Monday, January 12, 2009

Are We Being Hustled?

By Alan Caruba

I am perhaps naïve, but I can’t shake the feeling that the politicians are once again hustling us all with the endless talk about “bailouts” and “TARP” and the constant repetition that the nation is in a deep recession and that billions must be spent to escape it before a depression sets in.

I am well aware that some banks have failed, that AIG the giant insurance firm could not be allowed to fail without taking whole national economies with it, that there are foreclosures on homes when the owners could not pay their mortgages, and that there is something in the area of 7% unemployment. To me, however, that reads like 93% of the working population remains employed.

The problem comes down to getting the banks to begin lending again and, apparently, having thrown $350 billion at them—no strings attached—they still aren’t doing that. The nation got into this mess when banks and mortgage lenders were compelled by law to make bad loans so it is unlikely they are in much of a mood to starting lending again. Let’s begin by repealing or rescinding those bad laws.

Lending, however, is what they’re in business to do and I keep thinking the government, if it is going to do anything sensible, has got to drag some bankers into the spotlight and ask them when they will begin to lend. We went through a song-and-dance with Detroit auto manufacturers that everyone knows will declare bankruptcy about 48 hours after the new President is sworn into office.

What is taking place now is politics, not sound fiscal policy. If we had had a sound fiscal policy none of this would be happening.

Not only did the last administration spend every cent Congress asked it to, but they borrowed and borrowed in order to keep spending. Shame on you George W. Bush. Shame on Republican leaders in Congress and, for the last two years, Democrat leaders in Congress.

Leaders are not elected to bankrupt the nation, but we have a new President coming into office who is apparently convinced that the answer to the present problem is to spend a trillion dollars.
One trillion dollars is roughly one-sixth of the entire outstanding U.S. federal debt held by the public and one-tenth if you include intro-governmental debt such as Social Security IOUs. Yes, that’s right, the government keeps those “entitlement” programs going by borrowing from itself.
A trillion dollars is more than the Gross Domestic Product of all but twelve countries in 2007.

Franklin Delano Roosevelt kept the last Depression going for seven years by having the government hire folks instead of instituting programs that would encourage private business to do so. Roosevelt wasn’t keen on competition, but Roosevelt had never run so much as a corner store or met a payroll. His mommy held the purse strings of the family fortune and FDR lived on an allowance.

The Congress is full of lawyers, elected to public office, and living off public funding that includes all kinds of perks. Why should we trust or expect these people to have any insight to the way the marketplace functions? Lawyers live rather parasitically off of the need of businesses and individuals who, while performing a useful service for customers, lack the time to deal with the morass of paperwork the government requires.

What these useful members of society would tell Congress and the mainstream media right about now is to SHUT UP. And SIT DOWN. The frantic and secret negotiations going on behind closed doors right now to divvy up that trillion dollars should STOP.

Don’t bail out the Detroit auto makers. Don’t bail out the States coming hat in hand for the opportunity to waste more public funds. Don’t pick and choose between who gets what and how much. Shut off the spigot. And then go back to the bankers and demand to know what they are not providing mortgages, car loans, college loans, and the kind of loans that keep businesses functioning.

Congress has to tend to the problem of foreclosures in order to avoid destabilizing neighborhoods with good, but empty homes. It has to attend to the losses involved with the “toxic paper” that is the “bundled loans” for which no one was ultimately responsible to pay. But a trillion dollars? No.

The example of the successful recovery of the savings and loan industry in the 1980s is a good example of how the current problem should be solved, but a massive distribution of more borrowed public funds is such a bad idea that the only way to get it done is to frighten Americans into believing it is the only answer.

It isn’t. It isn’t even an answer. It’s a toboggan ride to the next Great Depression.

Write your Senator and write your Congress critter. Tell them you don’t want them to run up any more debt for the U.S.A. Period.


Rich Kozlovich said...


It is fascinating that so many with so much education understand so little.

My immigrant grandfather was the best economist I ever knew.

