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Day of Reckoning

Comment

How did the United States of America, the richest nation on earth, whose economy represents 30 percent of the Global Economy, arrive at the precipice of a financial panic and collapse?

The answer lies in the abject failure of both America's financial elite and the political elite of both parties — the same elites now working together to determine how much of our wealth will be needed to bail the nation out of the crisis of their own creation.

Big Government is riding to the rescue — saddlebags full of our tax dollars — to save us from the consequences of the stupidity and folly of Big Government. New York and Washington, the twin cities responsible for the crisis, are now being hailed by the media as the 7th Cavalry, coming to rescue a beleaguered nation.

Had there not been a steady and constant infusion of easy money and credit into the U.S. economy by the Fed, for years on end, a housing bubble of the magnitude of the one that has just exploded could never have been created.

Had the politicians of both parties not coerced and pressured banks, S&Ls, Fannie Mae and Freddie Mac to make all those sub-prime mortgages, then to tie this rotten paper to good paper, convert it into securities and sell to banks all over the world, there would have been no global financial crisis.

Had they seen this coming and acted sooner, the Federal Reserve and U.S. Treasury would not today, like Henny Penny, be crying, "The sky is falling!" and the end times are at hand, unless we give them 5 percent of our gross domestic product to buy up suspect securities backed by sub-prime mortgages.

Consider what the "Paulson Plan" of Treasury Secretary Hank Paulson, against which Sen. Richard Shelby and the House Republicans rebelled, entails.

Since Americans save nothing and have to borrow from abroad to finance our trade and budget deficits, wars and foreign aid, what the secretary proposes is this: that Congress authorize the Treasury to spend $700 billion to buy up the toxic paper on the books not only of U.S. banks, but of foreign banks operating in the United States. According to The Washington Times, the Treasury would also be authorized to buy up securities backed by rotten auto loans, student loans and credit card debts.

Thus America would be borrowing from China, Japan and the Middle East to tidy up the balance sheets of the banks of China, Japan and the Middle East.

And all the rotten paper will be offloaded onto U.S. taxpayers, who hopefully will be able to recoup some of their losses, because some of the paper will be good.

Why should we do this? Because otherwise there will be a financial panic, followed by a market collapse, wiping out pensions, 401Ks, portfolios and defined benefit plans of Middle America, forcing millions into bankruptcy and millions more to put off retirement and continue working until they drop.

In a democracy, it is said, you get the kind of government you deserve. But what did the American people do to deserve this? What did they do to deserve the quality of financial, corporate and political leadership that marched them into this mess — and that today postures as their rescuers?

Consider what this mess has already cost taxpayers: $29 billion to buy the rotten paper of Bear Stearns so J.P. Morgan would buy the investment bank; $85 billion for 80 percent of AIG to nationalize it; $150 billion in a stimulus package to flood the nation with cash; perhaps $300 billion to bail out Fannie Mae and Freddie Mac; and now $700 billion to begin taking the toxic paper off the hands of America's big banks.

And even if this is passed, say Paulson and Fed Chairman Ben Bernanke, there is no guarantee this will resolve the crisis. If the $700 billion is not provided and the toxic paper is not pulled off the books of the world's banks by U.S. taxpayers, however, we face an almost certain collapse, surging bankruptcies, rising unemployment, a shrinkage of GDP and a recession, if not worse.

Yet, the fellows who tell us we face a financial mushroom cloud over every American city if we do not act at once to provide the $700 billion did not see this coming and can make no guarantee that this will succeed and end the crisis.

Nevertheless, it must be done, and done now, as collapse is imminent.

Looking at all the money being ladled out by the U.S. government to prevent a collapse, and the diminished revenue coming in, it is hard to see how America avoids future deficits that reach $1 trillion a year. These will imperil both the dollar itself and the ability of the United States, which saves nothing, to borrow from the rest of the world. The downsizing of America is at hand.

Yes, indeed, we have arrived at the Day of Reckoning for Uncle Sam.

To find out more about Patrick Buchanan, and read features by other Creators Syndicate writers and cartoonists, visit the Creators Syndicate web page at www.creators.com.

COPYRIGHT 2008 CREATORS SYNDICATE INC.



Comments

4 Comments | Post Comment
"But what did the American people do to deserve this? What did they do to deserve the quality of financial, corporate and political leadership that marched them into this mess ó and that today postures as their rescuers?" ....................................................................................................................................................................................................................................................................................................................................................................................................................................................................
Do you really have to ask? What does a stupid consumer do to deserve being ripped off? The answer is, "nothing."
They just buy and buy and buy as all the idiot-tested commercials instruct them to do, and pay the consequences later. They don't look at the fine print on their credit cards and mortgage documents, and if they did they wouldn't understand it anyway. What does a sheep do to deserve getting fleeced?................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................
And so, could you tell us once again, mon Pat-pourri, why is it that the right wing deprives the government of the ability to pay for its waning services (you know, education, roads, bridges, keeping poison out of our milk, catching criminals, and yes, regulating the financial markets) with tax dollars on the premise that taxes are so evil, even though we can at least elect and unelect those who spend them, but the hard earned money that banks and credit card companies pick right out of our pockets with very funny and not so funny tiny little wormey words is just fine for us to lose?
Comment: #1
Posted by: Masako
Sat Sep 27, 2008 3:42 PM
Sir;...There is such a thing as following an ideal into oblivion against all evidence that it is not delivering the goods, but ruining the country to make a few people rich. The problem is that some of those being made rich were members of the government, and many were as idealistic as the rich who should have known better. Part of the problem was not the government handing out free money to force up the price of property, but the simple fact is, that in not taxing property to support the federal government it was made a bank of wealth paying so little of taxes that it could be held indefinitely off the market. On the other hand, labor taxed was driven down in price, and artificially so, so that those needing property had to borrow for long time periods against inflated property values because of short wages. Wages were inevitably pushed to their un-natural low, and property was pushed to its speculative high. Neither situation was healthy, but under the pressure of interest, which has sucked too much wealth out of the economy, property is reaching a natural low. It would have been more healthy for the country if Property taxed had to find willing workers to make it profit to pay the taxes. Instead, property had workers on the ropes, begging for jobs. It should have been property on the ropes begging for workers or buyers before the country took it for taxes. We have had that society, and it worked better than the one we have now...Thanks...Sweeney
Comment: #2
Posted by: James A, Sweeney
Sat Sep 27, 2008 8:22 PM
"Nevertheless, it must be done, and done now, as collapse is imminent."
Please tell me I'm reading this wrong, and you're not supporting the bail out. Oh Pat, not you too.
Comment: #3
Posted by: Hannah J
Mon Sep 29, 2008 8:59 AM
As a liberal I honestly wonder what happened to real conservatism. It seems they either became libertarians or neocons. We sold ourselves overseas to cheaper labor. In theory that should have made us more competitive, but it did not. This bailout is a slap in the face of the basic nature of capitalism. I do not mind being taxed fairly, but not to pay for someone who made almost 400 million in 5 years to run a company into the ground. I fault the trickle-down theory as well as the weak democrats who let neocons do as they please with just a mild squeak of false protest. And I am a Democrat. We need real leaders in the Congress and the Senate. We need to get out country back from China. We for sure need to get rid of the Electoral college. The hard workers of this country need to have their dreams realized and not be beaten into the dirt...
Great article Pat, love to read your stuff...boy I miss real conservatives.
Comment: #4
Posted by: Frank
Mon Sep 29, 2008 9:08 AM
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