Monday, August 15, 2011
A Horrible Week for Global Socialism
Over the weekend of August 6-7, the Wall Street Journal’s lead headline was “U.S. Loses Triple-A Credit Rating.”
On Monday, August 8, the Journal’s headline was “Markets Brace for Downgrade’s Toll.”
By Tuesday, August 9, it was “Downgrade Ignites a Global Sell-Off.”
On Wednesday, August 10, it was “Markets Sink Then Soar After Fed Speaks.”
Thursday, August 11, the Journal cast its eyes across the Big Pond noting that “Italy’s Woes Weigh on Europe.”
On Friday, 12, the headline said, “Stocks Swing Up in Wild Week.”
A week after the Standard & Poor’s downgrade of the U.S. credit rating from AAA to AA+, in the August 13-14 edition, the Journal took note of a “Global Crisis of Confidence”, adding that “World Policy Makers’ Inability to Agree on Fixes Led Markets on Wild Ride.”
As the new week dawned on August 15, the Journal said, “Markets Gird for Fresh Drama.”
It was a great week for dramatic headlines and a horrible week for the rest of the world. Mostly, though, it was a fulfillment of former British Prime Minister Margaret Thatcher’s observation that socialism works just fine until you run out of “other people’s money.”
That is a perfect definition of “redistribution” or, as President Obama once observed, “At some point you’ve made enough money.” A more un-American statement has rarely been uttered by an American President.
The U.S. has been engaged in a huge experiment in redistribution since the years of the Great Depression when Franklin D. Roosevelt, a man who knew absolutely nothing about running a business and who had spent most of his life living off an allowance from his mother, tried everything he could think of to get the economy going again.
FDR could have tried cutting taxes. He could have encouraged Congress to avoid voting for trade barriers in a fit of protectionism. Instead, he came up with Social Security, among an alphabet soup of government programs which were a disaster when it came to encouraging private sector job creation. Not unlike President Obama's "stimulus" and other doomed-to-fail experiments
The history of Social Security is one long succession of lies that Americans have been told. By the time Lyndon B. Johnson was President, the funds set aside for Social Security payments were moved to the general fund where they could be plundered by Congress. Under President Clinton Social Security payments began to be taxed as income.
World War Two arrived in the U.S. on December 7, 1941, and full employment followed to defeat the fascists in Germany and Japan. The government that had expanded during the FDR years continued to expand.
Americans emerged from the war without a scratch on the homeland. With the exception of Hawaii’s Pearl Harbor, none of our cities were bombed. We had a million battle-tested young men returning home in 1945, the GI bill let them go to college if they wanted, and by the 1950s we were on our way to being the greatest military power in the world and the greatest economy ever known.
And the federal government never stopped expanding. It needed more money, but the stock market, with occasional recessions, just kept growing too. As time went along, Great Britain and Western Europe rebuilt, alliances such as NATO were created to thwart the Soviet Union’s ambitions, while Eastern Europe stagnated under Soviet imposed communism.
In Asia, Japan became an economic powerhouse and South Korea too. China which had suffered under Chairman Mao waited until he died to convert its economy to a capitalist model, while retaining all the worst aspects of an Orwellian communist government. In the Middle East, oil allowed nations led by a handful of tribal chiefs and assorted despots acquire wealth beyond belief. Their populations remained oppressed. Now they are in the streets demanding freedom and justice. They will get Sharia law and more oppression.
Economies became increasingly global and interconnected. Europe became the European Union, a huge bureaucratic mess with the Euro as a common currency. Western bankers purchased Europe’s securities and vice versa. When the housing market imploded in September 2008, they discovered that most were de-linked from the original mortgage assets and were essentially worthless to the tune of billions.
The Federal Reserve responded by shipping $600 billion to prop up European central banks and Congress responded by authorizing the Treasury Department to “bail out” U.S. banks and the huge insurance company, AIG, with public funds--your money.
So what have we learned from all this? Foremost of all, socialist economies are inherently unfair and disconnected from the real world of hard work, property ownership, and capital investment. We learned that bankers are greedy and take greater risks than they should.
Great Britain, which has become one of the greatest welfare states in the world, was rewarded for its generosity with looting and rioting by youths whose families had lived on the dole their entire lives. Greece had already had its spate of riots.
Everyone keeps saying that the U.S. must not become Greece, but the U.S. has become Greece and that accounts for all those horrible headlines from last week.
The Obama administration, which has steadfastly ignored every previous “commission” that has studied the economy, has now engineered “a super committee” in Congress. It is composed of the twelve worst ideologues on either side of the economic policy divide in an effort to cut some spending, any spending! Failure has been baked into that cake.
The old way of conducting the affairs of nations, particularly their economies, is coming apart at the seams. It has exposed the hypocrisy of socialism here in the United States and everywhere else it has been practiced.
© Alan Caruba, 2011