Watch five minutes of coverage on the financial crisis and you'll come across one general theme: the markets are to blame. We need more regulation. Go ahead, turn on CNN. How about that, huh.
With the presidential election closing in fast, both candidates, but especially Barack Obama have been pushing for more federal oversight, regulation and assistance. John McCain is less enthusiastic about the regulation, but went ahead and joined Obama in supporting the 700 billion dollar bailout among other measures. And plenty of polls have been showing that people are losing trust in the free market and believe more regulation is required.
Well is this what we should do? Did capitalism fail? Did the markets let us down like they always seem to do? Do we need our benevolent government to step in and save the day? Well if you trust the government to fix this mess you might as well ask the guy who just stabbed you to perform the surgery.
First let me start with a disclaimer, a big one at that. I do not mean to absolve Wall Street of its responsibility. On the aggregate, they screwed up badly. Some, such as Wells Fargo and Bank of America, did the right thing. They played it conservatively when housing prices were skyrocketing and now they're the one's with enough money to buy up all those who got caught up in what Alan Greenspan called "irrational exuberance." However, most of the major firms and CEO's behaved irrationally, irresponsibly and sometimes criminally.
What started this train a rollin' were the flood of sub prime mortgages made by financial institutions to borrowers who had no business buying a home. Many of these loans were interest only or negatively amortized, which basically means that the owners were relying on continued appreciation or otherwise they would be upside down (owe more than the home was worth). Many banks accepted stated income, which boiled down means the borrower simply states how much they make and that's good enough. The stupidity here needs no further elaboration. In addition, many mortgage brokers would do anything and everything they could to get people into these loans because the risk didn't matter to them, they were just in it for the commission. Finally, these mortgages were packaged into mortgage-backed securities that were then sold to investors thereby infecting the entire financial system with garbage loans. Here's a nice little primer on how the whole process worked.
Anyways, when the real estate market finally and inevitably started to take back some of its ridiculous gains, the whole deck of cards collapsed. So again, Wall Street deserves plenty of blame, especially AIG, who after being bailed out is now spending $140,000 on a party for their "top sellers."
Given all of this, you may ask how is not the market's fault you ask? Well gee, where should I begin?
Let's start with the Federal Reserve and its ridiculous monetary policy during the real estate boom. After the dot com bubble burst, the Enron and World Com scandals and the 9-11 attacks the markets looked shaky. Alan Greenspan and the Fed thought that dramatically lowering interest rates could help avert a recession. They lowered the discount rate to 1% and kept it there for about two years! This is a stupidly low rate for a ridiculously stupid period of time. It probably prevented a longer recession after 9-11 (there was still a short one) but the prosperity was all an illusion.
What such a monetary policy did was push floods of liquidity into the market. With people scarred of a tumbling stock market they turned to real estate and the bubble began to form. Housing prices and starts accelerated at record paces and builders built far too many homes and apartments. Why did they do that? Simple, they supplied what demand told them to. Unfortunately the demand was artificial, pumped up by the low interest rates. In turn people started refinancing their newly found equity and used it for all sorts of things (like big screen TVs, new cars, etc.). This spending was what made the economy run. Unfortunately, that money was not only borrowed, it was borrowed against equity that shouldn't have existed in the first place! When the market finally adjusted people found themselves with what amounted to unsecured credit card debt. And predictably the foreclosures started coming en masse.
Unfortunately, this was not the only mistake the government made. Thomas Sowell made a pretty good list, but I'll highlight a couple of the other ones for you. First it was the goal of both the Clinton and Bush administration to increase home ownership. It sounds great, but like most political inventions, these great sounding goals come with unintended consequences. One of the major ways they attempted to influence this trend was with the Community Reinvestment Act. What this program did was push lenders to make loans in poor communities. Sounds altruistic and all, but these lenders need to justify risky loans with higher rewards. So whereas politicians used to be praising banks for making risky, higher interest loans, now they are condemning them. Say what, politicians can be hypocritical... who would have thought?
Then there's the whole Fannie Mae and Freddie Mac thing. These are both government created firms that have made it easier to make home loans. Again nice sounding, but it has lead to a steady and artificial growth in real estate prices for a long time. And a little digging will expose how again the politicians cheered Fannie Mae when it made it its goal in 2002 for every American to own a home. Same old goal, same old political cheering and same old unintended consequences. Now look where we are.
