December 30, 2008
World Economic Condition, and Change
Vic Biorseth, December 29, 2008
http://www.Thinking-Catholic-Strategic-Center.com
It’s time to take a closer look at the world economic condition and where we all might be headed. Obama ran and won on the thin, vague theme of Change, which was largely undefined, and sometimes was referred to as Change we can believe in, another thin, vague term, which also remained largely undefined. What kind of change? What kind of person or people would “believe” in it?
First, let’s look at how we got to this point. I strongly recommend that you take a quick look at the 2008 Financial Crisis page for a quick current history along with a rather shocking comparison to the causes and history of the Great Depression, and then continue reading right here. My reason for this recommendation is that the similarities between this existing world economic condition and the one at the beginning of the Great Depression are so very remarkable.
The Stock Market was what the people who should have known better were staring glassy eyed at, when they should have been paying intention to more important economic indicators, or just going about their daily work. On Black Thursday, October 24, 1929 there was a “crash” and the whole world incorrectly interpreted it to mean the “failure” of free market Capitalism. Most people even today think that was the real beginning of the Great Depression, when it was merely a bad day on Wall Street. An unsustainable speculative bubble burst, as all unsustainable speculative bubbles inevitably do. A panic stricken government took charge of the free market and regulated the hell out of it, driving America and the world into the Great Depression in the process.
In late 2008, guess what, the same thing happened. Another bad day on Wall Street, and another unsustainable speculative bubble burst, and another government was panic stricken enough to “take charge” of the free market and fix it good. This time the speculative bubble that popped involved real estate. At the root of it all was a corrupt-from-the-beginning so-called Sub Prime Mortgage Market.
And, at the root of the Sub Prime Mortgage Market are the twin government-invented monstrosities Fannie Mae and Freddie Mac. Again, how these economic monsters came into being and grew, corrupting everything they touched, may be seen in the 2008 Financial Crisis page.
If Fannie Mae and Freddie Mac had not, number one, been created by government, and, number two, become the largest mortgage holding companies on Earth, largely though corruption, the real estate speculative bubble might never have grown so large. Not only were down-and-outers who couldn’t afford a home granted mortgages they couldn’t afford to pay for small homes through the offices of Fannie and Freddie, but the corrupting economic lure of this whole market spread it’s influence upward to touch people who were not down-and-outers. In several ways.
First, legitimate banks and lending institutions were influenced to grant a larger mortgage to someone – a normal person in reasonable financial condition - who really should have been looking at a smaller house, and a smaller loan. The reason was that the lending institution could sell the mortgage, after they approved it, to Fannie Mae or Freddie Mac, who would buy it, without question. Remember, both Fannie and Freddie were originally intended to help the poor person, not the middle class person who just wanted to buy a bigger house.
So poor people were not the only ones getting mortgages approved which they could not really afford based on their assets and income. Some really sizeable mortgages are contained in this so-called sub prime “market”. I submit that “market” is an incorrect title; the free market had nothing to do with this.
Second, Fannie and Freddie “bundled” the most horrible risk sub-prime mortgages with not-so-horrible risk ones, and then sold them to other financial institutions as Mortgage Backed Securities. See? Sounds like a good, secure investment, doesn’t it?
Now, you might ask, what financial institution in it’s right mind would “invest” in such a questionable security? Well, if Fannie Mae and Freddie Mack were invented by and backed by the United States Government, wouldn’t that make it a fairly certain “investment”? The financial institution couldn’t loose their investment, as long as it was backed by the US government. All they could do was make money or break even, but not loose.
What made matters worse was that many of the financial institutions that “invested” in these sub-prime Mortgage Backed Securities bundled them with other mortgages and sold them again to other investment institutions. Probably every major bank and investment house in the world is now financially infected by America’s sub-prime mortgage fiasco.
