More Guest Commentary on the Bailout

I have been corresponding with my friend Peter on the bailout and after the Senate passed the pork laden bailout bill, I ended an email with "We are well and truly screwed".

I think Peter's response is worth passing on.

For anyone who has every been a parent, you certainly get to know what is to be looked up to as the purveyor of all that is good and just and the wisest person on the planet who can resolve any problem no matter size or scope. It is probably one of the most heartbreaking aspects of child rearing when Mommy and Daddy have to face up to the truth that there are some problems that we can't solve. One of those more humorous moments is when the parent tells the child that we can't buy that toy today because we don't have the money and the child, oblivious to the legal requirements of reserve banking, says, "Just write a check."

Socialists, in all their varied forms - communists, Fascists, Nazis, Progressives - are children. They demand and expect their nanny, the state, to deliver without any understanding that the state is incapable of creating wealth but only in stealing it from others. Communists complain of the the lower classes being slaves to the capitalists without regarding that their political philosophies enslave the productive to serve the weak and slothful.

The current bailout proposal before Congress is no different. It is a home invasion burglary by mob that tries to envelope itself with the air of legitimacy by being wrought upon us by a democratically elected governing body. Marx declared that capitalism would create its own downfall and he was half right. When capitalists use the unbridled force of the state to enrich themselves, they shouldn't be surprised
when the masses use the power of the state to steal back and that's when socialism, or one of her ugly daughters, come to the forefront. Marxism needs unfettered democracy for it to work. Once the electorate learn that they can make themselves rich by voting to steal from the public treasury, then a democracy cannot long rule.

Our country was never supposed to be a democracy. Our founding fathers were just as wary of a democracy, which many considered "tyranny by mob," as they were of a monarchy and that is why they tried to give us a representative republic which was supposed to be ruled by law, the Constitution, and not by men. It is unfortunate that the Constitution was written, possibly with intention, too vague and with no punishment for those in office who violate it and therefore it has been relegated
to the dumpster of history by those who have sworn an oath to protect and defend it.

It is hopeful that our children and grandchildren learn from the mistakes of our ancestors and ourselves and can make a better country for themselves out of the debris of this government as it collapses under it own weight. All forms of medical surgery can be scary and certainly risky but once one has gotten through the procedure and the old problem has been excised from the body, one can begin to live life anew and enjoy a fresh beginning.

Peter

Our children and grandchildren are going to hold us responsible for how we react to this "crisis". It seems to me that the only people who want to spend $700+ Billion dollars are the politicians. Many economist (ones not in the employ of the .gov) are against this legislation.

From Fox News:

By our friend John R. Lott, Jr.

Economists Raise Concerns About Bailout Plan

Interviews conducted with a dozen prominent academic economists, Obama supporters as well as McCain supporters, found little support for the bailout bill. Indeed, even the one economist who supported the proposal passed by the Senate Wednesday night had serious reservations.

Jonathan Berk, an award-winning finance professor at Stanford University and a strong opponent of the bailout plan, expressed the concerns of many: “I have never been so frustrated, I have never wanted to speak out publicly before on these political issues, but politicians don’t know what they are doing, they know nothing about these issues...”

The article covers many of the reasons why, financially speaking, this bill is so wrong for our economy. Reading it is well worth your time.

Here is a quote for you to ponder. Let's see if you can Name That Bailout?

"Following a pattern it had set in earlier bailouts of smaller banks, the government set up a holding company, which it financed together with the central bank. This company acquired all the corporate shares held in the portfolios of the banks at the higher historical, not current prices. thus, the government not only provided liquidity to the banking system, but it also absorbed part of its losses. It also became the largest shareholder in a number of firms. Many of the industrial firms thus acquired were themselves on the verge of failing and benefited not just from the rescue of their banks but also from the direct infusion of public money…. The cost of the entire bailout was a staggering 10 percent of GDP — the comparable amount in the United States today would be about $1 trillion."

Go ahead and hit the link for the answer, then come on back tell us what you think.

Thanks to Peter for his essay, The Volokh Conspiracy for leading us to the John Lott article, and to Downsize DC for the final quote in this post.