices at the top are staggering.  I am no fan of heavy regulation but some standards simply have to be kept.

At a time when we need energy, imagination and most of all guts at the leadership level we have…….well it is what it is and it does not inspire confidence.  The only people feeling good about the whole thing right now are riding in Maybach limousines and getting eleven digit checks from the American people.

von Rum

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