Wednesday, September 17, 2008

In the wake of ANOTHER bailout...

I've absolutely had it with CNN and every other news network... you know what... strike that, it's not even their fault this time - it's the stupid election that's brought our imbecilic politicians into the national spotlight blathering on about their half-baked plans to "fix the economy".

So let's get a few things straight right off...

  1. We are in extremely troubled economic times in the United States
  2. Government almost single-handedly created the mess we are in by setting up the conditions and applying the pressures on (especially) the housing/investment banking industries for it to become inevitable.
  3. There is not now, nor has there ever been a free market in the United States. As such, it is impossible for any of our current crisis to have been caused by the market - let alone "too much economic freedom", which is laughable at best.
  4. What politicians label "deregulation" is not, and as far as i'm able to tell, has never been anything but special favors being granted to certain companies or industries and is not at all an increase in freedom - merely a government-imposed and unnaturally lopsided arrangement of corporate power.
  5. And worst of all, our two "leading" candidates are economic morons...
John McCain: Has admitted that he knows very little about economics and is mistrustful of the market - is now blaming investment banks for the economic downturn. Also still believes that the "fundamentals" of our economy are strong, yet has policy prescriptions that will crush any ability to return from this slump.
Barack Obama: Especially based on his current rhetoric, seems to actively despise the very concept of economic freedom - blames Bush's failed economic policies for current market crisis... and though he's not entirely wrong there, he doesn't seem to realize that Bush's policies are in reality almost perfectly mateched with his own ideology (only the presentation is different... and perhaps the specific people benefits are directed to).

That's the set up... but there's so much more...

First off, anyone in the news or other media who says anything about either a "failure of the free market" or "deregulation caused these problems", is either a liar, stupid or just plain ignorant... there has never been, in this country or any other, a free market in any greater sense than the youthful trade of baseball cards (and even that sometimes involves some thuggery), and I'm not really sure what anyone could possibly be referring to when they speak of "deregulations" in the United States.

I have yet to see a single instance, in my lifetime or looking back on history, where an industry was given more freedom to run their operations without government interference rather than less. What people typically seem to be referring to is actually government subsidizing an industry, granting special rights to some companies within an industry or giving certain companies other special assistance, often as a result of sweetheart deals with corporate lobbyists & "corrupt" politicians. However, since the politicians are really functioning in exactly the capacity one might expect with the power we have granted them, I do find it a little hard to call them corrupt... and I certainly can't blame companies for doing whatever is within their (quite legal) power to make sure that their businesses get those deals instead of one of their competitors.

In each instance however, these deals always come with increased government meddling, so I challenge anyone to come up with an example of government actually deregulating an industry in a meaning ful way - a relevant example of this might have been to get the government out of the business of setting interest rates (which I know is way out of bounds in our country's love affair with Keynesian philosophy), and letting banks set their own rates for borrowers and also allow them to decide what level of risk they felt was acceptable.

I can almost guarantee you we wouldn't be in the condition we are in today had that been the case.

But instead, the Fed sets interest rates incredibly low, and politicians harass banks into lending large sums of money to high-risk borrowers in some kind of populist, "everyone should own a home!", love-in. So what do banks do?? Umm... right... they lend money out left and right. And of course, if you're a low-risk borrower, you can now get access to a HUGE loan!! Hooray... But... Realtors know all this. And they know that now, because of the way the lending structure works and that people can get larger loans to buy homes with, they are able to start charging significantly more for the homes they're selling. This creates a bit of a feedback loop as the price of housing skyrockets beyond any reasonable inflation rate (and far and away beyond the ability of any average income-earner to payfor it all), and banks keep lending to virtually everyone. Suddenly, we're left in a position where all our nation's banks (not just the major ones) are wildly overextended, and have taken on the burden of loaning to people who they should have known wouldn't be able to pay them back. But you can't really blame the banks since they were doing what they were told to do by the government and the Fed's interest rate policies combined with the FDIC guarantees made it not only possible, but actually desirable for banks to do so... Besides, never underestimate the pressure that government is able to wield over businesses, the way things are set up now - do what they say and you might get some tax-breaks, subsidies, special zoning rights, and other treats... go against what they say and you get taxed more heavily, strong-armed by policy, trapped with other legislation and probably a big fat IRS audit.

