Wednesday, October 01, 2008

So, who really won the Cold War?

Here is an outstanding article published in Canada's National Post about why this proposed Wall Street bailout is nothing other than warmed-over Marxism.

The author is absolutely right.

Economically, a centrally-planned national bank is the fifth principle of Marx's Communist Manifesto, as the author points out. He also explains coherently and concisely why this principle - which is now embraced by mainstream "conservatism" is doomed to fail.

For further evidence that the Soviet Union didn't really fold but has only relocated to American shores, read this Associated Press piece. I especially like this part:
Now it's not about financial institutions. The focus has switched to everyday Americans. And it's not an expenditure of taxpayer money, it's an "investment."


"Let's not call it a bailout. Let's call it a rescue," said Republican John McCain.

Democratic rival Barack Obama said, "This is no longer just a Wall Street crisis -- it's an American crisis, and it's the American economy that needs this rescue plan."

House Speaker Nancy Pelosi's take: Its not a bailout but "a buy in, so that we can turn our economy around."

Bush, McCain, Obama and top congressional leaders agree the plan -- which would nationalize large numbers of bad mortgages and securities tied to them -- is needed to unclog the nation's financial arteries.

We need to "nationalize" bad mortgages. It's not a bailout, but a "buy-in," a "rescue plan," an "investment." The Communists (who were likewise proponents of nationalizing the economy) often changed the names of things to try to convince us, in the words of George Orwell, that "War is peace", "Freedom is slavery", and "Ignorance is strength."

Politically, I'm struck by the inherent Soviet-style polit-bureaucracy going on here. Instead of the mythical two-party system, we have the leadership of both "parties" agreeing in principle about the need for this unconstitutional corporate welfare. Both presidential candidates of our allegedly two-party system are in lockstep unity with each other that the taxpayers bear the burden of this bailout. Pelosi and Bush might as well be slow-dancing with each other.

So, in reality, we only have one party (sound familiar?). Finally, notice the use of rhetoric, of euphemisms, and of outright propaganda and lying that is going on! Goodness, back in the Cold War days, we mocked the Russians for this kind of thing.

And speaking of Communism, check out this excerpt from the actual bill (now, this is the one that failed in the House, but a version of which will most certainly be brought back from the dead like the Frankenstein monster to be wed to its bride that passed the Senate today):
"Decisions by the Secretary pursuant to the authority of this Act are non-reviewable and committed to agency discretion, and may not be reviewed by any court of law or any administrative agency."
Huh? Non-reviewable? May not be reviewed by any court? Goodness, does that sound remotely American? Again, such a proposal coming out of 1950s Moscow would have drawn hoots from the same supposed "conservatives" who are willing for this to become law in 2008 Washington.


Well, there are two small silver linings here, comrades:

1) quite a few people are waking up the the fraud that is today considered "conservative" economics and are learning about truly conservative economics instead (and they are calling their senators and congressmen, as well as pulling their money out of Wall Street and away from the increasingly-worthless dollar - or should we just go whole-hog and start calling it the American Ruble?).

2) Louisiana's two senators, one from each half of our single American party, were among the 25 senators who voted against Karl Marx on this one.


Rev. Benjamin Mayes said...

Father Hollywood, here's what looks to me like a good fix for the current problem:
Do you concur?

Hoffster said...

Wow, a Canadian lecturing about the Marxism in the American government-what irony!

Anonymous said...

I must say, the left-half of your senatorial team only voted against the bill because of she didn't want to set in stone her almost-certain defeat . . . .

Father Hollywood said...

Dear GOPTory:

I suspect you're right - as well as for most of the rest of the "nay" notes.

And that's exactly what I like to see - terrified politicians. They need to wake up in the middle of the night in a cold sweat dreaming of pitchforks.

David Vitter and Mary Landrieu both know they're on thin ice. Even "Dollar Bill" Jefferson voted it down, but I think he's actually pretty smart to put his bribe money in the freezer. Safer there than Wall Street. Hopefully, he's bought gold with it. It'll come in handy in prison.

They need to stop listening to the "leadership" on this one and take a hint from the people.

Father Hollywood said...

Dear Ben:

Dave Ramsey rocks! You don't get much more common sense than from him. I like his suggestions, but there is one major oversight - he doesn't address the Federal Reserve.

The Fed is an unconstitutional central bank that "creates" money out of thin air i.e. by loaning it into existence. The fed's very existence is antithetical to Ramsey's philosophy.

If you look at the devaluation of the dollar since 1913 (when the fed was created), you can see the precipitous drop in the dollar (from 1790 to 1913 it varied very little, but began to plummet in '13, and is today worth about 7 cents).

The mischief we have gotten into now has been considerably caused by fiat currency and fractional reserve banking.