There are a litany of other government offenses, but I'll stop there. The main question is do we need more regulation now? There are probably some helpful regulations here and there, but going back to a strictly regulated economy is not the answer. Whenever that temptation befalls you, just remember the airlines used to be heavily regulated and now they are not. If they still were there would be no Southwest or Jet Blue to give you cheap flights to one of the few other countries that we still have a good exchange rate with. Same goes for many other industries. In addition, we would be regulating to prevent this crisis, not the next one. As the famous military slogan goes "we must be prepared to fight the first day of the next war, not the last day of the last war." Unfortunately, the best medicine for this whole mess is probably just time. Time for the market to liquidate the bad debt so we can get back to some sense of normalcy. Then hopefully our government can maintain some semblance of a reasonable fiscal and monetary policy. Damn, good thing you can't see me because I couldn't even write that with a straight face.
Thursday, October 30, 2008
Saturday, October 25, 2008
Chris Cornell Brings Sexy Back
Of all the "what the fuck?" inducing collaborations in music history this might be the what the fuckiest. Chris Cornel, the man behind Soundgarden and Audioslave has teamed up with Timbaland, the man behind Nelly Furtado and Justin Timberlake, to make Scream, which should be in stores sometime in early February.
I am a huge fan of Chris Cornell. If I made a list of my top ten favorite bands Soundgarden would be number 1 and Audioslave would be number 2. Temple of the Dog (his one time collaboration with Pearl Jam) and his solo work (even though Carry On was a bit of a disappointment) would probably both be in the top ten as well. Still, this mix just sounded like a bit too much for me. I mean I enjoy Timbaland when I’m out at the bars, but Chris should be singing about Black Hole Sun’s not Promiscuous Girls.
The first single, Long Gone, was debuted on The Ryan Seacrest Show making it even less rockish and more what the fuckier. And the early reviews have been well, mixed. Some are extremely negative, but quite humorous. Like this gem, “While better respected and less dead than most grunge singers, Cornell has been in decline for some time," and,
In order to minimize the traumatic effects of experiencing the subsequent Cornell/Timbaland samples, I'll start the dissection process with "Watch Out," a malignant musical tumor that makes the other songs, any one of which might normally be the worst thing you've heard all year, seem benign by comparison.
He then goes on to explain why three choruses describing the antics of a reckless driver may be a wee bit excessive. Of course the language he used was a bit more, oh I don't know, course. Even the positive reviews have to get a shot or two in, “...with Cornell's angsty rock-god vocals ricocheting off Timbo's skittering beats, are fresher and more enjoyable, at least in a monkey-riding-a-tricycle sort of way."
Haha! Well I guess that’s what you get when the guy who sung “pearls and swine bereft of me” is now singing “pick it up, pick it up, watch out, now pick it up.” I mean honestly, what the hell does that even mean?
However, while some of the songs like “Part of Me” and “Watch Out” have some of the dumbest lyrics I’ve ever heard, others like “Ground Zero” and “Long Gone” aren’t bad. And the hidden track that got leaked, “Two Drink Minimum,” is brilliant. It’s very reminiscent of his first and highly underrated album “Euphoria Morning.”
Overall, from what I’ve heard (almost half the album), I like it. Even though I feel like I shouldn’t. Maybe I really shouldn't. I mean rock fans are supposed to be all self-righteous and only like rock. Anything else is sell out corporate crap meant to brainwash us right? Oh well, maybe I'm breaking out, I don't know. Regardless, Scream has a certain Gnarls Barkley feel with an undeniable energy to it. And Cornell's signature vocals haven't sounded this good since his early days in Soundgarden. The new stuff is by no means as good as Soundgarden, Audioslave or Euphoria Morning, but it’s still enjoyable R&B. Hell it’s probably my favorite R&B/hip hop music of all time (not that that’s saying much). And hey, everyone needs a couple of club hits right?
Friday, October 24, 2008
Why Are We Afraid?
