I have tried to wait until the dust settles on the current financial ‘Crisis’, ’Correction’, ‘De-Coupling’ or whatever you wish to call it before posting more, only to see some kind of preferred path forward out of this mess.
With US banks collapsing, and Billions of US tax payer Dollars being thrown at the problem, it seems at first as if the solution has already taken place: The system has ground to a halt, and this infusion of funds grease the wheels of its recovery like some mostly empty 747 being towed up the runway in the teeth of the mighty hulk-like Treasury. Of course that is what it is meant to look like. But what is to stop this fuel being used for a quick pleasure trip to the Bahamas for it’s crew once again, instead of a flight to simply get the groceries for the feeding of the starving community? Simply Government controls? This is far more endemic a problem than simply the hoarding of free money in case of bankruptcy or, the multi-Billion dollar paying of golden parachutes to bungling, myopic executives. The amount of financial sector interference in US Government fiscal policy (Hello, Hank Paulson!), and the ‘re-alignment’ of the domestic savings accounts industry means that any further nationalization of the banking system appears to be too far-fetched. At least, the strings attached for this gigantic bailout, could have benefitted all, with the provision of a re-payment schedule directly into the social safety net, that at the moment is as threadbare as my 90-year old neighbor’s hearth rug. Re-paying the Government directly into Medicare, Medicaid, and the retirement financial program would show the US stakeholder citizens that something positive was being done with their money, rather than have it save ‘A few institutions’. That their funds were being used to feather their own future nests, now that they will have to work until their mid-70’s.
If everyone concerned really means what they day that all of this will pass, it’s a cycle, it will get better, then simply prove it. Why should the suddenly ubiquitous Joe-The-Plumber have to continue his or her savings down the black hole of private enterprise on the hunch that it will better them, when they could have these enterprises use a portion of their recovery to help those that kept them afloat for a generation and a half? A simple look at the last few censuses shows that for a quarter of a century, we have been earning less, while the cost of doing business has gone down thanks to technology. Now, we have saved what we can in the face of rising prices and falling salary, we have not only lost it all, we are paying for those that were responsible for losing it a reward to keep them in business. It’s like rewarding the coach driver for driving you into highwayman country against all warnings, when your coach is robbed. What’s more this loss has been downloaded across the globe. No wonder the US aren’t too worried about their economy – they aren’t ones responsible for its re-payment. Their banking system soiled itself, and the rest of the World now has to pay for the dry cleaning: The highwayman only takes from you, but the rest of the coach has to pay the driver for your loss, and theirs .
We should be learning from all of this. After all, we have been through it all before: Those of us in our mid-forties and older saw all of this 35 years ago, when we were teenagers. The result then was a drift the left politically to force governments to do their duty, but now the parties of the right have commandeered the centre of political debate across the West, leaving voters to re-elect the party in power so as not to suffer any further trauma to their lives. When you have a left-wing government, though, the answer is always the same – a pragmatic approach to problems large and small that leads to short term thinking: Short term government action to preserve power, hand-in-hand with short term enterprise thinking only interested in profit. The two work hand-in-hand. So be careful of trying to talk that driver of taking that fork in the road – he may have a highwayman partner in the bushes up ahead.
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