Unaccountability Nation
In the final years of the Cold War, a minor incident behind the iron curtain provides a striking contrast to the “bailout” mindset of America today, which far transcends the current financial crisis. The incident ranks as one of the better jokes to come out of that era—better than Star Wars, Khrushchev’s shoe, or even that bear caught scaling the fence at Volk airbase, Wisconsin, during the Cuban Crisis that nearly sent a squadron of nuclear-armed F-106s hysterically off after the Russkies.
On May 28, 1987, a brash nineteen-year old from the Federative Republic of Germany flew a single-engine Cessna from Berlin to Moscow—and landed in Red Square. The pilot, one Mathias Rust, proceeded to light up and chat with the passersby. There was no malicious intent and no harm done (Herr Rust later said that he was hoping the incident would end East-West tensions—not quite), but the incident so embarrassed the Soviet defense establishment that both the defense minister and the air defense chief resigned and nine generals and nearly three-hundred officers were sacked—an astonishing slaughter for what was, ultimately, a harmless prank.
The Rust affair indicates that even within the imbroglio of irrationality that was late-term Soviet Communism, certain healthy impulses survived. One of them was the capacity for officials to be seriously, egregiously embarrassed and to pay the penalty. Embarrassment requires a) something to be embarrassed about and b) an awareness that there are professional standards to which one will be held to account. “A” is ever plentiful, though governments are adept at covering them up; “B” is often lacking. The Rust incident contrasts sharply with the American approach of today in which, whatever the criteria for dismissing officials, manifested ineptitude is not among them. Indeed, the “capitalist”, “democratic” US of A increasingly bears the marks of the waning Soviet Empire, not least of which in its mindset of unaccountability. At least the Soviets went through the trouble of finding scapegoats. In the crises of early twenty-first century America, it seems impossible to fault anyone with enough specificity to fire him.
Even the exceptions tend to prove the rule: one recalls that FEMA chief Mike Brown had to go following the drowning of New Orleans after Katrina, but was anyone at the Army Corps of Engineers—the guys who actually build and maintain the levees—held to account? What about mayor Nagin or governor Blanco, whose responsibility it was to provide for the evacuation? (Just a few weeks ago it was the same Nagin tearfully lamenting, as Hurricane Gustav approached, that is was the end of the world. They got some rain.)
Today’s bank bailout frenzy is classic neo-American unaccountability, going so far as to propose to enshrine the principle in law. Whatever form the bailout ultimately takes, section 8 of the Treasury’s original draft proposal, preposterously headed “Review”, is illuminating. It reads (as reported by the NYT):
Decisions by the Secretary pursuant to the authority of this Act are non-reviewable and committed to agency discretion, and may not be reviewed by any court of law or any administrative agency.
Let’s read that again in case we missed something.
Decisions by the Secretary pursuant to the authority of this Act are non-reviewable and committed to agency discretion, and may not be reviewed by any court of law or any administrative agency.
Did you catch that? So not merely would the Treasury get a $700 billion (that’s a seven with eleven zeros) check from you and me to buy up “toxic” debt, they would be legally indemnified against doing anything wrong. They might spend it all on golf course condos for Paulson’s erstwhile colleagues at Goldman, Sachs for all we know but there would exist no agency or court with jurisdiction in which a remedy could even be theoretically effected. Section 8 (how appropriate!) is Paulson’s get-out-of-jail-free card. It might as well read, “The act hereby empowers the Secretary to do whatever he damn well pleases, common sense, legal precedent, and the Constitution notwithstanding.”
We do not know the form the bailout will take, or if it will take, but the tremendous frenzy for the government to dive into the financial markets is all justified, of course, by the ostensible exigency of the situation, which is how we got the likes of the Patriot Act, the wars in Afghanistan, Iraq, etc. The storyline by now is getting a bit hackneyed: we thought everything was going fine; there was a sudden, unforeseeable crisis; we need new powers and funds immediately—i.e., before such new powers and funds may be adequately scrutinized—to forestall a catastrophe. This is how nascent totalitarian governments bloom. The genuine conspirators who behind the scenes truly want to turn the US into an impoverished police state (if they exist) are being hugely abetted by the ineptitude of the remaining good-hearted people in government (if they exist) and the near-invincible culture of unaccountability. While Congress belatedly tries to come to grips with the ponzi-scheme that is central banking, nothing said thus far will impinge on the culture of unaccountability. There have been noises about reigning in executive compensation, curtailing golden parachutes, etc., but nothing serious about the obvious candidates for accountability, namely, the occupants of the Treasury and the Fed themselves. In a sane world, the first question from Congress would run as follows:
Chair: Mr Paulson, Mr Bernanke, you say we are in a grave crisis in which only immediate and sweeping action will stave off disaster. OK, fine. Question: How on earth did you let it get this bad? Why on earth do we have a Treasury, a Fed, an SEC, etc. if not precisely to bring impending crises to light and forestall this sort of disaster? Either we are dealing with some sort of truly sinister conspiracy, or we are dealing with criminal incompetence. Gentlemen, which is it?