Fear is a natural and useful instinct that all humans share. It is meant to alarm us when there is danger. We are afraid of a stranger standing in front of us with a gun because well, they can shoot us. Sure we could probably go with out the emotion and rationally construe that the best course of action is to tread carefully. Actually fear may make things worse by inducing panic. Yet many if not most other emotions are like that. Anger being probably the best example, because it is basically always useless. However, most other emotions are triggered by a situation that understandably stimulates it. Anger comes when someone or something wrongs us in some way. Fear however, seems to manifest itself in completely meaningless situations. So what is it that we really fear?
There are a multitude of different phobias, few of which make rational sense. Why on Earth would a 150 pound human being be scarred of a non poisonous little Granddaddy Long Leg spider that weighs less than an ounce? Yet, other fears that almost everyone has are present, even if not to the extent of a phobia. For example, calling a girl (or boy) you like, cold calls, phone calls in general, knocking on someone’s door, speaking up in a meeting, etc.
In essence, those fears fall into one category, while the others, like the aforementioned arachnophobia, fall into a second. The second category is simply a fear of danger. That danger is often non-existent, like in the case with most spiders, or horror films or dark alleys, etc. Yet it makes sense that people may feel this way. Some spiders are poisonous, horror films represent very dangerous situations for characters the audience has grown to care about and bad things can happen in dark alleys although they rarely ever do. The second fear makes less sense however. That is the fear, I believe, of being judged negatively.
This fear includes taking risks, initiating conversation with a stranger, potential client or someone you are attracted to, starting a business, etc. Some might argue that a third category should be added, that of failing, but I disagree. I think it’s the same basic fear. The fear of taking risks would seem to amount to a fear of failing, but is it failing or is it being judged for your failure? I believe it is the ladder. If something is appealing to someone, they will take the steps to get there, even if it sets them back financially or in some other area of life. Think about it this way, why would the average American be more willing to spend 101% of their income on mindless consumerism than launch a new venture? Laziness perhaps, or maybe some fear becoming financially ruined, but most don’t want people to see them aim for a goal and then fail. They don’t want to be judged.
Our culture today revolves around what you appear to be. Abercrombie and Fitch, the Gap, Banana Republic all celebrate this image driven culture along with plastic surgery, breast enhancements, most rappers, movie stars, most advertising, credit cards, etc. The problem is however, that appearance has nothing to do with yourself and only how others perceive you. People are basing their behavior, persona and just about everything they are on what others want them to be. Thus it makes perfect sense when Stephen Covey, author of The 7 Habits of Effective People, did a study on new age vrs older self help literature and found that books written in the past 50 years focused on one’s exterior persona while those written before are based on an introspective approach to self improvement. This cultural paradigm shift has come with quite unfortunate consequences.
Now this isn’t all to say I’m against capitalism (I’m not) or believe the good old days were so much better than now (they weren’t). But we as a society have appeared to lose some valuable insights. For instance, trying to please everyone will please no one, especially not yourself. It just makes you a yes man, fad riding, amalgamation of 50 different pop icons with no real discernable personality. Furthermore, it makes one fear others internal judgment constantly. Thus it cripples any attempt to reach out to others, take risks or pursue “strange” opportunities or dreams for fear of this judgment. What’s ironic is that people who speak their mind, take risks and have a sense of humor about failing are respected more by their peers than those who don’t. They just come across, well, they come across as real.
I for one believe that we’ve made great improvements in society overall. I wouldn’t go back to segregated, intolerant Cold War era of the 1950’s and earlier into the World Wars, colonialism, monarchies, de facto feudalism. Yet this change, or perhaps trend, has significantly damaged us by making us fear the irrational. Surely these fears existed before, but our culture exacerbates them and with out understanding where this fear comes from and how irrational it is, it is sure to cripple us in whatever we do.
There are a multitude of different phobias, few of which make rational sense. Why on Earth would a 150 pound human being be scarred of a non poisonous little Granddaddy Long Leg spider that weighs less than an ounce? Yet, other fears that almost everyone has are present, even if not to the extent of a phobia. For example, calling a girl (or boy) you like, cold calls, phone calls in general, knocking on someone’s door, speaking up in a meeting, etc.
