Jan 10 2009
It is a slow news day in North Korea
Yes, it has been a slow news day in North Korea, and with that said, I might as well post some other stuff that may have nothing to do with North Korea.
On CNN, President-elect Barack Obama encouraged others to give a better idea on how to get the economy moving again (I cannot find it on CNN, but I may send a letter). I have a few ideas, although I know it will never get use any time soon. One of the biggest things to get the economy moving again is to stop spending more money than we have. The US debt as of this second is $10,614,953,620,088.63. That, my friends, is a lot of money. In fact, it is so much money, it is not even a number anymore. How in the world are we going to pay it all back? I cannot think of anything other than turning to the Fed to print more money. Problem is, we print money from thin air, and as a result, the value of wealth in my beloved country dwindle. Yet, Washington, going on the platform of change, seem to be doing a lot of the same.
I have been hearing some complain of criticism before Obama gets in office. He made his proposal, and I do not like the sound of it. Therefore, I am going to be critical of said plan. If it will get passed or not based on his idea may be another thing altogether (we all know how many revisions were done when Henry Paulson presented his plan to piss away $700 billion was presented), so yes, it is a wait and see game.
Before I begin, let us look at the money spent already:
Bailout cost (Bloomberg/SFGate)
The amount is absolutely astounding and utterly unbelievable. However, truth is more extraordinary than fiction. Even more money is planned to be spent, and it has to be spent as soon as possible. That all sounds fair and good in a perfect world, but what in the world is printing more money going to fix? Apparently infrastructure, schools, states, banks, and the list goes on and on. Not only that, to give an infusion of cash to people who do not pay taxes. This does not include the universal health care plan Obama talked about. That alone should cost at least another trillion. Where is this money going to come from? How is this going to be paid, and most importantly, do those who do not like the idea have a voice in stopping this? I am going to guess no on the last question. Washington loves to spend money. Raising taxes and cutting entitlement programs are not popular, so guess what? We turn to the printing press. Eventually, the bills are going to become due just like the bills became due when the mortgage bubble burst.
I can only look at this problem from my own perspective and make my own opinions based on that experience. Sadly, my own experiences have not been great. I am expecting to lose my house, be paid in IOU’s because California is broke, and the list of my personal woes go on and on. With that said, I alone am responsible for my mismanagement and fiscal irresponsibility. With irresponsibility comes financial ruin. Therefore, why should I let somebody else who is responsible pay for my mistakes? If somebody wants to be charitable and help me that way, that is by their choice. It is not by force mandated by Washington. I can only see more problems in the long run because I strongly believe government cannot fix all problems. Do not get me wrong, I like “free money”. I cannot think of anybody who does not like it. However, that “free money” is never free. It has to come from somewhere, and to bolster spending or whatever, somebody else has to suffer. To me, that is not fair.
This goes beyond my personal issues, and not everybody’s situation is the same as mine. This, in my opinion, is why government cannot fix the problem. Central planning cannot address all the issues faced by individuals, and blanket plans are hugely inefficient. How does government know what circumstance when somebody loses a house? Was it because of loss of a job, money mismanagement, over extension in credit, borrowing more than they could afford, were they duped by somebody promising the moon via sub prime and calling it something else? The list is never-ending. How can government know all the problems and fix them?
They cannot. They are politicians. They want to be re-elected, so they turn to feel-good speeches and expensive programs that send this economy to a tailspin. Does this mean it is the end of the world? I do not think so. I call this a correction. Markets have bubbles and recessions in the process of the business cycle. I have not seen any remedy to the business cycle, and tossing money at it does not fix it.
That is why Obama’s proposal will not work, just like the massive spending done in the meltdown of 2008 did not work in the Bush administration. The meltdown continues despite the emergency plans, and as the ledger shows, all that money has not stopped the job losses, foreclosures or banks to fail. Nationalization of Fannie, Freddie and others only places the cost of failure on honest people. They were “too big to fail”, and with that, comes the moral hazard, and now everybody wants a bailout too (Porn industry anybody?).
Where does it all end, and where is the exit strategy? I do not know of any, and that scares the daylights out of me.
Now comes to when these bills will have to be paid. What form will that take? A run on the dollar, crushing debt for many years to come, or inflation? That I cannot answer because I am not a psychic. In fact, I will venture a guess Washington does not know either, because some of these actions have not been tested. Will it be a very expensive mistake, or will I proven wrong and everything will turn up roses? I really hope it is the latter, but call me skeptical. I really do not like this plan.
Let people like me who made bad decisions in life to fail, have an opportunity to learn from mistakes and move on. I cannot make my fellow man step in and make them give me a handout when I did not help myself. I am perfectly capable of making good decisions, but failed to do so. Now, the fallout is here. It is my fault, and nobody else.
Especially Washington.
So, here is a very special tip to Washington concerning what to do to make the economy better: Step out of the way, let the markets work and leave people alone.
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One response so far
Now, why are you are blaming yourself alone? Your government practically forced banks to offer sub-prime mortgage plans to everybody… They had an agenda. They knew it was going to fail. But they didn’t care. They gave you and others BAD ADVISE. And you believed them. Yes, it was a mistake. But your government & banks do have some shared responsibility over this. Capitalists still have billions of dollars in their vaults. So your poor people need to overthrow the system and create a new one. No more socialism for the rich and capitalism for the poor. Nationalize the property of the rich liars and put them in jail. Those rich bankers and venture capitalists have gambled with your money. You are not the source of this problem. Yes you all need to pay for the problem but don’t let those criminals go free-ride. Make them pay heavily. You and your family are in my thoughts. I wish you everything the best.