In either case, the prerequisite to any “bailout” (the term summons images of a listing ocean liner and a bucket brigade) is the submitted resignations of Secretary Paulson, his senior Treasury officials, Chairman Bernanke, and the other members of the Fed’s Board of Governors, Messrs Kohn, Warsh, and Kroszner. (The latest hire, Elizabeth Duke, has only been on the job since August, so we might spare her.) On what possible grounds can we justify writing a blank check to exactly the people who led us into this mess in the first place? And we mustn’t brook any nonsense about it all being unforeseen, it being the fault of others, of officials no longer in office, etc. The only answer to such casuistry is to be sure to drag Paulson’s predecessors and Alan Greenspan into the light as well.
(N.B. Senator McCain, running for the top spot back in 1999, actually said this in a New Hampshire debate: “And by the way, I would not only reappoint Mr. Greenspan; if Mr. Greenspan should happen to die, God forbid, I would do like they did in the movie ‘Weekend at Bernie's’, I would prop him up and put a pair of dark glasses on him and keep him as long as we could. The fact is that Mr. Greenspan deserves great credit, great credit for this economic recovery. He's been a steady hand. He's unintelligible, but he's had a very steady hand on the tiller and I am a great admirer and an advocate of his policies and programs.” Would now be an apropos time for Mr Greenspan to clarify some of those “unintelligible” remarks? [What I had meant to say at the time was that we were headed for a catastrophe. I’m sorry if I was unintelligible … ])
Personal accountability in high office is not only indispensable, it is only common sense; but, as the saying goes, common sense is not all that common—not anymore and certainly not in the world of finance or government. But the bailout, as bad as it is, is just the latest example in the burgeoning culture of unaccountability. Remember all those children who burned to death at Waco? Whose head rolled for that? Not Janet Reno’s—though she took “responsibility” for the holocaust.
The practical problem with unaccountability—as the “rational choice” theorists tell us—is that no one has any incentive to do his job. At some point, incompetence becomes a positive requirement for high office because everyone is so inept that a capable man would make everybody else look hopelessly out of their depth. Screwed the pooch, did you? It’s OK, we won’t hold it against you—we did, too!
But the crown jewel in the American pantheon of unaccountability—one, we must all hope, is not soon eclipsed—is 9/11. Of all the analysis of 9/11—much of it specious, some of it illuminating, some of it truly unnerving—the question of accountability seems hardly ever to come up. (I am still fairly new to Chronicles, so perhaps this is a point that has been made here. In which case, forgive me, gentlemen.) Among those who accept the official story (we’ll stick with that for present purposes), one thing they should all be able to agree on, is that 9/11 was, at minimum, the most spectacular national security failure in world history. Here we have the civilian population of the most powerful and well-defended nation in history attacked in broad daylight with its own aircraft. At best, it amounts to incompetence of a transcendent order. And so we ask: Who got fired? The defense secretary? The Air Force secretary? Head of CIA? Head of FBI? The crew at NSA? Head of the FAA? Somebody at customs and immigration? The security guy at Logan airport? Anybody??!! It seems that none of the legally, constitutionally responsible parties even got so much as a slap on the wrist. The Soviets took the security of their airspace seriously enough to sack half their air defense staff for failing to stop a mischievous teenager in a Cessna—how seriously do we take ours?
