printHere’s an excerpt from my new WND column:
“A crisis that was created by cheap credit must be corrected by less of the same. … How does a bankrupt person become solvent? He ceases to borrow and spend, pays down what he owes and lives within his means. But Bush and the bailout bandits (here I include Obama and McCain, who’re down with destroying the economy too) would like you to believe such eternal verities do not apply in macroeconomics.
Bush’s idea of a correction is thus to ‘free banks to resume the flow of credit to American families and businesses.’ In the man’s own crazed words!
Those who buy the Bush bailout are – to use the incomparable Paul Gottfried’s coinage – ‘at least as dumb as turkeys, the mouths of which have to be shut when it rains, lest they swallow too much water and drown.'”
An unlovely snapshot of candidates Obama and McCain. …”
The complete column, “Bush & The Bailout Bandits,” is now up on WND.
Update I (September 26): To Robert and all my readers: Surely you know by now that if my image is not on the WND masthead, my weekly column is still on the Commentary Page? If you don’t see my image up on the WND nameplate, please look for it on the Commentary Page. My image is more often than not up there, but, since there are more commentators than slots, there is a rotation. On my new website, ready to launch any day now, you will be able to sign up for the weekly newsletter.
Update II (September 27): I would not ordinarily publish a letter, such as Tom’s hereunder, urging—in the face of all that has been written by this writer—more counterfeiting of the currency, debasement of the coin, and inflation of the money supply. Fraud all. Criminal too. With respect, Tom and his idol “Mort” do not understand a thing about money and the economy. However, this might be an opportunity for Tom and others to study further. (Mort of the halls of power is a goner.) I count on our classical liberal readers to recommend a few classics by Rothbard, Mises, and others. But Tom may want to reread “Bush & the Bailout Bandits,” and move on to the following:
“US In The Red And Getting Redder” (Note the Chinese’s response to the threat of inflation: exactly opposite to ours. They’ve hindered lending and made living high on the hog harder.)
“Politicians: Stop ‘Stimulating’ In Public”
“Inflation 101 for Women Pundits & Other Tyrants”
“The Central Bank’s Game is the Same, Whoever’s the Name”
“Canadian Finance Ministry Pulling Bank Strings as Election Looms“
Bush, Congress, et al are an appalling bunch. If this bailout goes through I should like to see another campaign begin. The campaign to oust every last member of Congress – no one spared (alright maybe a handful – the faithful remnant).
Ilana, I think this is probably the only time I’ve ever disagreed with you on anything significant.
We are in a serious liquidity crisis. Bush, for probably the first time in his Presidency, isn’t exaggerating about that. And you are absolutely right about how we got into it — this one was 100 percent made in Washington. Wall Street, while contributing the to mess, merely gamed a corrupt system.
The problem is, a lot of innocent people are going to get hurt if the credit markets collapse completely. Businesses that deal in goods — that is, most businesses, everything from farms to factories to auto dealerships — require short-term credit to finance their inventories and receivables. Without it, they would have to cease operations and lay off employees.
Ironically, one of the effects of doing nothing is to direct whatever money is available for funding short-term credit to the U. S. Treasury. This is already happening, judging by the results of recent Treasury Bill auctions.
A “bailout” could work if the government eschews social engineering and restricts itself to restoring liquidity to the economy. And if it sells the securities it buys back to the private sector as soon as the housing market begins to recover.
I know that’s a big “if” — the Democrats are trying to write into the bailout provisions that would continue the policies that got us into this mess in the first place.
I know this is “socialism”. But we already had socialism in the mortgage industry. There are just no good options. Only less bad ones. If anything good comes out of this, it will be the permanent demise of Fannie Mae and Freddie Mac.
Dear Ilana,
I enjoyed your article. You are so right. McCain and Obama are sitting on the fence afraid to move, as afraid as J. Alfred Prufrock was of disturbing the universe. How sad that our nation has lost its grit and determination to pick ourselves up and go on. We must wait for government to fix it for us.
Up till this moment, I have not seen any leadership by John McCain, only incoherent mumbles about needing to work together. Work together with whom? Swindler-in-chief Judas Bush and the Federal Reserve Banks swindlers and the Wall Street Crooks and thieves and their Congressional and Establishment News Media lapdogs? McCain is showing his true colors as a Washington DC Insider Crook, NOT as a maverick or a populist reformer.
Ilana, thanks for this great essay describing the delusion and dissembling of the Bush Bailout Banditos. I love your reference to the bait and switch tactics of these con artists, who spin the notion “that the eternal verities do not apply to macro economics.” (…nor to war, and its provoccations’…)
We live in an age of mass delusion. As you persuasively point out, banks were arm-twisted through various state programs to extend sub-prime mortgages to deadbeats. However, the shocking decay of lending standards extended into virtually every area of economic activity: corporate bonds, prime residential, commercial real estate, credit card debt, municipal bonds, etc.
The delusion was that if everyone was doing it, it must be OK. Supposedly intelligent investment professionals bought “credit insurance” blindly–including from boutique investment shops that clearly could not weather a windy day, much less a recession.