Third, the credit market was opened wide, thanks to Fannie and Freddie, and it became far too easy to get a mortgage in America. Enter the speculator, and the flipper. People who had no real interest in living in a home for any significant amount of time were granted home loans that would be flipped within two years, sometimes less. All they had to do was marginally qualify for a loan that would be immediately sold to Fannie or Freddie. Availability of credit for such loans created a huge housing boom, and it also created many huge local speculative real estate bubbles all around the US.
Well, the speculative bubble may have burst, but the causative problem remains intact, and it is protected by the government. You might say it is now institutionalized.
It’s still going on. One thing all Socialists – I mean Democrats – and all reach-across-the-aisle Republicans insist upon is that nobody is to loose his house. So much for the free market. Fannie Mae and Freddie Mac are still creating new questionable sub-prime mortgages. If you’re in trouble with your current home loan, you can get another loan to take care of it. If you watch TV, on virtually any channel, including even the Fox News Network, you will see ads for new loans, government guaranteed, for re-financing your home.
Credit? What credit? You don’t need no stinking credit. Just call the 800 number. It’s guaranteed.
The solution to a credit problem is seen to be to make more credit available.
The solution to a loan problem is seen to be to get another loan.
The solution to a money problem is seen to be to throw more money on it.
Meanwhile, the Stock Market refuses to respond predictably to all the money the government keeps throwing away. Eyes glazed over, the “experts” keep staring at the stock market, just as they did back in the thirties during the Great Depression.
The point that they all miss is that the stock market, watched on a daily basis, means next to nothing. If you watch the stock market daily and try to somehow relate it to the real economy, it will just make you crazy. Overall stock market trends only make any sense at all over very long periods of time.
What we have here is what we had back in 1929 – a gross US government over-reaction to nothing more than a stock market spike, and the bursting of a speculative bubble. It should have been left alone. We may suspect, and it may be, that there were other devious Marxist motives behind government action, but reaction to the current market was the excuse that was used. If we don’t do something really big now, why, the whole market will collapse.
So, they did something really big, and thereby made the situation worse.
And they just keep building on that. Just like FDR did back in the thirties. And just like Hoover before FDR. It’s the Great Depression all over again.
Obama promises to spend our way out of our difficulties, just as FDR tried and failed to do, over and over again, right on into World War II, plowing America deeper and deeper into economic depression. We are going to “invest” in infrastructure and so forth. Every child – not every qualified child, but every child – is to be able to afford a college education, at our expense. (Maybe some day every man, woman and child on Earth will be a full blown PhD.)
What we might do is to hire lots of government workers to dig holes in the ground, and then hire more government workers to follow behind them and fill the holes back in again, eventually hiring everybody. The amount of tax dollars collected from all of these government workers will not be sufficient to pay their wages, so, once all private industry in America is dead and there is no other source of government revenue, we will simply crank up the printing presses at the mint and print more money to meet the ever growing government payroll. How’s that for a plan?
Inflation is one of several factors the “experts” should have been watching rather than the stock market. Note this very well: in all of recorded history, including even the Carter years, there has never been an instance of rampant or run-away inflation in any nation that was not directly related to that nation printing too much national money. Only governments cause any inflation that is other than extremely temporary and self-correcting.
Long lasting inflation is not caused by any wage-price spirals, other contentious issues between labor and management, global warming or anything other than overuse of government printing presses or mints.
Right now we are in a deflationary situation, because the credit crunch has made the dollar less available to industry and to citizens. The dollar is now unusually high on the world market, which is not a good thing, because that makes American goods and services overseas very expensive and kills our export market.
Before all this crap happened, the American dollar was quite stable, and it has been the world standard monetary unit for a very long time. But the “Bush Bail Out” knocked the drain plug out of the economic boat, and the government has been faithfully “bailing” economic water into the boat ever since.
Milton Friedman’s monetarism tells us that the government should concentrate on the supply of money and leave interest rates alone, to float with the free market. Money supply should be tied to legitimate population increase, or, when population increase is low, not to exceed about 2.5 percent per year. The inflation rate is thus tied directly to the annual change in money supply.