This most basic failure to get rid of the people on whose watch disaster occurs indicates a truly pathological corporate mindset. In a polity in which public opinion ranks so high (one hesitates to say “democracy”), the natural reaction to disaster would be a spectacular witch hunt that would afford endless opportunities for politicians to tell the cameras how much they care about the public welfare, about how no stone will be left unturned in the righteous quest for the truth, etc., etc. That all we got from our elected officials after 9/11 was the flaccid 9/11 Commission report indicates how far things have unraveled, and the current financial crisis gives little grounds for hope. When next contemplating worst-case scenarios—whether financial, military, or some other—we must factor in the culture of unaccountability. Will the US dollar someday not be worth the paper its printed on? Will a suitcase nuke ever find its way to flattening a US city? Why not? After all, why would anyone have a reason to stop it? All 9/11 resulted in was more power, money, and reduced oversight for the same national security-intelligence establishment that permitted the disaster to happen—imagine the wonders a small atom bomb might accomplish. Without seriously attacking the culture of unaccountability, a bailout would have substantially the same effect on the Fed and the Treasury as 9/11 did for the national security establishment: it would affirm the distorted policies that got us into the crisis in the first place and empower rather than punish the people on whose watch it transpired. Bad idea.
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Mr. Davis,
It would be hillarious in the world of "conservative journalism" to go back and read the old back issues of Weekly Standard and National Review during the run --up to war in Iraq . Heck throw in George Wiegel and the other water bearers just for giggles. Then see what Chronicles was saying about it at the very same time.
Do the same for the immigration issue.
Do the same for infanticide.
Do the same for same sex marriages.
Do the same for the last four presidential elections.
Do the same for all the major cultural, religious and political issues of the last thirty years .
One can only conclude, given the existence of men like Frum, J. Goldberg, Weigel, Novack, and the rest ( all who still retain their positions as conservative journalists ) that :
There is no accountabilty among "conservative " either !!
I repeat;
"Decisions by the Secretary pursuant to the authority of this Act are non-reviewable and committed to agency discretion, and may not be reviewed by any court of law or any administrative agency."
The senate voted in favor of this abomination on the grounds that wading through 450 plus pages is simply too turgid, too much effort, and takes away from the presidential aspirations of three per cent of them. The ignorant voters will be spun later by the gutter press, in addition the pork will make a wonderful palliative.
And the voice of pop culture addresses the situation albeit from over three dacades ago:
NO MATTER WHO YOU VOTE FOR, THE GOVERNMENT ALWAYS GETS IN
(Vivian Stanshall / Neil Innes)
Bonzo Dog Doo Dah Band
Preside!.....Order!.....Order!
Noises on the radio, megaphones on cars
Sermons from the street of shame, know-it-alls in bars
Posters in suburbia, experts on TV
Don't let them disturb-i-ya
They're just the powers that be
Hey-Ho!
Don't worry! Nobody can win! (Hey-Ho! Hey-Ho!)
No matter who you vote for, the government always gets in
Hey-Ho!
Oh great, great slumbering nation
Awake! Set yourself free
Oh! Smell the comforting bacon, taste the bromide tea
And give a little chirrup as I ladle on the syrup
Promises are cheap
Let me bear your crosses, make me boss of bosses
Then you go back to sleep (Ha ha ha)
Hey-Ho!
Don't worry! Pop your cross in the bin (Hey-Ho! Hey-Ho!)
No matter who you vote for, the government always gets in
Hey-Ho!
Hey-Ho!
Hey-Ho!
Hey-Ho!
Memories of a finer place in comfortable Shangri-La
Then they too have their Shangri-Las
Shangri-La La La!
See them in the public eye, oozing oily charm
Hear them all personify, down on Animal Farm
Dog eat dog, but cock and bull isms are the game
Ism this and ism that
Isn't it a shame!
Hey-Ho!
Don't worry! Nobody can win! (Hey-Ho! Hey-Ho!)
No matter who you vote for, the government always gets in.
Hey-Ho!
Don't worry! Pop your cross in the bin (Hey-Ho! Hey-Ho!)
No matter who you vote for, the government always gets in.
Don't worry! You know you can't win! (Hey-Ho! Hey-Ho!)