In essence, those fears fall into one category, while the others, like the aforementioned arachnophobia, fall into a second. The second category is simply a fear of danger. That danger is often non-existent, like in the case with most spiders, or horror films or dark alleys, etc. Yet it makes sense that people may feel this way. Some spiders are poisonous, horror films represent very dangerous situations for characters the audience has grown to care about and bad things can happen in dark alleys although they rarely ever do. The second fear makes less sense however. That is the fear, I believe, of being judged negatively.
This fear includes taking risks, initiating conversation with a stranger, potential client or someone you are attracted to, starting a business, etc. Some might argue that a third category should be added, that of failing, but I disagree. I think it’s the same basic fear. The fear of taking risks would seem to amount to a fear of failing, but is it failing or is it being judged for your failure? I believe it is the ladder. If something is appealing to someone, they will take the steps to get there, even if it sets them back financially or in some other area of life. Think about it this way, why would the average American be more willing to spend 101% of their income on mindless consumerism than launch a new venture? Laziness perhaps, or maybe some fear becoming financially ruined, but most don’t want people to see them aim for a goal and then fail. They don’t want to be judged.
Our culture today revolves around what you appear to be. Abercrombie and Fitch, the Gap, Banana Republic all celebrate this image driven culture along with plastic surgery, breast enhancements, most rappers, movie stars, most advertising, credit cards, etc. The problem is however, that appearance has nothing to do with yourself and only how others perceive you. People are basing their behavior, persona and just about everything they are on what others want them to be. Thus it makes perfect sense when Stephen Covey, author of The 7 Habits of Effective People, did a study on new age vrs older self help literature and found that books written in the past 50 years focused on one’s exterior persona while those written before are based on an introspective approach to self improvement. This cultural paradigm shift has come with quite unfortunate consequences.
Now this isn’t all to say I’m against capitalism (I’m not) or believe the good old days were so much better than now (they weren’t). But we as a society have appeared to lose some valuable insights. For instance, trying to please everyone will please no one, especially not yourself. It just makes you a yes man, fad riding, amalgamation of 50 different pop icons with no real discernable personality. Furthermore, it makes one fear others internal judgment constantly. Thus it cripples any attempt to reach out to others, take risks or pursue “strange” opportunities or dreams for fear of this judgment. What’s ironic is that people who speak their mind, take risks and have a sense of humor about failing are respected more by their peers than those who don’t. They just come across, well, they come across as real.
I for one believe that we’ve made great improvements in society overall. I wouldn’t go back to segregated, intolerant Cold War era of the 1950’s and earlier into the World Wars, colonialism, monarchies, de facto feudalism. Yet this change, or perhaps trend, has significantly damaged us by making us fear the irrational. Surely these fears existed before, but our culture exacerbates them and with out understanding where this fear comes from and how irrational it is, it is sure to cripple us in whatever we do.
What it Means to be Moderate
I am a self-described libertarian. However, many libertarians annoy me with their righteous moral certitude (ever read Ayn Rand?). So I must also add that I consider myself a political moderate, and no, that certainly doesn’t mean I don’t pay attention. It means, like it sounds, that I fall in between the political extremes at least as it relates to the United States of America. And to do that and care and be informed, well let me tell you, it’s harder than being a rank and file conservative or liberal. It means I have to form objective opinions on my own, recognize bias, and never only settle for one source or point of view. Yet it is well worth it.
The main reason it is so worth it is what becomes of those who are not. It’s amazing the amount of bias that smart people will allow themselves to absorb with out a second thought. It will always amaze me when a conservative takes something Bill O’Reilly says as fact or a liberal does the same with Michael Moore. These two are bias producing machines, using stick men opposition, shouting, omission and fancy editing to make their point seem like the only one that could possibly be correct.
The idea that only your point of view is correct is, in my humble opinion, the single greatest cause of human suffering in the world. I’m not saying that Bill O’Reilly or Michael Moore and anyone who agrees with them are evil. I’m saying that their thinking and techniques are what has lead to such disastrous consequences. Normally at this point, it would be prudent to give an example, but there are so many that it’s hard to settle on just one. For instance, the Nazi’s believed it was only OK to be Arians, Osama Bin Laden and his followers believe it is only OK to be an Islamic fundamentalist, Pol Pot and Khmer Rogue believed that it was only OK to be an uneducated, agrarian, communist, etc. etc. How hard would it be for someone to say “this is too much, these are people too!” Evidently, very hard when you’re only seeing things from one perspective.
