I think this editorial says it best:
The freeze-up of the financial system — and government’s seeming inability to thaw it out — are a main concern, no doubt. But more people are also starting to look across the valley, as they say, at what’s in store once this crisis passes.
And right now it looks like the U.S., which built the mightiest, most prosperous economy the world has ever known, is about to turn its back on the free-enterprise system that made it all possible.
It isn’t only that the most anti-capitalist politician ever nominated by a major party is favored to take the White House. It’s that he’ll also have a filibuster-proof Congress led by politicians who are almost as liberal.
Throw in a media establishment dedicated to the implementation of a liberal agenda, and the smothering of dissent wherever it arises, and it’s no wonder panic has set in.
The federal bailout bill has flooded the markets with money but it doesn’t seem to be working. Why ?
It starts with a tax system right out of Marx: A massive redistribution of income — from each according to his ability, to each according to his need — all in the name of “neighborliness,” “patriotism,” “fairness” and “justice.”
It continues with a call for a new world order that turns its back on free trade, has no problem with government controlling the means of production, imposes global taxes to support continents where our interests are negligible, signs on to climate treaties that will sap billions more in U.S. productivity and wealth, and institutes an authoritarian health care system that will strip Americans’ freedoms and run up costs.
All the while, it ensures that nothing — absolutely nothing — will be done to secure a sufficient, terror-proof supply of our economic lifeblood — oil — a resource we’ll need much more of in the years ahead.
The businesses that create jobs and generate wealth are already discounting the future based on what they know about Obama’s plans to raise income, capital gains, dividend and payroll taxes, and his various other economy-crippling policies. Which helps explain why world stock markets have been so topsy-turvy.
And that doesn’t even mention the assault on freedom of speech that is planned by the people who ensure that You Tube videos critical of Obama and his friends disappear in an hour.
We do have the advantage of a preview of Democrat government in charge in California.
The Golden State’s finances are a mess. California’s general obligation debt has tripled in the past six years and is now almost equal to the state’s $145 billion annual budget. Even without any new loans, in three years the state will spend a record 6.1% of its budget just to service the debt it already has. What’s more, with the economic slowdown, the state is now expecting a deficit larger than $1.1 billion for the first three months of this fiscal year. The state’s rainy-day fund is running dry, which has hurt its credit rating.
Would that cause a retrenchment in spending ? Not with Democrats (and a RINO governor).
California Gov. Arnold Schwarzenegger sent an extraordinary letter to Treasury Secretary Henry Paulson asking for $7 billion. Although the governor has since withdrawn that request, it testifies to the dire state of his budget. Yet days before penning his note, the governor told an audience at the Commonwealth Club of California not to worry about the state’s budget crunch and to approve $9.95 billion in new debt on the November ballot to build a bullet train to connect Los Angeles to San Francisco: “Just because we have a problem with the budget does not mean people should vote ‘no’ on high-speed rail.”
The bullet train is a fantasy that will never pay for itself, let alone add thousands of new net jobs. The Democratic Party used to be just as conservative on spending as the Republicans. The difference was in emphasis on working men and women vs businessmen. Now, rich businessmen donate most money to Democrats and fiscal prudence is not a feature of Democrat rule. It isn’t just limited to the state, either as cities and counties are also insolvent.
God help us all.
Tags: finances, Obama, stock market, taxes
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I’m sure the leftists can explain how everything will be just fine. Like Cuba, only done right. Er, done correctly.
The reason the ‘bailout’ money is nowhere to be seen is that it is being stuffed into bank reserves. That’s the credit crisis now. Banks won’t even lend to each other. And why should they? The ‘real’ rates are preposterously negative, they want to protect themselves from insolvency, and the feds are there to protect them for the sake of the ‘system’. Plus, they pretty much know that any money they loan, they’ll never see again. Cash is king now. Credit is dead. And all the capital intensive industries are, too.
Buffet is buying by the fistfuls all the corps he can that are loaded with cash, and with sound long term fundamentals not even considered by the panicked sellers taking huge losses and buying treasuries at an additional loss. The best advice I ever read was don’t trade companies, trade people. Investing is all about companies and business cycles. Trading is fear and greed.
The reason this downturn will last a long time. Two of the reasons are that there are only 5 more bullets in the Fed rate gun at a quarter a piece. But with the banks not lending a dime when it matters most, it really doesn’t matter. And this boom has left an overhang of very illiquid assets called houses. They can’t be moved overseas to the highest bidder like computers, and they have long life spans, not like the 2-3 year obsolescence of the dot.com overhang assets.
Allan, there should still be entities out there that will repay a loan with interest. They should be found by the market, I would think. Or maybe this fear has washed everything away, but someone should buck the trend.
I don’t see any resolution until the election and then, if Obama wins, more uncertainty. This will not be solved until spring and there may be a bloodbath if Obama and Pelosi really think socialism works. I am really worried. The only plus is I’m old.
Maybe Pelosi’s husband could talk some sense to her. I remember thinking, well, Jimmy Carter has been a businessman. Wrong ! This will be bad unless all the polls are wrong.