No matter who you vote for, the government always gets in
No matter who you vote for..............FADE
Please.Go talk to your local banker.He or she is not behind some conspiracy and actually did not create this crisis.The accountability that you rage about begins and ends with our neighbors,relatives and friends who bought houses THEY couldn't afford,ran up credit cards for pleasure and couldn't figure out to be thrifty(not really that hard to do).That punishing people that bothered to save money or buy stocks could satisfy you,indicates you're still living in your parents' basement without a real job or assets.In the near future,when we cursed men of property begin to lay off our employees ,I will refer them to the moral comfort of your jeremiad.Please,go visit your local banker...have it carefully explained to you that inside of banks is something called a deposit.Enjoy the experience of opening up your own bank account.As to your deliberately distorted account of the buy-out,who exactly is being" bailed out"...commercial houses already defunct?!This bill is for banks and businesses that have done nothing wrong and are going out in a bank and credit panic.I know or actually I guess you have a better unpublished plan.Nevertheless,go visit Congress.Observe Congress.Talk to a Congressman.You will discover there are few perfect bills;so we move on and ACT as best we can.Start writing better stuff Mr. Davis.Chronicles becomes subject to cut-backs like everything else if this mess continues.
Leo said: You will discover there are few perfect bills...
Yeah, so what! No one is asking for a perfect bill, but now we have one loaded with so much pork that it makes more sense for congress to do nada, nothing at this stage...but I'm sure asking the local banker about this situation will lead to enlightenment...
MJK...go talk to a farmer if you don't like bankers.There were no farmers at my Illuminati meeting last night so I suppose they are not part of THE WALL STREET CONSPIRACY .Farmers are in favor of this bill because it will help them....feed people...like you and me.Its kind of funny,that all you latter-day Jeffersonians trying to put down us neo-Hamiltonians know absolutely nothing about farming and couldn't talk belly futures with a milkmaid.I'm sorry the Georgics don't much apply to farming anymore..I really am...but we chose to be well fed over being "rustic".As to "pork",MJK,I don't know what you pay in taxes,its none of my business.I wish we had less pork and paid less taxes.I've tried hard for over thirty years to see that happen and it ain't.The heirs of Jefferson-Roosevelt endlessly wage their war on us evil men of property(of which I have relatively little),the hellish spawn of Hamilton,Lincoln,Morgan,Mellon,Ford,(fill in your favorite capitalist here).I and a relatively few others pretty much pay for everything at this party so if you wish to complain that I might want to eat a little bit of the food I've provided you're being a very rude guest in my house.Right now I have to take my retriever for a walk and calm down.Please forgive me if I unfairly associated with the Jefferson-Roosevelt crowd.They pursue their "happiness" by enslaving others.
I'm not sure what kind of "farmers" Leo has been speaking with, but the actual farmers I know are none too happy with this bailout plan. Perhaps Leo's "farmer" friends all work for ADM...which has about as much to do with farming as I Can't Believe It's Not Butter has to do with butter.
My problem with this whole issue is that the incompetence of our 'leaders' is eclipsed only by their lies, duplicity, corruption and greed. I distrust them because they've never done anything to earn my trust. Does this so-called 'bailout' fit in wtih the globalist, neocon agenda that's been unfolding behind our backs for decades? Accountabliity? How 'bout just being truthfully informed for a real change.
A brilliant essay! Let's have more from Mr. Davis.
It seems odd to me that banks need to borrow money to lend. Maybe that's not a great idea en masse.
I saw Shaza Andersen, CEO of WashingtonFirst bank, on TV a day or two ago. She runs a D.C. local bank and claimed to be in zero trouble. Why? They didn't make bad loans. She was being polite but was clearly against the bailout. She mentioned it rewards banks and houses like Wachovia who are taking full page ads out to attract depositers by paying above market interest rates.
This is not an imperfect bill, this is a deeply flawed bill. It represents about 1/4 of our federal budget. The assets Leo claims are being protected by this bill are actually being devalued by maybe as much as 1/4. Of course, that is what they should be worth in current dollars, but it is a far worse thing to claim they are worth some high price by inflating the value of that price. I'm not an economist, I'm sure someone can put a better mark on it than that. But I know my own poorly managed assets have fallen by about that much.
From the basic risk-reward relationship, it is clear that the lenders are the ones assuming the risk. That people were given false economic signals (not to mention being coerced into some of these contracts) does not make them culpable as you say, but makes them merely rational. And believe me, they have already or will pay a much dearer price than anyone involved in this sham.
Reacting out of fear or anger is not a good way to do anything, especially anything big. Walking one's dog is at least productive. And at this stage, one's dog might be the only asset that can be truly protected.
