The current financial crisis has come to the greatest head to date. I say to date because it will certainly get much, much worse. There are a number of things that have been battling inside my mind the past few days related to this, yet they have remained elusive whenever I attempt to corral them into the hardened context of speech. These feelings and thoughts are like a malevolent maelstrom of color and light, fueled by ironic rage and righteous indignance. I imagine, perhaps vainly so, that I have reached into a deep well of ageless frustration that knows no spatial or temporal bounds. I drink heady draughts from the same wellspring of defiance as John Hancock, Edmond Dantes, and V, all of us bound by an immortal sense of defiance in the face of hopeless odds. Perhaps I romanticize my frustration with the current state of affairs in the world economy, but perhaps that's a good thing. Perhaps we should all be so incensed as to hope for nothing more lofty than to see ourselves being dragged screaming to the pillory for blasphemy against the establishment, confident that we will have the last laugh if only we survive the fall. This sense has instilled in me a Zen like acceptance of the endtimes, a wu-wei passivity that assures me the best will come from the worst possible ends, and along with it a blessed release from the Samsara of partisanship as I realize that both sides are so very very wrong on this issue. Here's a few reasons why:
1. The “Bailout”
$600,000,000,000 – the bailout
2. The Precedent
Even as the last aftershocks are still rippling through the global economy, America will be picking itself up and dusting itself off. Tattered and tired, we'll look at our once brave nation and see a broken husk. Oil will continue to skyrocket on the open market, foreign nations will turn their noses up at a Treasury stocked with toxic assets and saddled with trillions in corporate debt, and the dollar will plummet. We will cry out in our hour of need, the plaintive plea of desperation last heard almost a century ago the last time a meddling government freebased a giant hit off the ass of the people. Big government will step in with their plan to get America back on track – you've already heard it, but now they'll have their reason. Corporate equity owned by the government will be used as collateral for the Treasury to issue a new round of blank checks to subsidize health care. After a hundred trillion dollars in taxpayer burden, what's a few more hundred billion? We'll have the health care we all so dearly need, but what of our jobs? So many of us are now broke, saddled with higher taxes and a worthless currency, that we can't afford to feed ourselves. So in comes phase two – energy independence for all by creating a new arm of the Department of Energy that will institute public building of nuclear/wind/tidal/solar/etc energy sources at an unprecedented pace. Funded by more skin of the back of the taxpayer, the lower socioeconomic third of our country will be indentured slaves to the government, happily erecting monuments to our failure to earn a living wage on Uncle Sam's dole in the hopes that oil is the real problem and if we build enough windmills it will all go away. But it won't go away, people will grow restless, commodity prices will keep rising as transport costs increase and the labor base of the country finds that it no longer is worthy of being extended credit by private enterprise. So the government, now the most potent regulatory financial organ in the world, will give out credit to those who need it most (remember this old line, how quickly we forget), getting them back into their homes and driving consumption back up....Crash...
It doesn't have to be that bad. And maybe it won't be. Maybe our benevolent oppressors-cum-protectors will really be wise enough to steer the economy back onto a sound footing and then gently release the reins with a stern look down their noses and the admonishment not to let it get this bad again or they'll take away our toys for good. I just peed myself. You should have too – because any sane individual reading this knows that they will not give back the power, and the concept of a Washington that is responsible and wise was even rejected by the framers of our Constitution, so there's no reason to think politicians will become the “good guys” now.
What I do hope though, and this should be your hope too, is that we can have the vision to let it all fall apart. Capitalism, real capitalism, can work reasonably well, but only with strict private self-regulation and an absolute minimum of government interference. We'll still get booms and busts, and people will still do stupid things that break the system from time to time, but those have a way of sorting themselves out. Warren Buffet knows it, T. Boone Pickens knows it (though he missed the boat this last time around, it seems), and we should know it. The big question I've asked myself through all of this mess is, “Why should the average taxpayer really care if banks start going under?” Before the governent started bailing people out, the answer was that, aside from the sliver of the population that is in immediate need of liquidating their long-term investments, they shouldn't. This mess could have rippled on and on for years, burning itself out on its own, and we'd end up better for it. Sure, the American quality of life would be lower as a result of a damaged dollar (temporarily) and tighter credit standards (which we need anyway), but that's the correction that needs to happen, right? If we really believed in capitalism, we'd laugh as the losers went down, and those savvy enough to do so would maneuver themselves into position to profit from the loss. Consolidation, short-selling, all these things are good – people get richer when it happens. Sure, others get laid-off, but hey, dem's-da-breaks. I truly believe like the cleansing fires of the Phoenix's nest, a sudden crash will give rise to a wiser, stronger, better America, and by proxy a better world economy overall. And with the alternative being as grim as it seems to be, what have we to lose, really, by just closing our eyes and letting the tides take us where they may?