But the best thing we can all do, I believe, is to adopt a frugal lifestyle, get out of debt, and save money - preferably in gold and invested in businesses not linked to the dollar.

Father Hollywood said...

Dear Hoffster:

And, for the icing on the cake, he's quebecois! Tabernouche, he must be one lonely freedom-loving francophone!

Past Elder said...

Big Government is not Marxism.

No Marxist would find anything remotely Marxist about the "bailout".

It's Marxism when you seize the means of production, not bad debt. Regulation of means of production you haven't seized is for "useful idiots".

Father Hollywood said...

Dear Brother Past Elder:

The Marxist part was a done deal in 1913 when the Fed was created (the same year the election of senators was taken from the states and when the federal income tax began).

1913 was a Marxist trifecta: a move away from states rights, wealth redistribution through progressive taxation, and a central bank with the power to issue fiat money. We began to reap the whirlwind in the bubble of the 20s and the bust of '29 - followed by more and increasingly radical socialism in the 1930s.

All of those Red ghosts are continuing to haunt us today.

Add to it a few things like military bases around the world, nation-building, secret prisons, suspension of habeas corpus by the executive branch with no declaration of war from the legislative, and torture... and now, nationalization of banks and centralized economic planning.

Having a centralized bank is a way for central planners to work around the market to manipulate capital. Every dictator wants a central bank!

Past Elder said...

When I first got into the financial world, the teacher getting us ready to pass the Series 7 used to say: 1913, the year of two disastrous mistakes, the Fed and the progressive income tax.

He left out the move to popular election of senators rather than by state legislatures -- which, btw, I agree with; if the Senate is to be equal representation by state then the state legislature electing them makes sense.

I'm not for the bailout. Not at all.

But I do think the idea that free markets are a solution, or that there even is such a thing, is as much a cherished illusion as that central government planning prevents all ills.

Father Hollywood said...

Dear PE:

Well, if we want to set the price of something - be it money (i.e. interest rates on loans) or houses, or cabbage patch dolls - there really are two ways to do it: 1) Let the market set the price based on supply and demand, or 2) Try to outsmart the market and drive prices up or down through government intervention.

#2 presumes that something is available for nothing, that value can be added by government fiat. It's just a shell game. The reality is that things are simply worth what someone will pay for them - not more, not less.

I guess the catch is your word "solution." I don't know exactly what you mean by it, but I do know that the value of a commodity is whatever people are willing to pay for it.

Government can't "make housing affordable" without simply taking resources from some and giving to others (which simply complicates matters and turns the state into a thief). But government can get out of the way, and let supply and demand interact with each other and settle on an equilibrium. The Soviets, Cubans, and Chinese believed wages and prices can be mandated and managed by The Party. They might as well try to regulate gravity. They are gradually giving up on such ideas. Such economies end up in ruin with people wither starving or with huge surpluses of manufactured things wasting in warehouses because nobody wants them.

If loaning money is lucrative (as it always has been), banks will have incentive to loan. But if they are taking risks, they will need to raise the interest rate to cover the risk. When government "bails out" bad risks, banks are encouraged into foolhardy risk-taking and lowering rates to be "competitive." And when those bad loans default, guess who gets to pick up the pieces?

I can't think of a single instance where government bureaucrats or party apparatchiks were able to establish price better than supply and demand. There are simply too many variables.

I guess when it comes to the Fed, there really are only two options: 1) We have it (central banking and fiat currency) or 2) We don't (free banking and hard currency).

With number 2, there is a level playing field insofar as the dollar can't be devalued by a secret government cabal.

wmc said...

And that's exactly what I like to see - terrified politicians. They need to wake up in the middle of the night in a cold sweat dreaming of pitchforks.

This is most certainly true. And this is most sorely lacking here in the People's Republic of California where the two sides of Demopublican Party have made a cozy little devil's deal not to run against each other's House incumbents.

Past Elder said...

So, when results fall short of analysts' projections, which headline do we see:

Stocks fall broadly as x quarter results miss expectations.


Analysts fired in droves as projections wildly overestimate reults.

There is no such thing as a free market. The term simply means "free" in the classic liberal sense of state control. It is not free of control, just state control.

The phrase supply and demand is an illusion, as if those with the supply and those who want it meet in the marketplace and a mutually agreeable price emerges. The fact is supply and demand are an entirely different thing than that: those with the supply demand the highest possible price they can get. And pay the lowest possible price to produce it. It is entirely one-sided. Nothing more than a casino, with the house determining everything including exactly how much leaves the house under the perception of "winnings".

The only difference being, who is the house. There is a "house" either way. The "free market" apologists just won't say so, and the "free market" advocates believe the lie.

Father Hollywood said...