I agree with Professor Wilson, this is a splendid essay. Perhaps Leo can find something in the turgid monstrosity that was passed today that actually helps local banks and frugal and prudent people. From what I read in it, it is mainly an instrument to bail out Morgan Stanley, and Goldman Sachs. It is a huge money laundering operation run through the Department of the Treasury, where toxic securities will be bought from Wall Street at an artificially high price, the good tranches will be sold back to them for less, and the crap will be foisted off on the taxpayers. The profits of this operation will be used by Wall Street to buy up distressed firms here in Fly Over Country, and further centralize the economy in New York City. It will do nothing to ease the effects of moral hazard that are bringing the credit markets to a grinding halt. But, due to the lack of Congressional or Court oversight intentionally put into this law, it will keep the good Mr. Paulson, Robert Rubin, and the rest of their cronies from being locked up the the cells they so richly deserve. Oh, and it does give a tax break to a wooden arrow firm. This is a most sad day for America.
I see at least two basic lies.
One: Governments can control economies.
Two: Governments, since economies can be controlled, should be trusted with controlling them.
Within the scope and framework of those two lies, there is ample room and opportunity for skulduggery, mischief, malfeasance, criminal activity and no little sin. The current "bailout" and its political, fiscal and economic antecedents are quite the proof thereof.
Since the transparent government won't tell you all the increased amount of money in circulation, I'll have to do it for you. The M-1 grew by 16% this year. Anybody earning less interest than that is falling behind. That explains why people can't be bothered to save any more. Spend everything you earn now because prices are only going to go up, in fact since a dollar today is woth more than a dollar tomorrow, spend tomorrow's dollars now.
Correction, the growth is 9.8% which is quite considerably more than savings accounts pay.
Etienne Gervaise wrote:
"...Spend everything you earn now because prices are only going to go up,..."
Mmmm, the last time I looked house prices were still dropping as fast as ever, cars and trucks are gathering rust on dealer's lots, sales of consumer goods are contracting and many retail chains are closing stores by the dozen or hundreds....
Agreed the US government is spending and printing money in a mad frenzy which, if unchecked, by classical definition would lead to inflation. Yet the price reductions in real estate and durable goods is at odds with this conclusion.
Any thoughts on this?
H.F. Wolff
@15 H F Wolff
When the World Trade Center toppled, The Decider-in Chief told us to keep spending in order to overcome this tragedy. Unfortunately, the habit of thrift -- if you want something, save for it -- has all but vanished from the American mindset. Just whip out the plastic and it's yours!
Now you only have to listen to AM radio to find out that $20K balance at usurious rates is not unusual. My wife got a credit card application in the mail she had no job at the time, and entered zeroes. They sent her a card so she could charge stuff and have somebody else pay.
For laughs why don't you read Deuteronomy chapter 28 in the Old Testament. Then you'll know wherer the once Christian West went wrong.
Etienne Gervaise wrote "The M-1 grew by 16% this year. Anybody earning less interest than that is falling behind. That explains why people can’t be bothered to save any more"
Actually, saving has hardly anything to do with the money supply and very much to do with the tax laws.
We don't "save" because we're punished for it- our original income is taxed, then if we have any surplus to put into a savings account or money market, the interest we earn on our savings is taxed. Invest that surplus in the stock market and your capital gains are taxed; real estate- same thing.
And our "leaders" tell us to be patriotic about our punishments
Perhaps the point I was trying to make (#15) was not clear.
Agreed that the spending by the US treasury like "drunken sailors" is inflationary, which means that more $$$ will be required to purchase a given basket of goods.
At the same time house prices, consumer goods, and cars, are dropping in price. (I'm thinking of buying a small SUV next year because most of my driving is tax deductible). Agreed that groceries and services are increasing in price.
There is a disconnect here, a mixed message at it were, for which I was soliciting some thoughts.
In reference to the Bible, the one morality tale that made a life-long impression on me is Joseph saving during the 7 prosperous years to tide him over the next 7 lean years. My family and I have done our utmost to live by this principle; however, serious inflation could bring all to nought.
The prudent and careful are usually damaged during inflationary economic times. And, as was pointed out, taxation only adds insult to injury.
H.F. Wolff
A lawyer's thought. I would guess that Section 8 is unconstitutional (breach of the separation of powers) but I would also guess that those who drafted the act know that. It's a rather clever lawyer's "stall". Without it, any decision under the act would be automatically liable to judicial review in the federal courts. With it, the courts must first determine whether or not they have jurisdiction before proceeding to review, and possibly annul, Mr Paulson's decision.
