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Retired news reporter, former business writer for two daily newspapers. Former business owner. Manages own IRA, to keep hand on pulse of the market. Thinks the banking system is a no longer sophisticated control mechanism to keep the serfs in bondage.
  • Is Private Enterprise the Anti-dote to Capitalism, "Communitrianism"? 2 comments
    Sep 26, 2009 12:33 PM | about stocks: AIBYY, COY, CVX, DUK, IRL, LUK, KGC, LUK, MUR, NGD, NYT, PCL, RDS.B, UN, UTG

    Capitalism calls for destruction of capital when it is mismanaged or misallocated. Failure to allow capitalism to run its cyclical course only buillds up a backflow of unreleased pressure.

    Repeated attempts to plug an ever larger finger into successively larger holes has led to this current state of continually being on the rim of an ever deepening hole that has now turned black and bottomless..

    The succession of events since 2000 illustrates that the artificial construct of the Federal Reserve cannot in the long run overcome cycles that are endemic to the natural order.

    Suppression of an audit - which will indeed lead to deconstruction of the Fed - will only delay the inevitable. Benranke in 2005 is on record as not seeing the disaster which loomed ahead from all the financial finagling and fraud then underway. How would he see the collapse of the dollar either? And this is the event that will bring down the system if it cannot be staved off. Gold surging to $5,000 an ounce will not mean gold is five times more valuable but that the dollar has lost 80 percent of its purchasing power. The continuing decline of the dollar's value has been the byproduct of The Fed's artificial finagling since 1913.  

    However, the illusionary magic of The Fed could conceivably get the entire system across the looming bottomless pit to the other side if all that destroyed capital can somehow be rendered moot and unaccountable for,  forever.  After all, much of the destroyed capital in the financial sector was fraudulent illusion money whose only purpose was to create large sums of imaginary wealth so that obscene bonus money could be extracted from real wealth.

    Real wealth has been partially reinflated by The Fed and its desperate co-conspirator "investment" bankers. But how will it bring back the trillions sold to China, Japan and domestic "investors" that have indeed evanesced into the mist?.

    How will the financial system extract money from the peasants when 16 percent of them are now out of work, with little hope of being re-employed at wages even close to the levels they were paid?

    Warren Buffet says the recession is over. It isn't. And if timely infusions of cash had not been created out of thin air to cover up the losses in the financial components of Berkshire, then Buffet would find there is no market for discredited gurus.

    The Fed has "saved" Buffet and the big banks and big insurers and big mortgage companies. But in the end it will come to pass that the callous destruction of all those little people - the collateral damage from fraud, corruption and Fed hubris - was a huge mistake.

    It would have been better to allow capitalism to work its course in little upheavals from time to time than to have destroyed capitalism deliberately create what George Soros calls communitarianism, a code word for totalitarian rule, an artificial construct that suppresses the human spirit and its inherent creativity.

    Even communism was allowed to fail, to collapse after the symbolic fail of the Berlin Wall. Now, after suffering through the aftermath, the reorganized successor to the Soviet Union, Russia, is somewhat recovered. It has a balance of payments surplus and is huddling with the other BRIC countries on how to bring about a more sensible world economic order. It is doubtful if they will come up with a system with a moral compass. Moral codes seem lacking in most of the "isms"

    Clearly, no one can argue that capitalism is still the guiding light for this nation. The intrusion of both the privately owned Fed and the aloof federal government into former private sectors has seriously damaged the creative force and nature of capitalism.

    But perhaps this was inevitable.  Both capitalism and communism share a lot in common. Both are collectives. Both enrich a few party loyalists and leave crumbs for the peasants and stockholders.

    The party members got the dachas on the Black Sea. The investment bankers got the yachts and the homes in Italy. The Russian peasants and the holders of capitalist shares got the shaft.

    This is not a blanket indictment. I believe the boards in such companies as JEF and LUK and KGC, and DUK (my disclosure is below) are guided by a desire to make money within a framework that at least follows the Golden Rule. But I question the motives and morality of companies that shall be unnamed but which are in the headlines and often mentioned by informed writers on this site.

    Ultimately, the answer may be to eschew both capitalism and the code word communitarianism and just return to a more Midieval concept known as private enterprise.

    Consider the Amish and their farms and affiliated cottage industries. On the one hand they are self sufficient, but on the other hand they do not contribute much to the financial system bonus pools. Nor do they seem to drain much from the federal treasury. Is there a solution halfway between the business model of the Amish and the business models of capitalism?

    Despite these thoughts, I remain hypocritically long with modest positions in AIB, COY, CVX, DUK, ENLAY, IRL, JEF, KGC, LUK, MUR, NGD, NYT, PCL, RDS.B, UN, UTG

    I am trapped in this current system along with everyone else.

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Comments (2)
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  • Mansoor H. Khan
    , contributor
    Comments (97) | Send Message
    We should foreclose on the banks. See article via link below:


    A Radical Solution for America's Insolvent Financial System


    26 Sep 2009, 04:00 PM Reply Like
  • Mansoor H. Khan
    , contributor
    Comments (97) | Send Message
    I have replied to your comments to my article (A Radical Solution for America's Insolvent Financial System).
    3 Oct 2009, 07:51 PM Reply Like
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