This ‘with me or against me’ attitude creates a false dichotomy: an absolute good and an absolute evil. What must happen to that absolute evil? Well it must be eliminated! So we see the Holocaust and Killing Fields and just about every other tragedy as a result. Now obviously this doesn’t mean that those with strong opinions are going to go on a genocidal rampage. It’s just that this kind of ideological idolatry is the foundation that kind of evil can be built upon. Luckily, for the most part the problems it causes are less severe.
The US government is currently paralyzed by partisan politics where each side is looking to gain power instead of helping the common good. I heard a political pundit say that more people know Bush’s political advisor (Rove) than his chief of staff (who knows what his name is?)! And it’s true! George Bush, as well as other Republicans and Democrats, have done a great disservice to the American people by being a member of their party first and their country second. The rhetoric coming from both sides of aisle during this election cycle should be proof enough of this.
So finally, what it means to be a moderate must be capped by what it absolutely does not mean to be a moderate. Being moderate does not mean that you don’t have strong opinions. I think George Bush has failed miserably, but that doesn’t mean I’m a liberal. Who’s to say our political balance is even in the right hemisphere. For example, a moderate in the United States would be considered a radical right-winger in the former Soviet Union!
A moderate could be a communist or a laissez-faire capitalist (like me), it doesn’t matter what you believe. In essence, you can still be a liberal or conservative and still be moderate. Because a true moderate is not defined by where he stands, but the fact that he knows and tries to understand where others stand and why. Someone who is willing to debate robustly but in the end, agree to disagree. A moderate is someone who recognizes that we are all human and all want what’s best, we just disagree on how to get there.
The main reason it is so worth it is what becomes of those who are not. It’s amazing the amount of bias that smart people will allow themselves to absorb with out a second thought. It will always amaze me when a conservative takes something Bill O’Reilly says as fact or a liberal does the same with Michael Moore. These two are bias producing machines, using stick men opposition, shouting, omission and fancy editing to make their point seem like the only one that could possibly be correct.
The idea that only your point of view is correct is, in my humble opinion, the single greatest cause of human suffering in the world. I’m not saying that Bill O’Reilly or Michael Moore and anyone who agrees with them are evil. I’m saying that their thinking and techniques are what has lead to such disastrous consequences. Normally at this point, it would be prudent to give an example, but there are so many that it’s hard to settle on just one. For instance, the Nazi’s believed it was only OK to be Arians, Osama Bin Laden and his followers believe it is only OK to be an Islamic fundamentalist, Pol Pot and Khmer Rogue believed that it was only OK to be an uneducated, agrarian, communist, etc. etc. How hard would it be for someone to say “this is too much, these are people too!” Evidently, very hard when you’re only seeing things from one perspective.
This ‘with me or against me’ attitude creates a false dichotomy: an absolute good and an absolute evil. What must happen to that absolute evil? Well it must be eliminated! So we see the Holocaust and Killing Fields and just about every other tragedy as a result. Now obviously this doesn’t mean that those with strong opinions are going to go on a genocidal rampage. It’s just that this kind of ideological idolatry is the foundation that kind of evil can be built upon. Luckily, for the most part the problems it causes are less severe.
The US government is currently paralyzed by partisan politics where each side is looking to gain power instead of helping the common good. I heard a political pundit say that more people know Bush’s political advisor (Rove) than his chief of staff (who knows what his name is?)! And it’s true! George Bush, as well as other Republicans and Democrats, have done a great disservice to the American people by being a member of their party first and their country second. The rhetoric coming from both sides of aisle during this election cycle should be proof enough of this.
So finally, what it means to be a moderate must be capped by what it absolutely does not mean to be a moderate. Being moderate does not mean that you don’t have strong opinions. I think George Bush has failed miserably, but that doesn’t mean I’m a liberal. Who’s to say our political balance is even in the right hemisphere. For example, a moderate in the United States would be considered a radical right-winger in the former Soviet Union!
A moderate could be a communist or a laissez-faire capitalist (like me), it doesn’t matter what you believe. In essence, you can still be a liberal or conservative and still be moderate. Because a true moderate is not defined by where he stands, but the fact that he knows and tries to understand where others stand and why. Someone who is willing to debate robustly but in the end, agree to disagree. A moderate is someone who recognizes that we are all human and all want what’s best, we just disagree on how to get there.