Thus, those wishing to challenge the act must first find a party with an interest to defend who goes into the US District Court seeking the aforementioned annulment. The government's defence will be the jurisdiction bar in Section 8, the constitutionality of which will have to be appealed upwards through the Circuit to the Supreme Court. All that could take several years.
Why the stall? It's probably connected with the fact that all the toxic paper is to be bought back, even that held outside the US. By the time the courts have ruled, the sellers will be out of the jurisdiction and the money will be in the Cayman Islands. That suggests that the international financial elite, including those Americans who are part of it, have got their wealth out of the US and are planning to jump ship.
@ 17 and 18
You're both correct, but we're still left with an irresponsible, destructive, consumer-driven economy. The gutter press alias the Main Stream Media, tell us it's good, but they get paid by advertising; both in print and broadcast. Prudence does not pay for their luxury yachts, so it's in somenoe's best interest to spin this bad situation, in which credit card wavers fill up over-sized houses with imported schlock (brak in russian) and remain convinced that God blessed us with all this wonderful stuff.
I cannot for the life of me see where this nation -- and lots of others -- will change their spendthrift ways. One could hope for responsible government to lead the way but ... I'm kidding, so laugh out loud!
@19 Michael
What with all the judicial activism and mischief surrounding every piece of legislation coming out of Congress in the past couple of decades, I would have hoped that similar wording would have been included earlier. Unfortunately, it's been latched on to this steamer of a bill.
Some people are confusing the US Treasury Department (and indirectly Congressional spending) and the Federal Reserve Bank. The Federal Reserve Bank (actually a private bank) that, thanks to old John D. and J. P. Morgan, prints US money (actually only Federal Reserve Notes that Congress forces all of us to accept as money) at will creates inflation not the Treasury. The entire situation would be different if the FED did not buy the Treasury debt with its pretty (?) notes. If the Treasury had to borrow at market rates from us and others from among a fixed pool of dollars, the interest rates would be much higher. But thanks to old John D. and J. P. "we" were able to do WWI, WWII, the Korean War, the Vietnam police action, the Cold War, and all the other war-stuff that Smedley Butler railed (and would have if he were still alive) against. And all the while inflation rages on and the "economists" never see the one source that they are trained not to see.
Robert: "go back and read the old back issues of Weekly Standard and National Review ... Do the same for same sex marriages."
You're right.
As far as I can tell, the alifornia judge was correct to legalize Homosexual "Marriage", since "conservatives" had already conceded every characteristic of marriage to homosexual hookups except the word "marriage". Therefore the judge was correct to conclude that the only reason homosexuals were denied the title was unreasonable discrimination.
Many or most "conservatives" had just spent the past decade assuring everyone that they had no problem with honoring homosexual relationships, with allowing them benefits equivalent to real marriages and with combatting discrimination against them in housing, employment, insurance etc. Therefore, the judge rightly concluded that since they claimed they respected homosexual hookups in every way, but just didn't like calling them "marriages", the reason must be old-fashioned bigotry.
David Frum went out of his way to "defend" marriage against people like Andrew Sullivan and Andrew Coyne, but constantly insisted that he was no bigot and wanted to see gay couples treated "just the same" as heterosexual couples. [i.e. Separate but Equal]
Anyway, with the fallout of the California decision, and all the hand wringing, and the impotent schemes to "turn it around", and all the denigrating of the left and of gay activists, I don't recall a single "conservative" saying, "It's our fault because we conceded that there's nothing special about 'one man one woman', because we were afraid of looking 'intolerant', and so we just insisted that everything can be equal except the name."
I was just listening to a podcast of Frederica Matthews Green [who I believe also writes for the Neotional Review?] who was making the similar point that American "conservative" Christians constantly claim that America is a Christian nation, while rarely exhibiting the basic Christian virtues of Humility and Repentance.
Robert Peters, as usual, nails it (#12). The best thing the government could do in this case, as in most cases to do with economics, is -- absolutely nothing.
A country that decides to stop making things will soon lose any notion of money for product value. This people will end up with imaginary money being used to make folks with imaginary jobs pretend to be wealthy. Alarm clocks which awaken from dreamscapes are a cataclysm for those who live in such a world.
Factory workers with no factories, farmers with no farms, tradesmen with no shops ultimately result in an economy with no customers. It seems this lesson has been learned too late for many.