Interest rates are another economic factor not watched by the “experts” who preferred to watch the market ups and downs. Interest rates in October 2008 were around 6 percent and stable.
Interest rates now are zero. I’m not kidding. If it goes any lower, the banks will pay you money to borrow. Only thing is, credit is now so tight, you probably couldn’t qualify to get a zero interest loan anyway. Nobody is lending. Unless you go to Fannie or Freddie, or maybe that re-finance loan advertised on the Fox News Network.
The Fed just keeps tweaking interest rates downward hoping to loosen up credit and get people in a borrowing mood, and it just keeps on not working. As seen in the 2008 Financial Crisis, the Fed caused the banking catastrophe of the Great Depression, and really does not even deserve to continue to exist.
Unemployment is another economic factor the “experts” should have been watching rather than the daily, or even hourly ups and downs of the fickle stock market. Before the panic induced “Bush Bail Out” our unemployment rate was around 6 percent, which was pretty bad, for us. But then, 6 percent unemployment was considerably better than all the rest of the world was doing at that time, as usual. I challenge you to find a large country that had a lower unemployment rate than us at that time.
Now, after the fact, American unemployment is rocketing. Plants and small businesses are closing left and right. With the death of credit, “float” money is unavailable to meet payrolls and pay vendors to keep business going. Business means jobs. Whole industries are now at risk.
And our government cannot leave well enough alone. It now appears to be addicted to free market interference at all levels.
Just watch what all this government interference does to our GDP.
GDP – Gross Domestic Product. Definition of GDP:
The total market value of all final goods and services produced in a country in a given year. GDP is equal to the total of consumer, investment and government spending, plus the value of exports, minus the value of imports.
The GDP report is released at 8:30 am EST on the last day of each quarter and reflects the previous quarter. Growth in GDP, plus or minus, is what is always emphasized. The U.S. GDP growth has historically averaged about 2.5-3% per year, with substantial deviations. The international norm used for the GDP is the US dollar.
The GDP numbers are reported in two forms: current dollar and constant dollar. Current dollar GDP is calculated using today's dollars; using current dollar GDP makes comparisons between time periods difficult because of the effects of inflation or deflation. Constant dollar GDP converts current dollars into some standard era dollar, such as 1999 dollars. This process factors out the effects of inflation/deflation and allows more accurate comparisons between periods.
It is important to differentiate Gross Domestic Product from Gross National Product (GNP). GDP includes only goods and services produced within the geographic boundaries of the U.S., regardless of the producer's nationality. GNP does not include goods and services produced by foreign producers in America, but does include goods and services produced by U.S. firms operating in foreign countries.
I prefer GDP to GNP as a measuring stick of annual wealth production of a nation because GDP is a measure of stuff produced in a nation by that nation’s workers, regardless of who owns the firms for whom the products or services were produced.
GDP, expressed as a percentage, is a useful tool for determining where the economy is going. A flat or declining GDP over two or more quarters is the most commonly agreed sign of an economic recession. A flat or declining GDP over four or more quarters is the most commonly agreed sign of an economic depression.
But, comparing GDP from one nation to another doesn’t mean much when expressed as a mere percentage of growth. For one thing, in many nations growth is a matter subject to radical change, up or down, during some years. And the percentage increase or decrease says nothing about the quantity produced.
The more useful comparative tool is the Per Capita GDP, or, a given nation’s total GDP amount in American dollars for that year, divided by that nation’s population.
I submit that Per Capita GDP is about as good a tool as may be used to determine a people’s or a nation’s wealth production in any given year.
The Per Capita GDP of the United States of America is typically ahead of virtually every other nation on earth, year after year. We may expect that to change for the worse under Obama and the Socialists. I mean Democrats.
Let’s look at 1999, a typical year. Note that the mean Per Capita GDP of the whole world that year was $6,600. All Socialist or near Socialist nations were far below that (China, Russia, Cuba, Vietnam, etc.) Using this year, I will make some statements, or arguments, that I believe are sustainable.