We MUST deal with the crisis without delay — http://www.southalabama.edu/history/faculty/rogers/348/reichstagfiredecree.html
as our leaders tell us. Resistance is futile! In fact, I have to say that Paul Gottfried’s “GOP turkeys” column was also on the mark about Republican addicts who will rationalize ANYTHING: http://www.takimag.com/blogs/
Well, as long as we are going to violate the US Constitution, let us do it truly with consent of the governed (e.g. sheep) – let us agree by national referendum to raise ALL taxes – income, social security, tariffs, gasoline, corporate, inheritance by 25% for this $ 700 billion bailout. We may, in fact, get it back later! {fat chance} If the voters actually consent to a 25% across-the-board one time “bailout tax increase”, then we should do it. After all, it is for our own good! No currency debasement – just everyone gets to pay more taxes so that my Citicorp dividend checks keep coming.
// {{ Yes, indeed, Nixon and Bush have done what Khruschev only threatened to do – bury capitalism! }}
I voted for Bush in 2000; I thought Al Gore was the bigger idiot. Looks like I was wrong.
A pox on both the DEMONcrats and the REPUGNANTcans for offering up mental and moral midgets for the most powerful office in the world (it won’t be for long).
My great regret is becoming that I could never convince my wife to leave the country if it implodes. I have managed to persuade her regarding home-schooling, but leaving the country would be hard. At least she is trusting my financial decisions (I just bought more semi-numismatic gold), so we have some funds to tide us over when the results of the bailout hits. I plan to sell my house as soon as possible (one I am not living in currently) and hunker down to wait on better times.
A good friend of mine on Facebook wrote a joke: “I don’t have any money, so I’m going to go ask the government for my own $700 bailout”. He’s a funny guy, but it’s pretty hard to laugh about this statist coup.
fractional reserve banking in a nutshell
They counterfeit some money
and to make their crime complete,
they loan it out to others
to involve them in their cheat.
This is the root as Ludvig von Mises, F.A Hayek, and Murray N. Rothbard pointed out.
John Maynard Keynes
you’ve had your fun.
Now we find we’re living
in your “long run.”
At the risk of sounding cold-hearted, why is it wrong that individuals who haven’t read (or didn’t understand) the fine print on their mortgage lending agreements, and who now find themselves in financial trouble due to inability to pay, lose their homes? Why is it wrong that banks and institutions who’ve made loans to less-than-credit-worthy borrowers go out of business? Home ownership, while desirable, is not a right guaranteed to Americans by the Constitution.
In the early 90s, after the Berlin Wall fell and the Cold War ended, I saw many productive American technologists laid off from their jobs. They had to downsize their living standards due to loss of income, and I wouldn’t be surprised if some, perhaps many, were unable to pay their mortgages. What makes this situation different? Apologies in advance for sounding naïve, as I’m not a financial genius.
Q: Why $700,000,000,000 ?
Besides being a rather overtly spectacular demand, this is a very “specific” number.
How was this particular sum determined to be “THE” critical amount of precious U.S. taxpayer-dollars crucial to both rescuing America’s financial system and ensuring Global “free market” credit stability?
I decided to research the “rationale” put forth by “the experts” in determining this “magic number.” I expected to find a cogent and thoroughly reasoned explanation. Here is the brilliant “cost-analysis” strategy I discovered:
Brian Wingfield and Josh Zumbrun wrote for Forbes that “some of the most basic details” of the plan, “including the $700 billion figure Treasury would use to buy up bad debt, are fuzzy.”
An undoubtedly highly-paid “Spokeswoman” for King Henry’s Treasury Dept. was then quizzed by Forbes and had this informative response:
“It’s not based on any particular data point. We just wanted to choose a really large number.”
Oh, really.
Allow me, your astonished and humble taxpayer, to interpret such a fascinating and very revealing bit of info thusly – for it may as well as have been said:
“Let them eat cake.”
Szasz
Excellent article.
An old saying sums up the bailout nicely: “Throwing good money after bad.”
(Does anyone else feel an irresistible urge to throw a good punch into Barney Frank’s smug mug?)
“(Does anyone else feel an irresistible urge to throw a good punch into Barney Frank’s smug mug?)” Bob Schaefer
You must be kidding. What if you cut your hand on his teeth? You may snip this Ilana, I could not resist.
Friday, went to WND and found that Hal Lindsey had Friday’s comments instead of you. Bored and disappointed I clicked Hal’s picture. Then I noticed your byline. I’m afraid to look at my financial websites right now won’t till the dust clears and you are right on the money, it is a mess caused by socialistic government and socialistic business working together always ignore sound economics . Nationalizing these businesses won’t work either except to create more of the same. The only thing we can do is ride it out. Fat chance of that though.