Thursday, October 23, 2008
Does Fasting Work?
Many cultures through out time have placed fasting in high esteem. To many fasting is a spiritual thing. Some Buddhist monks basically fast their entire lives and even Moses did some fasting among others the Bible references. Today people do it for spirtual or medical reasons or simply to lose weight.
The question is, does fasting actually do anything? Supporters say it detoxifies the body while helping people build discipline and lose weight. Wikipedia cites a study by Berkely that suggests fasting can decrease the risk of cancer and extend one's lifespan. On the other hand, some mainstream sources say it does nothing and can actually be harmful (and messy too if you use laxtives in the process, although that's kinda expected).
Fasting undoubtedly puts the body into starvation mode, which basically means that once you start eating again your body will store everything as fat until your metabolism gets back up to speed. So ironically, fasting can actually cause you to gain weight.
So when I got the strange impulse to do this, I was nervous about a couple things (going into hypoglycemia not surprisingly was the highest on the list). However a friend of mine had just done it with positive results and the idea got stuck in my head to go for it. For me it was about discipline. If I can go with out food, I can do anything (or not do anything).
So I decided to do a five day water fast. However, I quickly started to doubt my wisdom in this chosen endeavor. After the end of the first day the hunger pain was awful. Day two was almost unbearable. The hunger pain was so bad that it was actually hard to go to sleep even though I was exhasusted. In addition to that, I couldn't focus very well and my tongue started to turn a gross white color. It was also a little awkward when my stomach started growling whenever I was around someone (I didn't tell many people I was doing it). I'd always say it must have been something I ate (or didn't eat, ha ha).
Luckily, the third day felt fine and so did the fourth. I guess my body got use to not having food. Like an annoying, little kid begging for attention who finally just gave up. The hunger pains did come back on the fifth day, but I got through it. To celebrate, I bought a pizza and wow, it was easily the best tasting thing I've ever eaten!
Overall it was something I'm very glad I did. I felt like I achieved something and have been much more disciplined ever since doing it; working out consistently, getting my work done, not smoking, eating healthy and all that. I also lost 13 pounds in five days which was nice. And oh yeah, I didn't die. Given all that, I'd have to recommend it.
The question is, does fasting actually do anything? Supporters say it detoxifies the body while helping people build discipline and lose weight. Wikipedia cites a study by Berkely that suggests fasting can decrease the risk of cancer and extend one's lifespan. On the other hand, some mainstream sources say it does nothing and can actually be harmful (and messy too if you use laxtives in the process, although that's kinda expected).
Fasting undoubtedly puts the body into starvation mode, which basically means that once you start eating again your body will store everything as fat until your metabolism gets back up to speed. So ironically, fasting can actually cause you to gain weight.
So when I got the strange impulse to do this, I was nervous about a couple things (going into hypoglycemia not surprisingly was the highest on the list). However a friend of mine had just done it with positive results and the idea got stuck in my head to go for it. For me it was about discipline. If I can go with out food, I can do anything (or not do anything).
So I decided to do a five day water fast. However, I quickly started to doubt my wisdom in this chosen endeavor. After the end of the first day the hunger pain was awful. Day two was almost unbearable. The hunger pain was so bad that it was actually hard to go to sleep even though I was exhasusted. In addition to that, I couldn't focus very well and my tongue started to turn a gross white color. It was also a little awkward when my stomach started growling whenever I was around someone (I didn't tell many people I was doing it). I'd always say it must have been something I ate (or didn't eat, ha ha).
Luckily, the third day felt fine and so did the fourth. I guess my body got use to not having food. Like an annoying, little kid begging for attention who finally just gave up. The hunger pains did come back on the fifth day, but I got through it. To celebrate, I bought a pizza and wow, it was easily the best tasting thing I've ever eaten!
Overall it was something I'm very glad I did. I felt like I achieved something and have been much more disciplined ever since doing it; working out consistently, getting my work done, not smoking, eating healthy and all that. I also lost 13 pounds in five days which was nice. And oh yeah, I didn't die. Given all that, I'd have to recommend it.
