The Objective Eye

"Every movement that seeks to enslave a country, every dictatorship or potential dictatorship, needs some minority group as a scapegoat which it can blame for the nation's troubles and use as a justification of its own demand for dictatorial powers. In Soviet Russia, the scapegoat was the bourgeoisie; in Nazi Germany, it was the Jewish people; in America, it is the businessmen."
- Ayn Rand, "America's Persecuted Minority: Big Business" (1961)

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Location: Los Angeles, United States

Tuesday, September 30, 2008

Le Monde Va de Lui Même: a.k.a. So...Where's the Economic Armageddon?

Now Playing: "Paper Money" by RonMon and... some singer

(Oh, those pesky - nay, infuriating - voids...)

Washington, D.C. (pAP) - In a development that wrought waves of apoplectic panic among scores of D.C. politicians and minor functionaries, the Economic Meltdown of 2008 rudely failed to show up today. The development sent deeply-cherished Visions of Discretionary Sugarplums and Bundles of Earmarks to evaporate in agonized shrieks. Rep. Barney Frank (S-MA) was rushed to an undisclosed Georgetown hospital today on complaints of drool-related dehydration complicated by a metastatizing guilt, and was assigned to a bed beside that of Senator Christopher Dodd (S-CT) who remains in critical condition with the same illness.

Seriously, with today's 485-point rebound from Monday's record plunge, haven't we all just seen a blatant, in-your-face, reality-based confirmation of the market's ability to take care of itself? Of the fact that the fervently-promoted $700B Mortgage Bailout is, in fact, not even pragmatically justifiable? (I mean "pragmatic" aside from the overriding need to pander.)


Call me deeply not-shocked-in-the-slightest, but every single major politician is getting this mortgage crisis wrong, most conspicuously - and stupidly - the Bush Administration and GOP Presidential candidate John McCain.

The Democrat-Socialists we can take as simple givens: They will advocate whatever is most likely to facilitate the destruction of America, and what is most thoroughly at odds with the facts of reality. The Demo-Socialists remain reliably constant.

But... what's the GOP's excuse?

First, some necessary background, in the form of three excellent and beleaguered video summations, posted at The Bidinotto Blog

If only Bush and/or McCain had a couple sane economic advisors - for the record, Dr. George Reisman and Dr. Walter E. Williams are at the top of the list - and listened to them, they would likely make a new announcement that this bailout is not needed (if it ever was.)

But Bush and McCain do not have sane economic advisors, nor apparently even competent political strategists. The no-brainer position on principle (look the word up, guys,) is staring them right in the face, yet they're consumed with an obsessive-compulsive devotion to this $700 Billion Congressional hog-wallow. A prime opportunity to divorce themselves from the Demo-Socialist Party's power-grab and realign themselves with the overwhelming wishes of the American people is also there for the taking. Can you imagine the looks on the faces of Pelosi, Frank, Obama and that pack of clowns if the Republicans left them standing alone in the cold with their mega-looting bill? So do you think Bush or McCain will spot the principled option and seize it? Naaaaahhh.

Wall Street nosedived yesterday, but... has the economy melted down? Or is this just a massive yet otherwise normal self-correction, much like the self-correction of the market following the implosion of the tech bubble ca. Winter 2000-2001? As of today, the market has gotten its legs back handily, with absolutely no help from the Federal Government. That's: All by its lonesome. Say it isn't so! As testimony to the embarrassment now afflicting the pack of looters who've been licking their chops for some of that fabled $700B, note the near-unanimity of condemnations...not of Washington's "Fannie Mae/Freddie Mac" corporativist scammers (BARNEYFrank! Ach...ach...CHRISDodd!! 'Sneeze, sorry,) but of Wall Street and its producers. Naturally.

Granted, some of that stock rebound may be attributable to Wall St.'s expectation that the government will eventually play Mega-Santa. But could it be that maybe, just maybe, Wall Street can indeed wean itself off of the government teat and walk on its own two feet? The fact that "economic armageddon" has not occurred, as predicted so hopefully by the Democrat-Socialist Party, argues that Wall Street can.

So... what should Bush, McCain and the GOP "leadership" be pushing for? I mean, What Would Ronald Reagan Do? I... have some suggestions, which I trust will be roughly the opposite of what those "leaders" will choose:

1. McCain prides himself on the label of "maverick," and just today made the ridiculous statement that "'bipartisanship' is a tough thing." To paraphrase Mr. Limbaugh: No, it isn't. What is a "tough thing" is sticking to one's principles in the face of withering, often barbaric criticism from an opposition Party that has lost the capacity for civilized behavior.

If Bush and McCain wanted to embrace proper principle for a change, one or both would schedule a press conference tomorrow morning to announce that, given Wall Street's Tuesday rebound and its indication of a resilient and self-correcting economy, that the GOP has now canceled its endorsement of and now opposes any government bailout. This on the sound principle that any market correction needs to happen, not to be prevented.

2. As a reassurance in keeping with the government's mission to protect, rather than violate, people's property rights, Bush and/or McCain could unveil a modest, temporary and strictly as-needed fund to bolster the FDIC - to protect the property of depositers in any bank failures not absorbed by buyouts by solvent banks. Period.

Prior to the mass intrusion of government controls into the private banking industry, banks deposits were not guaranteed by government - the "FDIC" did not exist. So how did people bank with confidence? Oh, however did anybody function without an omnipresent government nanny?

Simple: The natural mechanisms of the market provided all the security they needed. Banks, bereft of any outside "guarantees," had to earn the trust of customers over a long period and with a record of consistent security and trustworthiness. After the government jumped in, the door was opened to any and all, honest and dishonest, competent and incompetent alike, into the wonderful profession of banking.

What we are seeing today is the end result of (among many other things, also government-caused,) an artificial, blanket guarantee that removed from the banking industry any natural incentive to trustworthiness and competence. It's a directly-analogous repeat of the 20th-century Welfare State's removal of the incentive to responsible, self-reliant behavior - and the consequence of multiple-generation welfare junkies.

Which means that after this particular crisis has passed, principled lawmakers must also proceed with the abolition and dismantling of Federal Deposit Insurance, along with the entire edifice of government involvement with the banking industry, of which, all too obviously, it knows nothing.

A must-read on a longer-term fix for this government-engineered calamity is economist George Reisman's March 22 article Our Financial House of Cards and How to Start Replacing It With Solid Gold

And as always, if you're not in contact with your elected officious at least quarterly, you're a chump. So don't be a chump.


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