Saturday, March 21, 2009

Listen to Sweden


'You can't think you can solve everything with taxpayers' money. Stimulus packages are already in place and taking us through this challenging time. We already have done a lot.'

In contrast, the Feds have decided to double down on their incoherent pretense that they love the banks but hate the bankers. Despite the diversionary witch hunt about AIG bonuses while not questioning the vastly greater giveaway to AIG, and imposing salary limits to a small number of executives under the TARP bailout plan, Treasury plans to expand the already trillion-dollar Federal Reserve TALF (Term Asset-Backed Securities Loan Facility) program.

The Fed, however, has conveniently exempted TALF from compensation limits.

All these Treasury and Fed programs represent employment for financial types.

We can learn a lot from the Swedes, who have been all over the place in their voyage into and somewhat out of socialism.

More precious than any given level of expenditures for cellphones, WIIs, movies, restaurant meals, two-five bathroom homes, etc., is the preservation of liberty and democracy as envisioned in the Declaration of Independence and the Constitution, as amended. Thus the greatest imperative is to protect the financial strength of the U. S. Government itself, while dealing directly with the growing homeless epidemic and the fiscal strains/crises at the state and local level.

One additional point.

The alacrity with which Congress imposed a 90% tax rate on these individuals at large financial companies is surprising and disquieting. Why no hearings? What's the rush?

This ginned-up AIG bonus "scandal", the payments for which were, a month ago, specifically allowed by the same "shocked" crowd that now is imposing this penalty tax rate, is so contrived that the suspicion has to be entertained that a la Hoover and then Roosevelt, much higher tax rates, perhaps at the same level, are going to be imposed on other "undeserving rich".

As more and more Ponzi schemes are uncovered all over the U. S. and the U. K., as Europe tries to have less of an increase in government involvement in the economy than does America, as the party in power in the U. S. points fingers within itself over the AIG flap, as Republicans join in the lynch mob, as corporatism continues to be official governmental policy, and as the economic Banana continues to inevitably worsen in the months ahead, all the geniuses who look to the great majority of post-Great Depression economic cycles to guide their decisions and recommendations are making a big mistake. The current crisis is more like the really bad scenes:

The stock market kept going down despite tremendous public angst all throughout 1973 and 1974, bottoming a full 24 months from the peak in December 1972 only after the Watergate and OPEC crises were completely decided and the Viet Nam crisis was almost completely over.
The about 32 month waterfall decline in 1929-32 and the 1973-4 stock market and economic fiascoes strike this observer as better historical examples.

The public's anger at the Big Government/Big Finance alliance is palpable and growing. This does not bode well for the markets in the short term.

Copyright (C) Long Lake LLC 2009

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