He grew up and lived in poverty much of his life. He worked in the coal mines of Pennsylvania (and if anyone knows anything about that era they know what he went through) while working his own farm and raising five children.

Of course he didn’t have an education, but he did learn how to speak, read and write English.

He said that if you keep spending more than you make you will go broke. He was also the smartest man I ever knew.


Alan Caruba said...

Rich, I had two grandfathers like that, one from Russia and one from Italy. Both learned English and both prospered in America.

libertyforusa said...

Is it me- or have both political parties merged into a colossal and destructive glacier of socialism?
Has an entire generation of new voters been reared without knowledge or fear of what socialism will do to the prospect of living their lives without true liberty or freedom? Have the capitalists engineered their own demise with an entertainment industry (to include the news) that specializes in demonizing capitalism and individual responsibility or achievement and promoting anti-Americanism?
We are going the wrong direction, and it does not seem to matter to anyone in leadership positions.
I hate to be a pessimist but I truly worry about our kids and grand-kids and am wondering what it will take to stop our inevitable decline as a free nation as people trade away choice for entitlement.

Guy said...

You've hit the nail on the head again Alan. However, every time I find myself wondering why so many of our leaders, who are supposedly educated people, cannot see the simple solution to this mess, I can't help but come to the same conclusion .... they understand the situation perfectly well, but they are corrupt to the bone, and they're just grabbing what they can get before the next band of thieves takes office. Is it really just a cooincidence that this economic "crisis" just happens to be hitting us right in the middle of an administration change, when there are political debts to be paid, palms to be greased, and the public is consumed with so many other things to worry about? While the cat's away, the mice will play. Sadly, we're the ones getting played ... big time. $700 BILLION of our tax dollars are being doled out like crack to a bunch of hoodlums, while we're busy being mesmerized with things like global warming, "the messsiah", and the supposed failure of the auto and mortgage industries. I have smelled a rat since this all hit the news, and like you, I can hardly accept their screams of doom, gloom, and depression. Fully 93% of people are still employed, and people are hauling big screen TV's out of Sam's Club by the dozens. Foreclosures are at or about ONE PERCENT of all mortages, but they'd have you believe that half the people on your street are being thrown out of their homes. I wish I could believe that writing my congressman or senator would do any good, but I think it would be a lot like calling for a policeman and telling them you've been robbed in a third world country. If they don't lock you up or deport you, they'll certainly take whatever you have left and dump you off in some back alley .... In light of all that's happened in the last ninety days, I don't have a lot of hope for the future of this country, and right now, all I can concentrate on is protecting my family and loved ones. I hope I'm just overreacting, but there's nothing I know of that can ruin a society faster than apathy and rampant corruption, and I'm seeing what looks like a LOT of both right now....

Dave's Daily Day Dream said...

Keeping the populace obsessed with man-made crises is good for business for those who follow the global pantheistic socialists' agenda.
Woodrow Wilson, the Fabians and others began to orchestrate the tune we're now being serenaded with. We lost the educational system, we have outlawed instruction in virtue and morality, and, up until now, we have been mollified with $1.59 six-packs and plasma TVs.
Obama's masters will print more money, and many of us will taste the bitterness of $5.00 bread. However, there's always hope in the resilience and courage of America's heartland, wherever that may be.

TheBigHenry said...

"Tell them you don’t want them to run up any more debt for the U.S.A."

Sorry Alan, the majority of "grown ups" can't even spell "debt", let alone understand what it means. I suspect most of these morons are drooling in anticipation of their "free money" and are already casing the malls for stuff they didn't get last month.

Rich Kozlovich said...


Your comment is spot on. I have been fascinated by history all of my life. Reading history (deep history) is the greatest form of self education that I can think of.

Very often I will get into discussions about these events and I will give the rhyme and verse as to the history of what occured and why.

The question invariably turns out to be the same. "Don't they know that?" My answer is always the same. "Yes..I learned it the hard way....they were taught it...they just don't care."

All of this reafirms something that I have observed over and over again. Many prominent people are only good at being prominent.