The only person that I have seen on television of national and financial prominence who has made any sense about the mortgage crisis 700 Billion dollar bailout swindle has been Mort Zuckerman, as seen on the McLaughlin Group. I strongly recommend that the national television news media interview Mort Zuckerman, and I strongly recommend that the Republicans follow the advice of Mort Zuckerman, by increasing money supply and capital for banks, by investing in bank stocks and by loaning money to banks; but NOT buying the bad mortgage securities from banks, as stupidly suggested by the Bush administration.
[See Updated Post.–IM]
Tom,
The Mystery of Banking by Murray N. Rothbard will make clear to you the criminal roots of fractional reserve banking and the devastation (via boom-bust cycles and inflation) it wrecks on society.
It is available for free from mises.org or as a newly released 2nd edition hardbound from that same site. This book is a classic!
In theory, is this practice more Socialist or Fascist?
[They are two sides of the same coin. The bailout has aspects of both. This is why both Democrats and neoconservative like it, but the hard right rejects it. Interesting point.–IM]
My 11 year old daughter’s Social Studies teacher had the kids watch the debate and write their impressions. Anna wrote something like (not exact wording): “They both were for the economic plan but I don’t know what it is. They both talked about Fannie Mae and Freddie Mac but I don’t know who they are. They both sounded full of bologna and I was bored.” – I think she captured the essence of the differences between the two parties – Myron.
The Dow down 777.68. Better than down 666.68. Coincidence?
I’m currently considering bringing this to the attention of my poly science professor. I have heard him make a lot of economically bogus arguments.
The only thing that makes me hesistate is the amount of ruckus that could go down.
Then again… true liberals are known for being troublemakers.
Hmm…
I just wanted to defend the honor of turkeys, which are not, in reality, dumb enough to drown in the rain, staring up at the sky. In their natural environment, turkeys are clever and tricky, very hard to kill or capture. Their reputation for stupidity comes from their behavior in the large, artificial flocks that are created by humans, using modern poultry methods. I know this from first-hand experience on a poultry ranch. After those years, I observed humans living in crowded, artificial conditions in cities. Amazingly enough, they, too, were not as smart — and often seemed to behave at least as badly — as turkeys in human-made pens.
Overcrowding negates the natural instincts and talents of both turkeys and humans. One thing that turkey handlers know is how to stampede the flock so as to get the birds themselves to run toward the abbatoir. Looking at the “financial meltdown,” I see that the human handlers have similar knowledge. For the moment, we seem to have resisted their tricks. But how long until we succumb to their wiles and stampede in the desired direction?
Well guys, I am back. The turd hit the fan (I guess), and I went and sat down with my political science professor about the current state of our economy, and economics in general.
What started out as a conversation between two adults (one younger than the other, of course) ended up with me being kicked out of his office. For the first time in perhaps ever, I have been kicked from a teachers office.
What started the conversation along the lines of economics was his question of why I did not speak my mind during class, and that his grading up ‘curve’ applies only to those who participate in class. I told him that I prefered to stay away from class dicussions as my political idealogy and economic beliefs might upset some people.
He then asked what I would do about the current financial crisis.
This is perhaps when I should have said nothing, but I continued to try to give a defense over pure capitalism, and unrestrained banks and trade. His first comment, a put down, was that I he wasn’t sure where I was getting my ‘backward’ ideas regarding laissez faire; that system ‘failed’ in 1890. I told him that I politely disagreed with him. He began laughing and saying that I was full of misguided, ‘backward’, and silly ideas. I assumed that he was following neoclassical idealogy and asked him about it. He didn’t know what that was; he again asked me what strange types of economic reasoning that I was getting my misguided information from. (The Economist magazine?)
He said that the only real economics was Keynesianism, as it explained everything. I told him that I disagreed, because of the faulty theory inherent in this economic policy. He became even more agitated and told me that I was now insulting him. I apologized and told him that this was not my intention.
He then told me that his colleagues all agreed with him. I hesitated, and then told him that I would argue my case with them as well. He started laughing and then told me that I was now insulting his colleagues. I sat in silence. He then asked me how many of ‘them’ I had (pointing to the sheep skin’s on the wall). I told him none. He said, ‘Exactly. You don’t have *any* of those. This conversation is now over, I am eating, now please get out of my office.’ (Argument from Authority; a logical fallacy).
None of what I have said is made up, nor is it embellished in any way. I will be writing to my professor to recap exactly what has happened in order for it to be on record. I would like to get a recommendation so that I may get into an honors program, but I am not sure that I will receive it from him.
I would like to say that I am surprised, but I am really not. Nor do I feel bad; it is difficult to feel bad when arguing about human liberty. It is also difficult to feel bad when someone says that they praise diversity of thought, and then does not honor their idealism.
I don’t feel upset, but I feel defeated. It reminds me of the scene in Lord of the Rings, when orcs are breaking down the door to the castle chamber. One of the characters feels he can no longer fight. Another questions why; he responds ‘what can men do against such barbarians?’.
Enter ‘college’.
[You were not only the adult in this unpleasant, unethical interaction; you were the gentleman and the true teacher. I feel for you greatly.–IM]