Argument 1: People in Capitalist countries create wealth, as explained in the Pure Democracy page. People in Socialist countries consume wealth, as explained in the Pure Socialism page. The more Socialistic any country is, the lower will be that country’s Per Capita GDP. The more Capitalistic any country is, the higher will be that country’s Per Capita GDP.
Argument 2: Ignoring the Capitalism Vs. Socialism argument, it may safely be stated that the more freedom and individual rights a people enjoy, the higher will be their Per Capita GDP, and conversely, the more restricted, regulated and less free a people are, the lower will be their Per Capita GDP.
I will go a step further.
Argument 3: We have seen the close, symbiotic relationship between the Judao-Christian Ethos on the one hand, and Capitalism combined with Democracy on the other, as described in the Catholic Thinker page. Western Culture Nations aligned with or not long divorced from a long tradition in the Judao-Christian Ethos will be seen to be toward the top of the Per Capita GDP ranking, and those with another ethos, or no discernable ethos, will be seen to be toward the bottom of it.
We know, and history proves, that Socialism opposes and suppresses Judao-Christian religion and open religious expression, and abhors and suppresses Judao-Christian morality and social norms. What Socialism promotes is pure materialistic atheism and “outcome” based central plans for achieving eventual social perfection. The three most frequently heard axiomatic statements to be heard from the mouths of up and coming Socialist petty bureaucrats, bosses and dictators are these:
- The ends justify the means;
- You cannot make and omelet without breaking some eggs;
- Shut up and get on the cattle car.
Those phrases constitute the sum total of Socialist moral norms, or Socialist amorality. In sharp contrast to the well known Judao-Christian Ethos, this “progressive” amorality is what I have elsewhere referred to as the ethos of BMDFP and Democrats. Any new wealth in any Socialist nation comes out of immoral activity and exists only under the control of or in the pocket of the dictator.
Argument 4: I submit that those Western Culture nations most recently emerged from Socialist dictatorship and decades of brutal state suppression of their traditional Judao-Christian Religion and Morality will be found more toward the bottom of the chart than those traditional Western Judao-Christians who were more free during the same period of brutal Socialist religious suppression.
Judao-Christian peoples inherently and naturally know right from wrong.
Socialist ideologues know only whether something promotes and contributes to social sameness, or not.
Per Capita GDP, Year 1999:
1 Luxembourg $32,700 2 United States of America $31,500 3 Bermuda $30,000 4 Switzerland $26,400 5 Singapore $26,300 6 Hong Kong $25,100 7 Monaco $25,000 8 Norway $24,700 9 Cayman Islands $24,500 10 Belgium $23,400 11 Denmark $23,300 12 Japan $23,100 13 Liechtenstein $23,000 14-1 Austria $22,700 14-2 Kuwait $22,700 15 France $22,600 16-1 Canada $22,400 16-2 Iceland $22,400 17 Netherlands $22,200 18 Germany $22,100 19 Aruba $22,000 20-1 Australia $21,200 20-2 United Kingdom $21,200 21 Italy $20,800 22-1 Bahamas, The $20,100 22-2 Finland $20,100 23 San Marino $20,000 24 Sweden $19,700 25 Guam $19,000 26 Ireland $18,600 27 Israel $18,100 28 Andorra $18,000 29 Gibraltar $17,500 30 United Arab Emirates $17,400 31 Qatar $17,100 32-1 Brunei $17,000 32-2 New Zealand $17,000 33-1 Spain $16,500 33-2 Taiwan $16,500 34 Greenland $16,100 35-1 Faroe Islands $16,000 35-2 Macau $16,000 36 Portugal $14,600 37 Greece $13,400 38-1 Bahrain $13,100 38-2 Isle of Man $13,100 39-1 Cyprus $13,000 39-2 Cyprus - Turkish Sector $13,000 39-3 Malta $13,000 40 South Korea $12,600 41-1 Chile $12,500 41-2 Virgin Islands $12,500 42 Netherlands Antilles $11,500 43 New Caledonia $11,400 44 Czech Republic $11,300 45 Barbados $11,200 46 Saint Pierre and Miquelon $11,000 47 French Polynesia $10,800 48 Martinique $10,700 49-1 Argentina $10,300 49-2 Malaysia $10,300 49-3 Slovenia $10,300 50-1 British Virgin Islands $10,000 50-2 Mauritius $10,000 50-3 Nauru $10,000 51 Northern Mariana Islands $9,300 52-1 Guadeloupe $9,000 52-2 Puerto Rico $9,000 52-3 Saudi Arabia $9,000 53 Palau $8,800 54 Uruguay $8,600 55 Venezuela $8,500 56-1 Mexico $8,300 56-2 Slovakia $8,300 57 Trinidad and Tobago $8,000 58-1 Antigua and Barbuda $7,900 58-2 Oman $7,900 59 Turks and Caicos Islands $7,700 60 Hungary $7,400 61-1 Anguilla $7,300 61-2 Panama $7,300 62 Seychelles $7,000 63-1 Poland $6,800 63-2 South Africa $6,800 64-1 Costa Rica $6,700 64-2 Fiji $6,700 64-3 Libya $6,700 65-1 Colombia $6,600 65-2 Turkey $6,600 65-3 World $6,600 66 Gabon $6,400 67-1 Brazil $6,100 67-2 Thailand $6,100 68-1 French Guiana $6,000 68-2 Saint Kitts and Nevis $6,000 69 Estonia $5,500 70-1 Belarus $5,200 70-2 Tunisia $5,200 71 Croatia $5,100 72-1 Dominican Republic $5,000 72-2 Iran $5,000 73 Lithuania $4,900 74-1 Ecuador $4,800 74-2 Reunion $4,800 75 Algeria $4,600 76 Lebanon $4,500 77 Peru $4,300 78 Swaziland $4,200 79-1 Bulgaria $4,100 79-2 Latvia $4,100 79-3 Namibia $4,100 79-4 Saint Lucia $4,100 80 Romania $4,050 81-1 Cook Islands $4,000 81-2 Russia $4,000 82 Guatemala $3,800 83 Paraguay $3,700 84-1 Botswana $3,600 84-2 China $3,600 85-1 Grenada $3,500 85-2 Jordan $3,500 85-3 Philippines $3,500 85-4 Suriname $3,500 86-1 Dominica $3,300 86-2 Jamaica $3,300 87 Morocco $3,200 88 Kazakhstan $3,100 89-1 Belize $3,000 89-2 Bolivia $3,000 89-3 El Salvador $3,000 90 Egypt $2,850 91 Indonesia $2,830 92 Armenia $2,700 93-1 American Samoa $2,600 93-2 Solomon Islands $2,600 94-1 Guyana $2,500 94-2 Nicaragua $2,500 94-3 Sri Lanka $2,500 >94-4 Syria $2,500 94-5 Uzbekistan $2,500 95-1 Honduras $2,400 95-2 Iraq $2,400 95-3 Lesotho $2,400 95-4 Papua New Guinea $2,400 95-5 Saint Vincent and the Grenadines $2,400 95-6 Zimbabwe $2,400 96-1 Montenegro $2,300 96-2 Serbia $2,300 97 Mongolia $2,250 98-1 Georgia $2,200 98-2 Kyrgyzstan $2,200 98-3 Moldova $2,200 98-4 Ukraine $2,200 99-1 Samoa $2,100 99-2 Tonga $2,100 100-1 Cameroon $2,000 100-2 Pakistan $2,000 100-3 Saint Helena $2,000 100-4 Wallis and Futuna $2,000 100-5 West Bank $2,000 101 Mauritania $1,890 102 Maldives $1,840 103 Ghana $1,800 104 Vietnam $1,770 105 Federated States of Micronesia $1,760 106-1 Bosnia and Herzegovina $1,720 106-2 India $1,720 107 Cote d'Ivoire $1,680 108 Togo $1,670 109-1 Azerbaijan $1,640 109-2 Central African Republic $1,640 110 Turkmenistan $1,630 111 Senegal $1,600 112 Cuba $1,560 113 Kenya $1,550 114-1 Republic of the Congo $1,500 114-2 Equatorial Guinea $1,500 115 Albania $1,490 116-1 Cape Verde $1,450 116-2 Marshall Islands $1,450 117 Bangladesh $1,380 118-1 Benin $1,300 118-2 Haiti $1,300 118-3 Vanuatu $1,300 119 Laos $1,260 120-1 Burma $1,200 120-2 Djibouti $1,200 120-3 Niue $1,200 121 Guinea $1,180 122-1 Nepal $1,100 122-2 Sao Tome and Principe $1,100 123 The Former Yugoslav Republic of Macedonia $1,050 124 Uganda $1,020 125-1 Angola $1,000 125-2 Bhutan $1,000 125-3 Burkina Faso $1,000 125-4 Chad $1,000 