An American Renaissance: Capitalism Is Alive and Well

Includes: DIA, QQQ, SPY
by: David Roskoph

Despite the headlines trumpeting America’s death, quite the opposite is happening – we’re moving up.

For the first time in decades we are coming to terms with the institutionalized malevolence that has been consuming our republic. We finally have a President that does not pretend “off-budget” expenses will magically disappear with pixie dust, one who refuses the play the Government Sponsored Entities game, one who will not propagate the cheap-money-induced boom-bust cycles, one who will not let labor unions turn America into Europe-Lite.

Obama does not resemble the New-Dealing Franklyn Roosevelt, but rather his Trust-Busting cousin Teddy. As a lifelong Republican (who has never voted Democrat), I say bully! Regardless of which party is driving, this is an American Renaissance, and it’s just getting started.

For years we have toyed with government-sponsored mortgage expansion through Fannie and Freddie. When they bled onto an otherwise healthy balance sheet, they were placed in a special category, one which was intended to create the illusion of being indemnified by the faith and credit of the Union. Thus was born the ruse of the Government Sponsored Enterprise, GSE.

This façade worked until a Modern Depression occurred and prompted their demotion to receivership. That the GSE game was ever played is a testament to the institutionalized smoke-and-mirrors that are finally being dismantled. That, combined with off-budget accounting, has been business as usual for my entire lifetime. Simply stated, they were a deception and we deserver better. We are finally receiving transparency. Hazzah!

Like an out-of-shape distance runner trying to compete in an Olympic field, our economy has been staying “fresh” with regular doses of cheap-money opiates. They work for a while but eventually our economy, like the hopped-up runner, is extended so far past its organic ability that a collapse is unavoidable. We just lived through that collapse, a Modern Depression. You can differentiate a Depression from a Recession (Great or garden variety) because the momentum carries the economy past the point where the Federal Reserve has any tangible influence. They find themselves steering the toy wheel in front of the baby seat, while the car careens over the cliff. Understand that all prices are artificial. Whatever caused prices to falter, Federal Reserve cheap money props them back up.

In other words, each recession threatens an incipient deflationary depression and each “fix” only buys time; at the price of increasing the pressure. Depress... are periodic under this system; it’s just a matter of when. That President Obama is even addressing this cheap-money habit evokes my Hazzah!

Collectively we are gathering the nerve to perform our own economic vivisection; examining the pulsing innards to make sure they’re actually working. The reality is that we have been living far larger than we can afford, and subsidizing an American Oligarchy, through the boom-bust oscillations. Markets are patently too free when each bust results in an orange jumpsuit parade. The perp-walks of course are to placate the public with “justice” while the free-market-fleecing-machine stays largely intact. Each bubble has effectively transferred wealth from the many to the few. No larceny, mind you, it’s contract law.

Each and every participant willingly bellied up to the window; it’s just that they lost before the ink dried. If the meaningful banking reform now underway continues in earnest, it will be mitigate the Sting of 20th Century American Capitalism; bully, quite.

Finally, to those who believe we are heading closer to an “ism” greatly resembling Europe, please notice a once mighty UAW, now greatly humbled. GM is breathing its last and the UAW better understands the futility of the Tragedy of the Commons.

Truth be told, auto unions enslaved Ford, GM & Chrysler and forced them to use their capitalistic might to create a UAW-designed socialist utopia; one where every member was taken care of forever. That push for ever-greater security worked when we dominated the world’s auto industry but faltered with each percentage lost to foreign automakers.

Step back and see that the worker-mandated social net is no more tenable than Medicare, Medicaid and SSI. Now the UAW, but eventually every citizen must understand that you cannot have complete security and capitalism at the same time. The biggest question remains – will Obama have the courage to face the most dastardly demon of them all, our national legacy costs?

With a restoration of public confidence through the diminution of institutionalized con-games and real governmental transparency, much more of America’s potential will be unleashed. The deficit numbers are presently irrelevant; recovery is a function of our franchise value! We are the greatest franchise this planet has ever seen. We just endured the equivalent of a World War and we will now enjoy an America fundamentally stronger than any time in the past 35 years. The idea that the world could dirty their hands while we financed the transaction is over. We will now rebuild our manufacturing might to produce things for a world committed to capitalism; a world we created. Stand back and realize that we have indeed won the world over to American capitalism and they are not going back.

Capitalism dead? Nothing could be farther from reality. Capitalism allows the unleashing of the human spirit and the last version (the 20th century one) simply let “free market” shake the middle class nearly out of existence. This is the dawn of 21st century. Capitalism will continue to lead the world, American style.

Disclosure: I am a leveraged buyer equities, US and abroad, a seller of gold and neutral of currencies.