Thursday, October 9, 2008
Did Osama Bin Laden Win?
The stock market just fell below 9000 for the first time since the 90's after the Dow dropped another 679 points today. The stock market has already fallen almost 40% from its all time high of 14164 in October 9th of 2007 and will probably continue to fall. Huge banks such as Bear Stearns and Lehman Brothers have failed along with insurance giants like AIG. Mortgage foreclosures are up, inflation is up and Americans still save less than 0% of their income. That brilliant $700 billion dollar bailout package doesn't seem to be having its desired effect.
All of this was predictable and I take little pride in the fact I predicted it given how obvious it was (and how bad it could get). Economics is an extremely complicated discipline, but the basics are pretty simple. You cannot dramatically lower taxes, dramatically increase spending (Medicare expansion, No Child Left Behind, Department of Homeland Security, etc.) and start two wars with out bankrupting your country. Our government is worse than a teenage girl with her parent's credit card.
What makes this even worse is that not only did we do it to ourselves, but we fell right into our enemy's plan. We executed it to a T. Osama Bin Laden knew very well he couldn't defeat the United States militarily. What he did know is that he could get us stuck in the Middle East crapping money away fighting endless insurgencies. He bled us. And that was his strategy the whole time! He even stated it publicly saying, "So we are continuing this policy in bleeding America to the point of bankruptcy." He went further and cited Russia, who in the 1980's were bankrupted fighting Bin Laden's insurgents in Afghanistan. Yet we were still too stupid to listen, or at least our politicians were.
So where do we go from here? Well first things first, we have to withdraw our military. Not just from Iraq and Afghanistan, but from the entire world. The quasi-empire can go! As far as Osama Bin Laden is concerned, he'll lose support if the US leaves the region. Radical Islamists will likely turn on their own government instead of worrying about a bunch of infidels on the other side of the planet. Regardless we have bigger problems at home.
We then need to use the saved money to balance the budget. Right now, we just gave a $700 billion dollar bailout to our major financial institutions, but we have no money and our credit line with China is basically maxed out. So we almost assuredly just printed the cash. This crisis will get much worse if we keep that up, the dollar will just collapse and we'll have runaway inflation during a recession. We need to keep taxes as low as possible for the time being and simply be patient while the market liquidates the bad debt. It will take time and it will hurt, but there is no such thing as a free lunch. You have to pay for your mistakes. And the United States has many mistakes to pay for.
All of this was predictable and I take little pride in the fact I predicted it given how obvious it was (and how bad it could get). Economics is an extremely complicated discipline, but the basics are pretty simple. You cannot dramatically lower taxes, dramatically increase spending (Medicare expansion, No Child Left Behind, Department of Homeland Security, etc.) and start two wars with out bankrupting your country. Our government is worse than a teenage girl with her parent's credit card.
What makes this even worse is that not only did we do it to ourselves, but we fell right into our enemy's plan. We executed it to a T. Osama Bin Laden knew very well he couldn't defeat the United States militarily. What he did know is that he could get us stuck in the Middle East crapping money away fighting endless insurgencies. He bled us. And that was his strategy the whole time! He even stated it publicly saying, "So we are continuing this policy in bleeding America to the point of bankruptcy." He went further and cited Russia, who in the 1980's were bankrupted fighting Bin Laden's insurgents in Afghanistan. Yet we were still too stupid to listen, or at least our politicians were.
So where do we go from here? Well first things first, we have to withdraw our military. Not just from Iraq and Afghanistan, but from the entire world. The quasi-empire can go! As far as Osama Bin Laden is concerned, he'll lose support if the US leaves the region. Radical Islamists will likely turn on their own government instead of worrying about a bunch of infidels on the other side of the planet. Regardless we have bigger problems at home.
We then need to use the saved money to balance the budget. Right now, we just gave a $700 billion dollar bailout to our major financial institutions, but we have no money and our credit line with China is basically maxed out. So we almost assuredly just printed the cash. This crisis will get much worse if we keep that up, the dollar will just collapse and we'll have runaway inflation during a recession. We need to keep taxes as low as possible for the time being and simply be patient while the market liquidates the bad debt. It will take time and it will hurt, but there is no such thing as a free lunch. You have to pay for your mistakes. And the United States has many mistakes to pay for.
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