Monday, November 24, 2008
7.4 Trillion Reasons
The Fed is poised to 'lend' an additional $7.4 trillion to financial institutions on top of the $2.8 trillion they've already 'leant' to the banks since the beginning of this crisis a few weeks ago. The gross national product of this country is $13 trillion. Obama and the Dems are heading to DC to hand some pathetically tiny $200 billion or so 'stimulus package' to the peasants. Meanwhile every Blue State in the country is collapsing in a sea of red ink and will surely be bailed out by the munificent Big Brother. The Feds have still got some of that Fan-Fred $700 bil that they're handing out to cover the phony mortagages. The line at the bailout door grows daily. With all this stimulation and two-buck gas we should be in a howling boom, our phones ringing off the hook from calls from desperate employers trying to lure us from our current jobs with higher pay.
Its nice to know that the government has an extra ten or fifteen trillion bucks on hand to help us all through these tough times. Its must be those foreign investors clamoring to grab a piece of the coming Obama Boom lending us the money to stand behind these 'loans' to the banks who were impoverished by the government removing all qualifying criteria from lending. So we all received dozens of credit card offers, whether we had a job or not. Lets party! After all we all have hundreds of thousands of dollars in equity from these frame and drywall shacks we were clever enough to buy. A country of millionaires...on paper. Real Estate never goes down, you see.
OOPS! a slight miscalculation. Meanwhile every parasite and overpaid public official have sat back, content that they had enough political juice to protect their 'right' to a cushy livetime job, followed by a fat pension; the social security recipients just had to snivel in front of the TV cameras in phony interviews set up by AARP and big new 'benefits' are added to their 'entitlements': rural corporations grow fat off ethanol subsidies and the waste ground is covered by non-functioning windmills and broken solar panels, all collecting a hefty subsidy check. The list of recipients is endless and probably includes everyone in the country and a whole bunch of foreigners. As government grows its so easy to hide favors and handouts in the thousand-paged appropriation bills and after all, we all win!
Now the 401k's are headed for worthlessness, the fat government and union pension plans are holding 'paper' assets that aren't worth the paper their written on--bonds issued by the state and municipal governments that their improvident wage and benefit demands have bankrupted. WHAT?! Those pensions are a right! Aren't they?
Is this the first time that socialism has been achieved by putting the entire free economy in receivership. Everything collapses and the government takes over and runs it according to a Five-Year-Plan. That'll work. Good times ahead.
But where are they getting all this money? It must be all the cash that was accumulating in the 'Social Security Trust Fund' in Algore's lock-box. Ummm...I guess they put all those 'contributions' into the general fund ; anyway Social Security is about to take on millions of new recipients as soon as they pass 'Immigration Reform'. Just ship the abuelos north and put'em on the dole...there's plenty of money!
With all this money floating around why aren't we all rich? Because money is a reflection of the ability of the economy to produce wealth. The ability of this economy to produce wealth is shrinking as the inexorable demands of the recipients of subsidies are expanding enormously.
The corollaries of socialism are poverty and inflation and we are seeing it happen before our eyes. We are also seeing the electorates turning to Big Brother in the hope that they will get something for nothing. I grew up in Las Vegas among hustlers and cheats. The working definition of a sucker in that world is someone who wants something for nothing. That's a good definition in any world. Its also a good definition of the average voter.
Another thing that happens to suckers, or chumps as they are also known, is that there is a moment when they realize that they've been hornswoggled. Conservatives dream that that will be the day that the herd turns to Milton Freedman and FA Hayek and demands rational reforms. Don't bet on it. Tyranny and mob violence are much more likely. Democracy got us into this mess by empowering interest groups to grab control of the system and milk it. Democracy will not get the demands of all these disparate groups under control. Scarce resources will have to be allocated by fiat. Period. Thats Change We Can Believe In!