125-5 Gambia, The $1,000 125-6 Gaza Strip $1,000 125-7 Guinea-Bissau $1,000 125-8 North Korea $1,000 125-9 Liberia $1,000 125-10 Tokelau $1,000 126 Tajikistan $990 127 Niger $970 128 Nigeria $960 129 Malawi $940 130 Sudan $930 131 Mozambique $900 132 Zambia $880 133-1 Afghanistan $800 133-2 Kiribati $800 133-3 Tuvalu $800 134 Mali $790 135-1 Burundi $740 135-2 Yemen $740 136-1 Madagascar $730 136-2 Tanzania $730 137 Democratic Republic of the Congo $710 138-1 Cambodia $700 138-2 Comoros $700 139 Rwanda $690 140 Eritrea $660 141-1 Mayotte $600 141-2 Somalia $600 142 Ethiopia $560 143 Sierra Leone $530
Note that many nations may have more existing wealth than does the United States of America. “Old Money” is an important factor in many ruling families, among royalty and nobility, among many organized crime families, criminal factions and in many dictatorships and corrupt governments around the world. And, note well that there is much new wealth created every year that is not accounted for “above the table” because it is new wealth that is produced in some illegal manner.
But when we look “above the table” where all respectable peoples operate within all recognized law and standards of decency, very few peoples produce as much legitimate wealth on an annual basis as do the people of the United States of America. As I said before, we may expect that to change soon.
It may take time for our “ranking” among nations to significantly change, because the growing world wide economic depression will negatively affect other nations much more than it will affect the USA, for a time. Until now, whenever America got an economic cold, the world came down with pneumonia. America is still the economic engine of the world. It’s hard to predict where we and the world will be after complete American economic collapse, if it goes that far. At the moment, that is where we are headed.
The Auto Industry is now in jeopardy. Not just the American auto industry – the world auto industry is in serious trouble. A new car is a big ticket item, and credit is tight everywhere. Unemployment is high and rising. Everywhere the consumer looks he sees economic bad news, including threats to his income and even threats to his retirement. It is not the time to buy a new car unless you can pay cash, and even then you might see a better use for that increasingly valuable money. The value of American money is going up even when it is not in a bank. Bury it in a tin can or stuff it in a mattress, and tomorrow it will be worth more than it is today.
The pity of it all is in the timing. Congress had already approved a multi-billion dollar loan – not a grant – to the American auto industry before this crisis came about; but the deal had not yet been consummated. Now, since the major, major government interference with the free market, the economic situation is becoming desperate. But no professional politician is going to sit back and just take the rap when he can shift blame elsewhere, just as publicly as possible.
Now, the American auto industry, against all odds, has been producing quality cars at competitive prices, using union labor and meeting café standards. They probably don’t want to talk about their profit margins, but their prices are certainly competitive. They are producing lots of quality, competitively priced 30-mile-per-gallon class cars, and hybrids, and “green pleasers” and getting no credit for it. Bottom line, in America, those cars just don’t sell in the same volume that bigger cars sell. The consumer drives the market.