Dear PE:

I don't follow your argument. But if I make cars (or lemonade) and I set the price low, there will be high demand. If I set the price high, there will be low demand.

Similarly, if I want to buy green peppers, if the seller has them three for a buck, I'll buy them, but if they are a buck apiece, I will take a pass. Others may set their "trigger price" higher than I will. The price will fluctuate up and down based on what is necessary to move them.

Labor is the same thing. If I put out a resume as a short order cook and let potential employers know that I will work for them for $100,000, chances are, there won't be much demand for my "product" (unless my name is Emeril). Likewise, if I'm an accountant, and I agree to do tax returns for ten bucks a pop, I'm likely to have more business than I know what to do with (at least if I'm halfway competent).

Interest rates are the same thing. If a lot of people are in the market to borrow, the rates will creep up. But if the rate of borrowing drops, the lenders will have to lower their "price" (interest rate) to meet demand.

The only way to circumvent these market forces is by government getting involved (and they may as well outlaw hurricanes and regulate the law of gravity while they're at it).

A centrally planned market just doesn't work, because how can a "planner" determine the "fair" wage, "fair" price, or "fair" interest rate? You can't make people want what they don't want. It's not supply that runs the engine (which is what you seem to be arguing), but demand. I can make bottles of cockroach salsa by the millions, but if nobody wants them...

But people want milk and eggs and MP3 players - and if I want to make money, I had better make what they want.

The freer an economy is, the more prosperous it is. The more "planned" it is, the more disastrous the results. The USSR went from "superpower" to third world country in a matter of decades. Its collapse was entirely economic.

Free markets are simply the best way to determine price and stimulate businesses to get into markets in which there is demand. Soviet warehouses full of unsold black shoes, as well as the feeding frenzy of Tickle Me Elmo at Christmastime are examples of how demand can't be predicted.

If we don't have the federal government "regulating" the price of Tickle Me Elmo, we shouldn't have them "regulate" Wall Street, or CEO salaries, or the amount you can buy or sell stock.

Government needs to get out of the way. We need a separation of the economy and the state. According to the Constitution, the only economic responsibility the federal government has is to ensure the value of the dollar doesn't change - and they're actually doing the opposite!

Just my two cents (which are today worth about .014 cents thanks to the unconstitutional manipulation of the Federal Reserve).

Past Elder said...

I'm not for the bailout, for starters. BTW, interesting that the media increasingly is calling it "rescue" rather than "bailout". Now who decided that? Control of language is a big deal. Rescue sells a lot better than bailout -- why would oppose a "rescue", whereas a "bailout" connotes some fault with who is needing to be bailed out. IOW the bailout only becomes a rescue if you believe the bailout will indeed be a rescue, and the belief is built into the term.

An example -- rates do not fluctuate, creep up, or creep down. Rates themselves don't so anything. They move where they move because someone sets them there. "Free market" rhetoric ignores this entirely, as if the market had a life of its own.

So with the price of money, so with the price of everything else. At least the most serious of the objections to the bailout is that nobody knows the price of the mortgage backed securities Treasury will now be able to buy, which is both a lot of how we got here and a lot of why the bailout is a bad idea.

But it makes sense that you don't "follow my argument". I don't have one. By that I mean, there is no economic system for which I am arguing, IOW I think centrally planned economics and free market economic are both ideas that don't really work, and that all economic theories ignore one basic fact -- original sin. The economic problems of Man are not economic problems.

That's my message, as Pastor Scott (which is now Melissa rather than Gene, she easier to behold but he far more entertaining and he played Blues on his broadcasts) says. We do seem to agree on the value of Emeril though.

Past Elder said...

God bless me sideways, I almost forgot -- wasn't it Clinton and the Democrats in the 90s who were pushing for loans to the less creditworthy to "make housing more affordable"? They seem to be getting a free pass on this mess.

Anastasia Theodoridis said...

It's Marxism when you seize the means of production

The means of production have already abeen removed from us. They've been moved to other countries. Like China - a Communist state.

Father Hollywood said...

Dear PE:

You have a very good memory. Here's a recap from the British press.

Past Elder said...

The means of production have been moved to other countries not by socialism but by the thoroughly capitalist practice called outsourcing.

Why pay $8/hr to a guy who barely if at all gets by on it when you can pay $8/day to a guy who thinks it's a bloody fortune? It's just "good business"! Holding down costs, keeping the price competitive and all.

Anastasia Theodoridis said...

So it's still the same effect. It means the ironic effect of Capitalism when it allows greed and exploitation to run wild is - Communism.

The free market is a trusty horse, but like any horse, it has to be bridled and guided some.

Past Elder said...

The Chinese government buys our debt like crazy. What's Communist about that?

"Has to be bridled and guided" implies an agent. Bridled and guided by whom?