I don't want the government to buy the country because the government gets its money from me. I will own the "bad assets" which are already helping kill a speculative economy. I want the government to leave me alone.
You mean to tell me that Rudy Giulliani does not rank as a "security expert"??! Come on, 9-11 DID happen in his city! WHILE he was mayor!! What better credentials could one seek?
The last time I heard such a ludicrous accusation was when someone claimed that Rudy does not rank as a "conservative" because he was in favor of big government oversight, was an adulterer and favored "rights" for those seeking to murder babies.
Etienne @14, where do you get that info and why do you use M1 over say M3?
Mr. Wolff @15,18. Inflation of the dollar is a general effect. Housing or other prices is a quicker moving local effect (on top of the inflation effect). House prices are coming down to try to sell off the over supply of houses that had been built up and sold off under false economic signals of the past several years. These false signals were caused by government intervention in the economy, which created a bubble of prices (the price is above the value). The bubble of prices spiraled into an even greater over-supply of inventory, which, when the prices became unhinged from the government fantasy revealed a drop in value (too many houses lowers the value of existing, interchangeable houses), not an increase. So then prices fell dramatically to try to match the new value. Though they are probably going to fall below that to compensate.
Other commodities might be dropping in price not because we've made too many of them (cars), but because people are too freaked out right now so demand is dropping. Lots of people lump their house value into their wealth, and when you see your wealth dropping in your house and the market by a bunch, you might delay buying a new car.
Other commodities such as food and services are going up because of general inflationary pressure, emerging middle class demand pressure in asia/india and increase in energy and other inputs (corn) via more government involvement.
Inflation as a phenomenon takes awhile to work its way through a system. It does not affect the value of a thing or the supply/demand for a thing, just the price of it in dollars. The reason this bill is deceiving and criminal is because that $700 billion is fresh money which carries with it today's purchasing power. That is a false handout to those who get it first. If you imagine it were literally green cash, and you put a red mark on each bill, by the time you or I actually handled such a bill, it would be worth less than it is today as inflation would be manifesting itself in general pricing.
That is also why inflation is such a devastating "tax" on almost all people. You don't need to be in the stock market or have any assets at all to be hit by it.
Mr McCabe,
Thank you for your thoughtful and informative reply to my queries on inflation and its manifestations.
It is very much appreciated.
H.F. Wolff
@27 Mr McCabe
I got the 16% from a guest on the Ron Smith Show on WBAL. His guests are generally pretty reliable sources. When I went to the Feds website I got 9.4%, and we can all trust the government to help us, right?
I don't know the truth about the Fed or the Open Market Committee, but I think they should be audited.
Jeff Anderson,
Re "A country that decides to stop making things will soon lose any notion of money for product value. ":
This sentiment was one of the themes of Tom Wolfe's "The Bonfire of the Vanities", especially his portrayal of "The Masters of the Universe" [Wall Streeters]
Have you read it? One of my favorite books.
[Don't confuse it with the execrable Tom Hanks movie version. I believe that particular piece of celluloid dreck was directed by Brian "Redacted" De Palma.]
Speaking of Tom Wolfe, wouldn't journalism be much better these days if writers followed Wolfe's "New Journalism" rather than phony objectivity?
Wolfe's four characterizations of New Journalism were:
* Telling the story using scenes rather than historical narrative as much as possible
* Dialogue in full (Conversational speech rather than quotations and statements)
* First-person point of view (present every scene through the eyes of a particular character)
* Recording everyday details such as behavior, possessions, friends and family (which indicate the "status life" of the character)
Imagine what such coverage (especially the 2nd and 4th characteristics) of Gore, Kerry and Obama would be like.
Mr. McCabe (#27), excellent response to Mr. Wolff's questions.
It amazes me when I hear and read paleos blame the "free market" (would that we actually had free as opposed to managed markets); they sound like rank liberals when doing so. Meanwhile, the Austrian school economists have been predicting this meltdown as it precisely unfolded for at least six years or so.
This is a beautiful article based on the rare gift of comon sense.
Middleclass America embraces your thinking, and those that have never owned a firearm are now pawning motorcycles and other things inorder to purchase their first firearm............They recognize both incompetance and tyranny!..........Our Democracy has become a joke to the average citizen.
Akira,
I have not had a chance to read the book, and I avoided the movie due to several recommendations similar to yours.
If I can get through the next 10 or so books on my "to read" list, I will see if can get a copy. Thanks.