JohnAl

As Goes GM, So Goes the Country

Excellent article!

It remains to be seen how GM will fare after it's bailout bankruptcy. The crony capitalist manner in which this went down has also disturbed many potential buyers. I wonder how many will now swear off GM, and how that sentiment may damage their future.

Nothing About This Economy Is Surprising

“The doorstep to the temple of wisdom is a knowledge of our own ignorance.”
- Benjamin Franklin

Our problem is that we are not being led by wise men.

We're being led by men and women who think that they are smarter and more knowledgeable than our ancestors, and thus that history cannot teach us anything.

If there is even one among us today who possesses the insights of Thomas Jefferson, then he is staying well hidden. Yet even the average Joes, not to mention the arrogant politicians, dismiss Jefferson's warnings about central banking as quaint. "Things are different now", they rationalize.

But things are actually the same. People will always try to find ways to exert power over others and steal from them. When you get right down to it, while we walk around in well tailored clothing and put men on the moon, we're just a bunch of well dressed uberchimps with the ability to build things.

History tells us that human liberty to the degree experienced in this country only comes around rarely. I count myself fortunate to have experienced it, even if only at the tail end of the run.

I'm afraid it's gone though, and won't be seen again in this country for a very long time.

What Will This Crisis Lead to?

"Obama is better than the other guy, and by extension Obama's choice of Bernanke and Geithner is almost certainly better than the team the other guy would have installed. Let me change that: NOT ALMOST CERTAINLY BETTER, BUT DEFINITELY BETTER! "

F.E.B., you seem to see the world, as so many amazingly still do, as strictly D vs R. Anyone critical of D must be a proponent of R and vise versa, when in fact, many of us critical of Obama recognize that both McCain and Obama were terrible choices because both are big government proponents neither of whom has ever seen a problem that he didn't think the federal government should attempt to solve.

I may be way wrong, but I sense that there is a true political realignment taking place. The D v R alignment is being replaced by Big v Small federal government political sides. The big banker bailout last fall was the shock that many of us on both the right and left needed in order to clearly see the US federal government for what it truly has become - an oligarchy controlled by large, favored corporations.

The tea parties and future like protests are in large part reactions to this 21st century fascism.

Are We at the Beginning of the Next Bull Market? Probably Not

"Let put the record straight. The Great Depression started on October 29, 1929 (Republican Hoover in power). February, 1930 Treasury Sec. Andrew Mellon announces that the Fed will standby as the market works itself out. This philosophy continued through 1931. By 1932 over 10,000 banks failed and 80% of the markets value is lost. Hoover did little to late and FDR won the election and took over in 1933. By 1934 the markets began to recover. "

toobad41, you really need to reread your history. Looking at this as a Democrat vs Republican issue is missing reality entirely. Hoover wasn't the free marketer that he's made out to be by history teachers in the gubmint schools, he was a classic economic interventionist. In an attempt to spend the country out of the depression Hoover increased federal spending and the deficit so dramatically that FDR railed against it in the 1932 campaign. He also pressured business to prop up wage rates and it was he, not FDR, who started the depression era public works programs.

The Hoover/FDR to Bush/Obama parallels are astounding. Just as Bush was no free marketer, neither was Hoover. And just as FDR turned out to be Hoover on steroids, so it appears that Obama is Bush on steroids.

The Hoover/FDR interventionism stifled the recovery and kept the country in depression for a decade and a half. Let's just hope America comes to it's senses and we don't suffer the same fate in today's Bush/Obama depression.

Grand Illusion: The Federal Reserve (Part 3)

"Someday Americans will understand that Federal Reserve bankers have no magic ability – and certainly no legal or moral right – to decide how much money should exist and what the cost of borrowing money should be." (Ron Paul, July 11, 2006)

Man oh man, Dr. Paul, I do wish Americans would understand sooner rather than later!

Predatory Legislators

"American spending created a boom in China, where the average person works in a sweatshop, lives in a hovel, and saves 25 percent of his earnings.

Meanwhile, in the United States, the average man lives in a house he can't pay for, drives a car he can't afford, and waits for the next shipment from Hong Kong for distractions he can't resist. He saves nothing and believes the Chinese will lend him money forever, on the same terms.

That this cannot go on forever hardly seems worth pointing out. Whether it goes on much longer, we cannot say. But that it will end badly seems a cinch."

(Bill Bonner and Addison Wiggin, Empire of Debt, 2006)

Stop Trying to Jump-Start the Consumer - Barron's Interview

Mr. Albertson is right.

Time will heal the economy. What we are experiencing today, after all, is nothing more than the economy readjusting to the malinvestments made during the growth of the artificially created credit bubble. The government's attempt to reflate the credit bubble is the wrong medicine at the wrong time and will only prolong the readjustment period.

