Chicken Little, remember that guy, he ran around crying out, “The Sky Is Falling, The Sky is Falling!” Wonder whatever happened to him? Pretty sure that if by chance you have turned on a television lately, you have heard the same cries out of Washington DC. The odds are that your favorite DC intellectual type has uttered some dire warning like that.
After all, we have all heard some authority like President Bush or a highly respected news anchor make such a claim. All right-thinking people know that we just have to give $700 billion to the Wall Street crew or the economy will collapse. We are going to have a depression.
Now Mr. Bush doesn’t have all that great of a track record, if he were to stand up in a crowded movie theater and yell “Fire!” I seriously doubt if anyone would leave. He certainly isn’t an expert in any sense of the word. But that is just my opinion on it (and I am sure I will pay for it later).
Did you ever stop and consider, that a lot of these people don’t have a clue as to what they are talking about. Another thing that bothers me is “Who is it,that came up with this magic number of $700 billion?” What if it is only say $75 Billion … who keeps the change? Roll that one around in your head for a moment or two.
So, the great Washington give-away may or may not have passed. Round and round she goes, where she lands, nobody knows! As of Sept, 30th, the national debt officially stood at $10,000,000,000,000.00 and that was BEFORE THIS CASH COW was given away to the highest bidder. So what happens now you ask? I hate to sound like the voice of doom, but this isn’t over by a long ways.
For instance, I am being told that because companies can’t get access to credit they might have to lay off workers. United and GM may have to begin laying off workers next month if the credit squeeze doesn’t ease. Now please remember, 20 airlines are near bankruptcy right now, and GM is still making 85 vanilla wafer, cookie cutter models of cars, that get terrible fuel economy, so that is going to happen whether or not Wall Street gets a bailout or not.
Of course if United and GM actually do lay off workers, the credit squeeze will be a very small part of the story. The airline and auto industry face really big problems for reasons that have nothing to do with the credit squeeze, although paying higher interest rates on borrowing clearly does not help.
Rather than listening people who actually understand the economy (I doubt a single economist in the country believes that the bailout is the best way to help the economy) they have shouted down and shut out critics of the bailout and have been willing to spread all manner of outlandish scare stories to advance their case.
Why are we listening to this Texas Waddie, the captain of this rudder-less ship, mumble and complain about Congress, why isn’t he down in the halls of Congress kickin some ass?
It was impressive to see the mass outrage over the bailout at least temporarily stop the bill. What was especially revolting, downright disgusting, was Nancy Polesi standing around “congratulating everyone” for NOT doing anything. The bill or the fix, whatever you want to call it, “failed” it did NOT pass … Why is she congratulating everyone on national television this evening?
Now that the government has been terrified into rubber-stamping the Wall Street bailout, what happens now? When they all finish slapping each other on the back for a lack luster performance, then what?
The credit crunch filters through to consumers: Credit cards, home equity loans, mortgages, car loans, etc., get more expensive, putting more pressure on consumers and forcing them to cut back further. Now like the greedy money whores they are, bankers are actually with-holding credit to “Good Credit” people, putting the squeeze on.
American consumers continue to pull back, housing continues to fall (as of July, the year over year declines were still accelerating, my house for instance has lost over $3,000 this year, and I am considered lucky), companies begin to cut back, which leads to layoffs–which puts more pressure on consumers.
Things are not all that much better in Europe, Asia, and, eventually, emerging markets will also suffer. This is already has happened, and everyone else is later in the cycle than we are.
The stock market continues to fall, as corporate earnings come under increasing pressure and hope for an early 2009 recovery fades. Analysts are still expecting huge growth in S&P 500 earnings for next year. These estimates will get cut by at least a third. The government enacts further measures to try to stop the fall in asset prices (stocks, houses)–including an expansion of the bailout plan–but these don’t work. Governments always try to do this. They never succeed.
All they manage to do is delay the inevitable.
Somewhere down the line we will have the usual. A new round of white-collar prosecutions send a new posse of corporate villains to jail. Some will be guilty. Some won’t. All will be hated. The law is for the poor … And justice of course … Is for the Rich.
The government announces a new New Deal (sound familiar?), finally investing in the country’s infrastructure, in the hopes that this will stimulate the economy (which it will). Investments include broadband, green technology, solar, wind,wireless, physical infrastructure. The new Green Wave sweeping the country right now shows preliminary figures (estimates) of over 2,000,000 new jobs in this one sector alone could be possible.
Which sounds swell, except we have already lost over 600,000 jobs in the U.S. right now.
Wait it gets even better …. Eventually, asset prices will bottom: Housing down 40% in real terms, the stock market down at least 50%. With luck, this will happen by early 2010, so the recovery can begin. The stock market finally begins a new, long-term bull market, in which stocks once again return 10%+ per year. Unfortunately, most Americans will be so sickened by the stock losses they’ve sustained since 2000 that they’ll miss many years of it.
Throw this one out on the porch and see if the cat will lick it up.
If we give them the $700 billion, make them issue stock. Make ever recipient of the bailout issue stock in return for “our investment.” Make them sell a stake in their companies for the compensation. Another old saying comes to mind here. “People who do not learn from their mistakes, are prone to repeat them.” And the other saying that comes to mind is …. “History has a bad habit of repeating itself.” … You choose.
This is not the first time this has happened:
“Gentlemen, I have had men watching you for a long time and I am convinced that you have used the funds of the bank to speculate in the breadstuffs of the country. When you won, you divided the profits amongst you, and when you lost, you charged it to the bank. You tell me that if I take the deposits from the bank and annul its charter, I shall ruin ten thousand families. That my be true, gentlemen, but that is your sin! Should I let you go on, you will ruin fifty thousand families, and that would be my sin! You are a den of vipers and thieves. I intend to rout you out and by the Eternal God I will rout you out. If the people only understood the rank injustice of our money and banking system, there would be a revolution BEFORE MORNING.” — Andrew Jackson (7th President of the United States (1829-1837) Nickname: “Old Hickory” Religion: Presbyterian, Occupation: Lawyer, Soldier, Political Party: Democrat).
Tax dollars are “easy money” they have no sweat equity, no one has to work hard for them, so therefore, it is basically a give away. We give them $700 large now, they will be back in three years, for even more, it is the nature of the beast.
“The cartoon was published by the Center for American Progress” (online)