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Saturday, July 23, 2011

Sometimes you gotta choose...

In the beginning, there were 13 colonies.

And loosely bound by a Confederation, representatives for all the colonies met in 1787 originally to figure how to modify the 'Articles'.  Eventually, through tricks, chicanery and a lot of compromises, a new framework was created- the US Constitution.

And though some states ratified it quickly, others were very hesitant about giving up too much power at the hands of a central authority.  So included in the Bill of Rights, was a Tenth Amendment, which though intentionally vague, provided that states would not be giving up full autonomy.  And as a result, other states ratified and a nation was born.

Fast forward 80 years- a big, long, expensive bloody civil war is fought between (1861-65) because one group of states want to leave the Union as was their right and the other half wanted to keep them against their will, saying the Constitution does not give such rights.  Eventually moral issues of emancipation and human freedom were used as reasoning and rationale to keep the Union intact.  But at war's onset, it was more a Constitutional fight over rights of states and how much power and control a centralized Federal government was to play in all our lives.

We all know how the war ended.

And the Federal Govt. grew and grew.. and as thoughts of secession faded into the backdrop of history, one generation at a time. And more and more people became dependent upon Government for everything especially since the Great Depression-- money to live, food to eat, for healthcare and other basic services. Today it is so entrenched into our society that to slash even a fraction of the financial costs, would cause needless suffering and irreparable harm to many innocent people.
And since the Financial crisis of 2008 resulting in the ongoing Great Recession, the Federal government stepped in to bail everyone and every entity out (except you of course).  They bailed out US banks and foreign banks; US financials and foreign ones, the auto industry, on and on.. bailouts galore- frontdoor, backdoor, sidedoor.. every single aspect of the economy is controlled and manipulated by the US government.  And things are so bad that without it, we'd be in severe depression, so everyone cheers the intrusion.

Here's a new way the government is considering artificially manipulating the economic system (From WSJ.com):

"The Obama administration is examining ways to pull foreclosed properties off the market and rent them to help stabilize the housing market...  While the plans may not advance beyond the concept phase, they are under serious consideration by senior administration officials because rents are rising even as home prices in many hard-hit markets continue to fall due to high foreclosure levels."

So in other words, the US government would intervene to stop the natural ebb and flow of home values, and to artificially prop up prices, they'd take over these properties then play landlord to take advantage of higher rental prices.   The government wouldn't be doing this to offer rentals that are more affordable to people in need or who are struggling.  No, they'd be stepping into the private sector and competing with others to rent homes and apartments at the highest price possible on the open market.

In Capitalism, you rise and fall by your own merits.  If your business can't make a profit, you sell it or liquidate.  If you can't make your payments on your home, you sell it and relocate to a residence that is within your affordability.  If you're broke and missing mortgage payments, you get foreclosed upon.  And by the same token, if your home values fall and you're underwater (you're paying more than your home value) then you simply walk away.   That's Capitalism.

Instead we have this hodge-podge bastardization of the word capitalism by mixing elements of fascism (merger of business and state), socialism, collectivism, and social & economic engineering to provide a system that presents itself as all things to all people and in actuality is nothing to no one.

There are two ways the US is going to get out of this current 3+ yr recession- Either commit the money needed to truly stimulate the economy and create jobs via the government taking the lead (and that will be very expensive but will work)  OR Truly get government out of the way and allow businesses and financial entites to Fail; to collapse upon themselves while other companies and those with ingenuity pick up the slack and create the jobs on their own, free of most government regulations and controls.

One way is very liberal, the other very fiscal conservative; both ways are diametrically opposed and yet both plans would work to fix this economy.   BUT --  They can not Ever work together in unison, which is what most presidents of both administrations try to do.

If the government is going to reward corporations with little or no corporate taxes collected, extra low interest Fed loans and guarantees offered, and other special perks and privileges, then when a corporation or financial entity crumbles, you MUST let it crumble-- it MUST be allowed to fail, no matter what the political fallout.

Either the nation is bigger than the company, or the company is bigger than the nation. And until a leader can have the courage to make the choice and stick with it,  the US (and really All western nations that play this 'best of both worlds' game) are going to cause their populaces a lot of economic pain now and in the future.

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