‘It Hasn’t Been Enough’? What Would Be ‘Enough’?by
Vin Suprynowicz Two interesting stories on facing pages of the Las Vegas Review-Journal today. On page 9A, Kevin G. Hall of McClatchy Newspapers reminds us “Stock prices reflect future expectations about the U.S. economy, so the continuing avalanche on Wall Street signals tough times ahead. … The Federal Reserve has shoveled about $800 billion in short-term loans into banks and other financial firms since March to keep the banking system functioning. Yet it hasn’t been enough.” Meantime, on page 8A, The Washington Post quotes Bart Bennett, chief of equity trading at Memphis-based Morgan Keegan, saying “Everyone applauds (the government’s efforts). The fearful part is that nothing has taken hold. None of it seems to stop the free fall in the market.” In the paragraph immediately following this quoted remark, a whole bevy of Post economic reporters combine their efforts to explain: “The problem seems to be that many of the government actions, such as the $700 billion bailout passed a week ago, take time to go into effect.” Really? But didn’t Mr. Hall of McClatchy just remind us that these “bailouts” have been going on since March? Hadn’t Bailout Ben Bernanke and Shifty Paulson of the Treasury already poured $800 billion of taxpayer funds into these “fixes” over the past seven months, before they went to Congress, threatening martial law and a shutdown of the entire banking system if Congress didn’t OK another $700 billion? Why won’t they tell us how long they DO take to work? In fact, if Mr. Hall is correct when he states, “Stock prices reflect future expectations about the U.S. economy,” and the common consensus among investors was that these new infusions of still-wet-from-the-printing-presses cash and credit were going to fix things, shouldn’t the market now be rising in ANTICIPATION of the proven effects of these “bailouts?” In fact, this is like saying “The problem seems to be that sacrificing young virgins to the volcano god takes time to have an effect,” or “Clearly the number of virgins sacrificed is still not adequate. How many more you got?” No. When your problem is a bubble caused by the reckless expansion of the credit and money supply, “pumping in more liquidity” doesn’t work any better than tossing screaming young girls into the volcano. It’s also standard policy for any responsible newspaper or news service to follow a direct quote from a hand-picked expert, declaring “The world is flat,” by inserting a sentence to the effect that “Most experts still agree the world is a sphere.” So why didn’t the Post reporters follow Mr. Barnett’s statement that “Everyone applauds (the government efforts)” by pointing out this is clearly not so? Congressman Ron Paul, who came in second in Nevada’s GOP primary last winter, who has been right about fiat currency, the Federal Reserve, and the inflationary credit bubble for years, articulately condemned the latest “bailout” on the floor of the House on Oct. 3. See it for yourself. “The bailout will set back the economy’s recovery,” current Libertarian presidential candidate Bob Barr said two days later, on Oct. 5. “It tosses good money after bad. It also punishes companies that attempt to work through their problems without taxpayer largesse. Now only a fool will take tough steps to clean up his firm’s balance sheet. Instead, they will put in a call to Treasury Secretary Henry Paulson to ask for help. Moreover, Congress is creating a bailout culture. No matter how foolish or irresponsible a borrower, lender, or investor may be, they can count on the government to bail them out. “Congress already has approved money for the automakers,” the former Georgia congressman pointed out. “How long before other industries begin lining up in Washington with their hands outstretched? Congress will have no good argument to use in saying ‘no.’ Finally, who will bail out Washington when the government can no longer pay its bills? What happens when the Chinese stop buying America’s debt? If Uncle Sam can’t learn to say ‘no,’ the entire financial house of cards will soon collapse.” Does that sound to you like “Everyone applauds (the government efforts)”?
F. Hayek does return from the grave with a spookily on-target analysis of what these geniuses are up to, though, in my Oct. 3 post on this site, in case you missed it. Happy Halloween. October 16, 2008 Vin Suprynowicz [send him mail] is assistant editorial page editor of the daily Las Vegas Review-Journal and author of The Black Arrow. Copyright © 2008 Vin Suprynowicz
|