Committed detractors, which is a more accurate term than objective critics, in journalism and in politics, complain that Detroit produces ozone-depleting, greenhouse-gas emitting, gas-guzzling SUV behemoths because they get a higher profit margin from those higher priced larger vehicles. And I suppose that’s at least partially correct; they do produce more profit per unit. However, they also represent what the consumer wants. And, as you can see in the Eco-Nazi Front page, the effect of all of these cars on the ozone and on global warming and on the price of gas and on the world supply of oil is, exactly and precisely, nothing whatsoever. Which is to say, much, much too small to even measure.
You can look at the The SLIMC Vs. The Truth page for some gross examples of how our predominantly Marxist SLIMC habitually demonizes free market Capitalism in general and the American auto industry in particular. Even as “news”.
Sales of small cars vs. large cars vary to some degree from year to year with the price of gas. But, by and large, Americans like and want bigger cars, and even when gas is high, there always remains a certain percentage of American customers who will still buy larger cars. That’s just the way it is.
But Congress doesn’t want to hear it. They rake the Big Three big shots over the coals because of their “failed” business model and their stupid business plan to produce a lot of big cars rather than all little cars. Politicians who never produced any good or service and who never met a payroll are insisting that the Big Three drop production of all big cars before they will be granted a loan.
The customers may be damned; they don’t know what’s good for them. Government knows best. The only reason people are buying big cars is that they are available to be bought. If they were not available on the free market, everybody would then buy and drive nice little green cars, and the world would be a wonderful place. If only Big Business would just shut up and listen to Wise Government.
So, where are we going? That’s the question. I’m not going to pretend to know the answer. All I know is that, if my name were Mr. GM, I would strongly consider filing for Chapter 7 (not Chapter 11) bankruptcy and shutting it down, rather than running a car company as a purely Marxist government department. Chapter 7 is when you say to the court, take all my assets and settle with my debtors as best you can; I’m all done with it. It’s finished.
Now, Congress, and seemingly, everybody, wants to see Chapter 11 and a reorganization, with Congress having prior approval of the reorganization, and being deeply involved in it, and also being deeply involved in the running of the reorganized company(s). Which is to say, a virtual nationalization of the American auto industry. A happy day for Marxism. If nobody in the industry has the guts to stand up to Congress and refuse Congressional involvement in the running of the business, then they ought to just hang up their spurs and quit, and save everybody a whole lot of time and trouble.
Elimination of GM alone, let alone Chrysler and Ford, would mean disaster to thousands of dealerships, small and medium auto parts suppliers and transporters, and so forth. So would government running the business into the ground; it would only take a little bit longer and prolong the pain and suffering.
Question: What has our government ever run well?
Answer: Nothing whatsoever.
Everything – every single thing – that the government is in charge of is a virtual disaster. The only reason our military is doing as well as it is is that Republicans have learned how to properly leave it alone. Wait until the Dems start cutting the defense budget again, and interfering with the military mission through micro-management. Defense will go back to being the toothless wimp it was under Carter.
The auto industry has been being teased, harassed, poked and taunted as it played the role of Atlas, holding the economic world on his mighty shoulders. Atlas should shrug. He should drop the world, and just walk away in disgust. If the government gets it’s bureaucratic claws into the auto industry, then the auto industry is doomed anyway.
The only other alternative I see to complete economic melt down would be a President with the balls required to go after Fannie Mae and Freddie Mac with a meat axe and permanently destroy them, and to pull back, wherever possible, and stop all future bail-outs. Cut government spending to the quick, cut taxes, and get the hell out of the way of business. Let economic failures happen, including individual mortgages.
Not too likely. They’ll all sniff and say “we just can’t. Right.
Hang onto your hat, and pray.
Maybe in four years, if we survive, Sara will still be around . . .
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World Economic Condition
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