The Great Awakening: Boomers, Your Crisis Has Arrived (Part 3 of 3)

Mr. Quinn, another thought provoking article. Nice job!

I'm a bit (just a bit) more optimistic about the future, because I sense that attitudes ARE changing, and they are changing quickly. I see it happening here, on other forums that I frequent, and among friends and work colleagues. There IS a growing sense that we are still heading in the wrong direction and that we need to change course.

Most people I know opposed the TARP, oppose the stimulus (certainly in it's present form), and oppose most if not all of the new treasury bailout plan. More and more people recognize the reality of all of this - that it amounts to little more than a transfer of credit bubble economy losses from the powerful elite to the helpless taxpayer.

So I believe that if the President and congress don't change course, and I doubt that they will, there will be a political revolution in the 2010 congressional elections and the course WILL be changed!

All the country needs to survive this, and to come out the other end of it headed for prosperity, is to rediscover our roots and what made this country what it is: individual freedom.

The further the government moves to restrict freedom, the greater the resistance from those of us who crave it and the easier the sell to those who still need to be convinced.

Turning Japanese: The Audacity of Reality (Part 3 of 3)

Another excellent article Mr. Quinn.

Regarding the politicians wanting to "help". It seems the Dems think the solution is to spend, and charge it. The GOP solution is to cut taxes, and charge it.

Being a taxpayer I slightly prefer the latter to the former, but better still is a third solution. Cut taxes AND spending.

Imagine what a BIG tax cut would do for everybody's psychology, IF spending were cut an equal amount so people knew that the tax cut was REAL and not simply based on a scheme to put off paying for it.

S&P 500 Back above 50-Day Moving Average

This particular silver lining is a bit weak since the 50 day MA is still a downward trend line.

Orwellian Finance: Is 1984 Happening in 2009?

"Economic Recovery Program – This is Barrack Obama’s first contribution to Newspeak."

erp... kinda sounds like the sound my dog makes when she's puking.

Orwellian Finance: Is 1984 Happening in 2009?

Great piece of writing Mr. Quinn, and some excellent commentary as well.

I'm the world's biggest pessimist, but I'm starting to think that there IS hope for this country. There is a growing groundswell of opinion, at least as expressed here at SA, that we are off the tracks.

What Happened to the American Dream?

Mr. Quinn,

Another finely written analysis. Thank you.

The fact that there are so many of us who feel as you do gives me hope for the future - and it should you too - that our children and grandchildren may still be able to experience the American dream.

The recent bailouts and the continuation of bailout nation that we're likely to see during the next administration may end up being just the wake up call that Americans needed. More and more people are waking up daily to the stark truth that what we witnessed was first and foremost the result of a failure of a centrally planned monetary system. We will of course continue to experience such crises as long as the federal reserve and fractional reserve banking is allowed to exist, and as long as people continue to believe that a cadre of economists (or computers, as one of the commenters above suggests) can determine what is just the right amount of money to inject or remove from the economy in order to further whichever set of goals are in vogue with the power elites at the time.

Just one note to those who honestly believe that this was a failure of capitalism... time to remove the blinders, guys. You can start by educating yourselves at mises.org.

Here Comes the Foreclosure Cavalry

Oops, I should have mentioned that I did find the article to be informative. Thx

Here Comes the Foreclosure Cavalry

"The administration's blind eye to the impending crisis is emblematic of its governing philosophy, which trusted market forces and discounted the value of government intervention in the economy. Its belief ironically has ushered in the most massive government intervention since the 1930s. (yes, talk about IRONY!)"

i'm getting tired of correcting this oft repeated falsehood but hey, somebody's gotta do it, so here goes.

The mess was hardly a failure of capitalism. Anything but.

First, everybody's playing with fiat, government created currency, in a play world where the interest rate has been manipulated via fractional reserve banking to be far lower than the reality that lenders would otherwise require in a free market financial system.

Second, the lending came from GSEs that wouldn't exist in a free market, and the money found it's way into housing thanks to various government incentives.

Yes, wall street's creation of the nasty derivatives could be considered capitalist, but in the bizarro world that discounts risk due to the false sense of security caused by over regulation and the accompanying belief that these investments are safe because the government's looking out for us, people actually bought this crap without worrying about the underlying investments. And other people, faked out by the same false sense of security insured the crap.

And so now almost everybody believes that the fix is even more regulation and more intervention into the market until... until what? Until the whole thing implodes because anybody with any sense has moved all of their wealth into gold or tried looking for investment opportunities in less manipulated markets elsewhere.