In just a few short months the bastion of capitalism, the American economy, has collapsed into full-fledged socialism. here is the outrage? Where are our leaders who should be extolling the benefits of capitalism and free markets? Those we would expect to be the leading voices in opposition to the current shortsighted monetary policies are the very same people standing in the front of the line to receive the largest percentage of the approximately two trillion dollar bailout.
The political leaders of both parties are complicit in voting for the bills that led to the current crises. Liberals argued that sound economic policies which required a loan applicant to have a job and a history of paying their bills should give way to a social policy of trying to make home ownership a reality for anyone, no matter what their socio-economic status. Instead of staying true to accepted economic principles regarding mortgage loans, conservatives acquiesced in the doomed social experiment. When the few conscientious legislators warned of the dangers of the subprime mortgage explosion they were ignored or chastised as being against the advancement of minorities.
Shortly after the collapse began, we were told we had to invest nearly a trillion dollars of tax payer money to save the U.S. and possibly the world from a certain economic collapse. Without ever taking the time to consider that part of the Capitalist theory is that there will be winners and losers in supply and demand economics, we blindly accepted the doomsday predictions and acquiesced to the blackmail position of pay up or face a worldwide collapse of the economic system.
We were told the money would be used for purchasing the toxic paper associated with the subprime mortgage markets so we could save millions of Americans from having their homes foreclosed upon. We were told the trillion dollars was needed to save Main Street, not Wall Street. What have we received as a result of this bailout? The same greedy mismanaging CEOs who created the financial crises have used the taxpayer money from the bailout to hold several retreats at a cost of hundreds of thousands of dollars. Top management people were given obscene bonuses, presumably for the “great job” they have done.
Though we were told the bailout money was to be used to purchase uncapitalized mortgages we are now told that the money has instead been used to recapitalize the banks. So basically, the public treasury was raided to bail out Wall Street and Main Street has been ignored. So the politicians who voted to approve the bailout avoided being voted out of office on Nov. 4, by telling the voters that the hard vote on the bailout had been taken to save their homes and jobs. Now that the election is over, those very same politicians are showing their true allegiance is not to the voters, but rather to the powerful lobbyist who represent the interest of those responsible for this financial crises.
Where is the public out cry for the heads of those responsible for creating this mess? Both parties share the blame and both parties are working together to protect the guilty. There will be no accounting because so many of the elected officials who were responsible for protecting us, at best, are guilty of negligence and at worst guilty of greed and self interest. It is hard to get a pig to butcher itself.
Now that we have nationalized the banking and credit industry, others are demanding the same. The auto industry wants the taxpayers to give them billions of dollars so they can survive. While I am against bailing out the auto industry with billions of dollars, I understand the argument that the financial industry collapse has effected credit to such an extent that people can not or do not want to obtain loans to purchase cars. Dealerships likewise, can not obtain the operating capital usually available to fund inventory and operating costs. Yet, at the same time other auto manufacturers are likewise affected. Toyota and Honda are surviving under the same circumstances and not standing in the government welfare line asking for a handout. Their corporate models are different than that of the big three and apparently superior business models.
While thus far Congress has said no to the bail out of the American Auto Industry, it is inevitable that they will give the big three what they ask. Not because they deserve it, but because of the belief they are owed it as a political payoff for supporting the Democrats in the recent election. While I understand the concern raised that if we do not save the big three, then millions of people will lose their jobs and the ripple effects will be devastating. How does the government choose one industry and deny helping another?
Do we really want the government to begin choosing which industries or companies survive and which do not? Does not a free economic system also mean one has the freedom to fail? In an effort to appear to have performed their due diligence, Congress is requiring the big three auto makers to provide a business plan on how they plan to spend the 25 billion dollars they are requesting. (I would have preferred that a business plan have been provided by someone before Congress handed over nearly a trillion dollars to bail out Wall Street!) Over 290 Billion has been spent already with little or no accountability for where it has gone. Secretary Paulson will have sole discretion on how the remaining hundreds of billions of dollars are spent when Congress recesses.
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