Wednesday, October 13, 2010

More on Twenty Years of Failed Policies

My friend from Lew Rockwell, Mr. Bill Bonner, has an excellent article on Christian Science Monitor today talking about the very same subject that I wrote about yesterday: The Japanese government putting Japan (us) into debt oblivion with no positive results to show for it for these last twenty years. Also,  how our situation gets more and more desperate everyday with no new answers proffered by the fools in power in Japan.

The CS Monitor reports:

And now, their barks riding lower in the water than ever, the admirals grow desperate. The Japanese have vowed to use their QE more aggressively. The amount pledged so far – $60 billion – is trivial. But they say they’re going to target a wider range of financial assets…drive the key lending rate even closer to zero…and keep at it until deflation is defeated. The ECB is committed to spend $63 billion on QE too. It was forced to spend $1.4 billion of it last week to buoy up poor little Ireland, which is in danger of slipping beneath the Atlantic waves at any minute. And Ben Bernanke has told America that it should expect a more muscular approach to QE after the Fed meets on November 2nd.
“Central banks open spigot,” proclaimed The Wall Street Journal.
What else could they do? They think they face a choice: it’s the devil or the deep, blue sea.
Bonner's article also takes the US Treasury to task for following Japan's lead by enacting the so-called TARP stimulus:
The politicians didn’t hesitate for a minute. They passed their stimulus bills in a panic. And now they claim success. Steven Rattner, former advisor to the US Treasury secretary, argued in the FT that TARP “did more to keep America’s financial system – and therefore its economy – functioning than any passed since the 1930s.” Were it not for TARP, he says, AIG, Citigroup and Bank of America would have certainly sunk. Maybe GM and Chrysler too. And the recession would have “spiraled downward.”
Maybe he’s right about that. Even so, it seems like a small price to pay. Besides, how do Rattner, Geithner, Bernanke et al know who should survive and who shouldn’t? The trouble with degenerate, state-managed capitalism is that it lets politicians and policy makers decide these things. Why should a bank survive if it can’t weather a foreseeable storm? Why should an automaker stay in business if it can’t make cars at a profit? Why can’t willing buyers and sellers decide these things for themselves? That’s just how it’s supposed to work. It blows up gusts from time to time and sinks the unworthy and the unprepared. That’s what the deep, blue sea was made for.

Exactly! Why the stupid US government would want to copy tried and failed policies Japan used is a mystery. 

On that note, why is the government allowed to decide what businesses succeed or fail? If, in Japan's case, these Zombie banks were allowed to fail back in the late 1980's we could have washed all this bad debt from the economy. But we didn't and now we are still paying the price. By bailing out failed institutions with public monies, the government saves the jobs of their friends. 

Had the companies been allowed to fail, the factories, buildings, assets, would still be there and that would allow new, fresh management to come in a fix the situation. The way it is now, the incompetents that bankrupted these companies are left in charge.

Is this what we elect these government officials for? To use public money to save private company officials position's?

Why does a private company get to keep all profits, but when they take a loss, the public pays for it?

It's time to demand a stop to twenty years of bad policies.   

1 comment:

Andy "In Japan" said...

Why do they copy failed policies? Why do they bail out incompetent managers from failed firms? Because the politicians benefit by doing so. They get bribes and kickbacks (aka campaign contributions) from the beneficieries of bailouts and TARP and stimulus spending. Plus, new regulations, combined with the prospect for future bailouts serve to increase political power of the party bosses. The polcies may not work as advertised, but they work as planned for the politicians.