Point is, it's wrong to blame banks.

It's also equally wrong to blame borrowers. How can you blame a layperson for wanting a home? Or a car? Or hell... even a flat-panel TV? If we blame the borrowers then we're blaming people who want to improve the quality of their lives (perceived or actual) for doing something that any rational person would do given the options presented to them.

Borrower: "What's this you say? I can buy a home with no money down and only pay a small interest rate for the next 4 years??"
Bank: "Why yes sir, but of course the interest rate will be variable and could change later on."
Borrower: "Well, that's not for a few years right, I'll be doing better at work then and right now my family will be able to have a nice home... we'll do it!"
Bank: "Great, sign here..."
Now... I'm not saying that there aren't banks out there who deliberately obfuscated exactly how variable these rates were and much like credit cards, I have to imagine that they all came up with hidden fees and other surcharges designed to take advantage of people's ignorance of bank policy and the impossibiilty of being able to comprehend the legalese that is the fine print of all the agreements we sign. It's certainly a bit unfair from an information standpoint - lord knows I know that all too well from my personal experiences with creditors and with fraud policy. If my folks are reading this, they know what I mean better than anyone.

And of course... some people were just willfully ignorant, not doing their homework or doing the math before accepting agreements that they shouldn't have accepted. Again... I've also been guilty of that in the past. Though... I'm 25 now, most of my financial indiscretions happened between the ages of 18-22, and granted, many of them are still haunting me in a big way, but the thing is... now I know better. So I can't imagine being a 50ish man and still making such foolish decisions.

But if anything, this whole thing shows us that we all need to be looking out for ourselves and not expecting some massive bureaucracy to protect us. Government created the conditions for these problems to exist and though they always claim that they are overseeing it all, look at how many people slip through the cracks. Without the meddling in the first place though, none of this would have happened!!

So my question is, when will the asinine narrative end and the American people (and really, citizens of the world) wise up!? I'm so outraged right now I can't even properly form the thoughts to express what I want to get across. I need to break this down... We've had 80 years straight of expanding government, deficit spending, an increasing national debt and a Marxist central bank "managing" our economy in defiance to both the very idea of freedom and any truly rational economic thought and a market so crippled by complex taxes, regulations and government meddling in private affairs that I seriously wonder why 99% of the large companies haven't just left for greener pastures by now.

The obvious answer to that question is of course that very very few countries are any better than the US - and the ones that are, are quite often unattractive for other reasons... like Singapore (shout out to James!), where even though the economic conditions might be a bit better, no one likes the idea of being caned for littering.

But seriously... between all that, the development and gross expansion of the unconstitutional income tax (no the 16th Amendment did not establish an Income Tax, it established a corporate profits tax... but then not one, but two supreme court decisions were blatantly ignored by the actually greedy politicians and shazam... here we are!), the destruction of our currency into a fiat, faith & bond based one, and the constant attempts by everyone in government to dominate our economic choices and destroy liberty, how is it surprising to anyone that we're in a rough financial position now?

Yet here we are in September of the year 2008, two months out from yet another presidential election and the only two viable options are both people who think that an egregious expansion of what caused the mess in the first place is somehow going to be a miraculous cure.

The narrative for politicians is just too rich isnt it? Blame corporations - no one likes them anyway, blame banks too - those jerks!... Use it all as a pretext to expand your authority, your power and all the rights and "privileges" that go with it.

This all makes me really want to just disappear, get off-grid, off-radar and go spend the rest of my life with no ID on the beach of a small island in the South Pacific. I wonder how to make that happen... any ideas?

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