March 19, 2009
I was traveling all day Wednesday, making the trek up to the official Takimag mountain retreat in Whitefish, Montana. But in those airport flatscreens showing non-stop CNN, I caught a glimpse of the Banana Republic America is quickly becoming.
First, there were the AIG show trials, in which Congress berated all those greedy capitalist pigs who, we?re supposed to believe, are to blame for the economic meltdown. No, I don?t want to defend the bonus-takers. I supported letting AIG fail, which would have allowed us to avoid this scandal altogether. (And I might develop a little more respect for the execs if they?d taken Senator Grassley?s advice and committed seppuku, or at least sliced off a finger or two, to express deep regret for wrecking their companies by getting involved with all those credit default swaps.)
This aside, there was something utterly obscene about Charles Schumer and Charles Rangel threatening to create new laws that tax away all the bonuses and return the money ?to its rightful owners, the taxpayers.?
[Hat Tip: Bob Murphy]
Don?t hold your breath waiting for bonuses to be ?returned? to you, for by ?taxpayers? Chuck really means the government. I?d rather the AIG execs get the money, as they?d invest it, or at least spend it, and not use it to finance yet another government program or yet another government bureaucrat. As it is, the whole AIG charade was simply a way for Washington to hoot and howler about ?corruption? and ?greed? so as to justify a greater government takeover of the insurance business?which means it?ll be staffing AIG with DMV & Post Office-caliber workers, who are too dumb to be corrupt, as well as its lawyer-operative friends, who?ll make sure AIG stays on the government dole for a very long time. Put simply, Washington?s created a zombie.
Next it was Ben Bernanke?s turn to complete America?s transition to Banana Republic status by promising to buy 300 billion in Treasury Bills as well as 1.45 trillion in mortgage-backed securities issued by Freddie Mae and Fannie Mac (again proving that these institutions, which did more than any other to create the subprime disaster, will be spurred on to do more damage by their nationalizations.)
?Expanding the Fed?s balance sheet? and ?purchasing T-Bills? = money printing, pure and simple.
In the Fed’s latest infomercial, which was aired on 60 Minutes last Sunday, Bernanke announced that he’s targeting the financial industry and wants to bring it out of its current crisis to restart the American economy. Well, printing money and then using it to buy up equities is certainly one way of boosting stock prices. And the cost is picked up by the American people, who are now close two trillion dollars poorer?and completely unaware that they?ve been ripped off.
Daily updates with TM’s latest