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In its recent look back on the first ten years of the century, Time magazine proclaimed the period to be "the decade from hell." The editors made their case based on what they saw as the signature events of the last ten years, notably the ravages of terrorism, failed wars, and a global financial crisis. Taken together, these factors produced an era that Time is convinced will be remembered as one of the low points in our history.
As the media hates to dwell on the negative, the commentary was rife with notes of optimism about pending recovery. It could hardly be accidental that in the very next issue, Fed Chairman Ben Bernanke was named "Man of the Year" for his supposedly Herculean efforts to keep the economy afloat as we departed the Naughty Aughties. Although Time takes pains to point out that the "Person of the Year" honor reflects impact rather than adulation, its profile of the chairman was triumphant.
Even if you believe the "survived the worst/turned the corner" narrative offered by Time, it still should strike anyone as ironic that Chairman Bernanke, a chief architect of the economic problems that surfaced in 2007, should be held in such high esteem.
Apart from its misplaced reverence for the Fed Chairman, I would take issue with Time’s entire characterization of what has now become history.
Under no circumstances could the past ten years be described as "the decade from hell." In fact, in terms of economic good fortune, the period shares parallels with the Roaring Twenties. I would describe this as a decade of sin that paved the way to hell.
Yes, we had spectacular problems like September 11th and the invasion of Iraq — which were horrific for those who were directly affected — but for most Americans, it was a time of unexpected wealth and unearned prosperity. Up to the days of the stock market crash, the economics of the decade will be remembered for cash-out refinancing for millions of homeowners, no-doc liar loans, no-money-down car purchases, eight-figure Wall Street bonuses, cheap Chinese imports, and trample-to-death holiday sales. In other words, the decade now closing gave us the biggest and most irresponsible spending orgy in U.S. history. The past decade was the party; the one ahead will be the hangover.
The fact that Time completely ignored these issues shows how poorly the mainstream media understands the forces bearing down on our economy. Yes, they were able to identify some of the adverse consequences we experienced this decade. That’s the easy part. But as far as seeing the causes behind the effects, they haven’t a clue. As a result, Time has no ability to see the underlying pattern and will happily encourage our leaders to repeat the mistakes of the past on a grander scale.
For now, Congress and the President remain as clueless as Time. To show its resolve to "get to the bottom of things," the Obama Administration has impaneled a commission to investigate the causes of the financial crisis. Do not expect the proceedings, which are just getting underway, to come up with anything but the most politically useful explanations.
Blame will be laid at the feet of "ineffective regulators" who failed to "get tough" with industry, banks, and corporate leaders who held the "public good" hostage to their "personal greed." There is no hope that anyone who actually saw the crisis coming will actually be asked to testify. If they called me, I would be happy to give them an earful. Unfortunately, the only way my views will ever be heard by the powers-that-be is if I am elected to the Senate — which is exactly what I plan to do next fall in my home state of Connecticut.
My sincere hope for the coming decade is that I can help our leaders see what Time cannot: we need to stop committing the economic sins that are leading us to hell, so that our stay down there will be as brief as possible. We need everyone to stop spending more than they earn. That is true not just for individuals, but for our government as well. Just this week, the Treasury Department removed its internal caps on bailout funds to Fannie Mae and Freddie Mac. Meanwhile, another bailout was proffered to ailing GMAC. If we continue the same bad behavior, it might not just be one decade from hell, but several.
However, if we can confess our sins, and vow to reform our ways, perhaps this will merely be a decade in purgatory. Perhaps we can turn it into the decade of hope, hard work, individual liberty, savings, production, investment, sound money, de-regulation, exports, budget surpluses, capitalism, limited government, and respect for the Constitution. These traits will harden us to withstand the fallout from our reckless past.
As of yet, our troubles continue to snowball — and I don’t like a snowball’s chances if we have a real decade from hell.
Peter Schiff is president of Euro Pacific Capital and author of The Little Book of Bull Moves in Bear Markets and Crash Proof: How to Profit from the Coming Economic Collapse.