What Would Alexander Hamilton Think of Today's Market?

Friday morning, the Bloomberg ticker noted two stories which caught my attention. One read "Justice Department seeks to curb prosecution of white collar crimes," Which suggests the campaign contributions are going to come to a screeching halt unless the fat cats on Wall Street, and those who benefited from the financial meltdown will not contribute to campaigns unless the heat is taken off of them pretty darn quick!

The other headline read "Banks lobby White House to save Fannie (FNM) and Freddie (FRE) preferred shares." I must say that as irritating as the first headline was, this was the one that really seemed to cry foul! To think that these institutions got their Federal backstop at the tax payer's expense, then are trying to save their arses from the inevitable insolvency and dilution of shares put me, Mr. Social Conservative, on notice. If this comes to pass, it should be classified as a high crime against the American people. I will vote for whoever is the biggest political change agent this time!

Even Alexander Hamilton, who was credited as the original Federalist, knew his limits. He understood the importance of the country maintaining good credit, servicing debt, and balancing a budget. Maybe, just maybe, this is the way the United States is going to massage the countries and financial institutions who are holding Fannie and Freddie debt. After all, we must not jeopardize the share holders who have weathered the storm, and we must, under all circumstances, keep the cycle of debt current. One day, these same countries who have come to rely on the U.S.A., the largest debtor nation in history to pay the bills may decide to invest somewhere else. Malfeasance and moral hazzard be darned. And I am certain that the Anti-Federalist Jefferson is turning over in his grave!

Stock position: None.

Comments

[venividivici:]

I think you are spot on Brian.
These presidential campaigns cost hundreds of millions of dollars to stage and the money has to come from somewhere. The rich and powerful are happy to contribute but of course they expect that their interests will be looked after in this great American plutocracy. And I am sure they won't be disappointed.

2008 Aug 31 10:17 AM

[investor88:]

You can't change human beings. The Chinese who have a long history of thousands of years in the book Three Kingdoms says "empires wax and wane". Rome was ascendant, then it declined. The UK was ascendant then it declined. A similar rise and fall visited Japan, and now it seems to be the fate of the US. What will be will be, we just have to observe carefully hoping for the best but preparing for the worst.

2008 Aug 31 10:43 AM

[CLH:]

People will continue to invest in the US the most dynamic country in the world. Unless we go down the road of socialism following Europe.

2008 Aug 31 10:55 AM

[dynamicduo:]

The US of A is becoming a Monarchy; with the president as the central figure and congress his abiding staff! We have the rich crowding about the Monarch and trading favors. The rest of us are the fifes, digging the rich fields of the rich and not daring to hunt in their lands.

2008 Aug 31 12:26 PM

[carey_jim:]

If the founding fathers could have foreseen the technological developments of the modern world they would have leaned more in the direction of the anti-Federalists and the classical republican models of government.

To speak optimistically, I think modern America has many similarities with the small city states of the classical world like Athens or Rome, because of our rapid communications network (the Internet above all,) fast transportation network and our mostly dialect-free English language which unifies the entire country.

Montesquieu's On the Spirit of Laws is more relevant to this kind of world than it was to the America of 1789.

But obviously our massive military machine and the socialist-plutocratic corporations' control and use of most of the world's natural resources make us resemble the Roman Empire more than a Greek or Roman city state.

This is probably because the Federalists essentially won the Constitutional debate in 1789. If they hadn't, the South would probably have been allowed to secede, Texas would probably be a separate country and California would have followed it's lead. America itself would probably be a union of countries finally united by modern communications and by a common language with dialects, such as Italy and Germany are today.

But the Federalist blueprint allowed America to become the centrally directed socialist plutocracy that is is today, similar to the Roman Empire and directed by the Federal government.

Monopolies like Comcast, Microsoft, Ebay, Amazon, Pfizer and MacDonald's control all important aspects in our daily lives.

Whatever is left over (very little) such as education, social "security" and the public highway system, the Federal Government manages.

The socialist corporate plutocracy complains about "government interference" but they are usually referring to actions of the Justice Department like the ones you describe, or those of the large regulatory agencies such as the FDA, SEC and NCI. (These organizations are largely only "revolving door agencies," of course.)

When the socialist corporate plutocrats complain about regulations that affect ordinary people, such as rent control imposed on mom and pop rental apartments in the inner cities, it is only for political effect.

We are a nation of conformists and mass consumers who would rather buy hamburgers from big chains like MacDonald's and Burger King than from small business people in local areas who make food with locally grown produce for local tastes.

We watch films and television shows that provide us with friends and allow us to pretend that we are still a nation of rugged individualists, and we elect rich men and women to political office who pretend to be ordinary people like us.

In this age of opportunity for change, possibly brought about in the main by the Internet, we are even afraid to use Linux and prefer Microsoft and Apple which are two more examples of corporate socialism. But Linux and the Linux community embody the spirit of American free enterprise and individuality. Why do we continually turn our back on that spirit?

So even though the technology of the modern world presents us with a unique opportunity to become a large unified republic, modeled on the classic models described by Montesquiue, we are stuck, at least for now, with the model given to us by Alexander Hamilton and James Madison, and we seem to be afraid to embrace the model of local freedom and autonomy defended by the anti-Federalists.

Maybe it isn't just a coincidence that Barack Obama is a Constitutional lawyer and scholar and that his major campaign slogan is "change."

2008 Aug 31 01:10 PM

[ain't no fo...:]

or unless we go down the road of the "spend and spend more" republicans...

2008 Aug 31 01:48 PM

[Jackal:]

You are largely correct in your posting. The Republicans have lost their way when it comes to fiscal responsibility. Either that or they don't care that they are going to stiff senior citizens, which will grow dramaically witht boomers, with unconsionable inflation. But they still the only party which seeks to control government size and to leave more responsibility with the states, counties, etc. A most ingenious paradox, would say G & S.

2008 Aug 31 02:23 PM

[OKMONEY:]

Sounds to me like that old tome: "the rich get richer and the poor get poorer". Will history repeat itself? No! No! This time it's different. The U.S. won't go down the Roman road to ruin, or the British refusal to change in the face of another country's emerging military buildup, or, the Japanese Xenophobia and Chinese isolation. The U.S. will continue to pillage, plunder and make the rest of the world toe the line. In the end the victor is usually the strongest, meanest, most powerful party. After WWII there has yet to be a worthy opponent, let alone a contender.

2008 Sep 01 12:39 AM