By Monty Pelerin, on March 11th, 2010 In a further sign of the deterioration of society, the wealthy (or formerly wealthy) believe they are entitled to be bailed out for their losses. The victims of the Madoff and Stanford scams are appealing to Congress for a bailout. Bloomberg reports:
Together, the groups hope to persuade Congress to add a requirement to the regulatory overhaul bill, now under Senate consideration, that brokerage firms pay about $4 billion in additional fees to the Securities Investor Protection Corp. fund. SIPC protects U.S. investors’ accounts against fraud or bankruptcy. The victims also want Congress to require the fund to compensate them up to $500,000 each in losses.
We all should have sympathy for the victims of these two Ponzi schemes. After all, their lives have been adversely affected, in some instances irreparably. However, to believe that the rest of the country has an obligation to make them whole is a bit outrageous.
The lobbying initiative “gives new meaning to the word chutzpah,” said James Cox, a professor at Duke University School of Law. “This is just a tax increase. It’s levied on banks but customers end up paying.”
Their effort is natural. After all, in a society that bails out banks that created the economic crisis, why would others not believe they are entitled to the same treatment? When “victimology” becomes the code, all deserve to be recompensed for anything that is bad, or even unsatisfactory. No one should lose money, even when
Continue reading The Wealthy Beg
By Monty Pelerin, on February 23rd, 2010 According to calculations by Robert Barro, Harvard University economist, the stimulus package harmed the economy. Mr. Barro, concluded in the WSJ:
… viewed over five years, the fiscal stimulus package is a way to get an extra $600 billion of public spending at the cost of $900 billion in private expenditure. This is a bad deal.
The fiscal stimulus package of 2009 was a mistake. It follows that an additional stimulus package in 2010 would be another mistake.
When in a hole, government, like everyone else, should stop digging. Apparently stopping is not a viable option.
Since the 1960s, government has claimed the ability to manage the economy. Some economists were bold enough to state that the business cycle had been tamed. Keynesian economics was the key that opened the door to full employment, low inflation and general economic bliss. With these tools, we were told, prosperity was assured.
It is unclear whether our leaders believed their own propaganda. The media did, or at least became willing accomplices. Newspapers report in a manner that supports the myth of government controlling the economy. Statements along the following lines are not uncommon: Clinton “gave” us a good economy, Bush “gave” us a bad one and Obama inherited Bush’s mess.
The reality is that government cannot give us anything without first taking it. They can make things worse with bad policies, but they cannot create wealth or growth. These come from the hard work and
Continue reading What Crisis is Being Solved?
By Monty Pelerin, on February 20th, 2010 There are few economic problems that don’t originate in politics.
Originally, economics was known as political economy because the early practitioners understood the importance of institutions on economics. One of the early journals of economics was started in 1892 at the University of Chicago entitled The Journal of Political Economy. It is still one of the most prestigious journals in the field of economics.
Citizen faith in government has deteriorated recently as shown in virtually every political poll. Rasmussen found: “…63% of likely voters believe, generally speaking, that it would be better for the country if most incumbents in Congress were defeated this November.” Gallup had the federal government ranking ahead of only socialism in terms of positive image:
People know something is wrong. They know economic conditions have taken a turn for the worse. They sense that they don’t matter much, at least in the eyes of their government. Furthermore, many believe that government is out of touch and corrupt. Politicians are viewed more as a ruling class than representatives of the people.
History is replete with examples of the rise and fall of empires. Is there some mysterious, material force that produces “cycles of civilization?” History seem to support such a contention, but coincidence and correlation is not causation. Societies rise and fall as the result of policies, laws, customs and traditions. Man creates the forces that drive civilizations.
Over the centuries, brighter folks than our elected officials experimented with virtually
Continue reading The Economic Crisis is Only a Symptom
By Monty Pelerin, on February 19th, 2010 Bill Bonner is one of the more incisive and entertaining writers. His post below ostensibly deals with Greece but has warnings that should be heeded for the rest of the Western world.
The Daily Reckoning Presents
Government Sachs
Bill Bonner
Paris, France – It’s Goldman this. And Goldman that. And Goldman rhymes with greed. But it’s “Thank you, Mr. Blankfein,” when it’s money that you need.
Image via Wikipedia
Image via CrunchBase
Last week, Greek Finance Minister George Papaconstantinou slipped. He said not what he should have said, nor what he wanted to say. Unwittingly, he said something that was true: his country’s budget was “out of control.” He begged for more time to straighten it out. “We’re trying to change the course of the Titanic,” he said. The EU ministers gave him a month.
Mr. Papaconstantinou was speaking of Greece. But he described much of Europe, Britain, Japan and the US. And, in his fortunate metaphor, he prophesied. The big ships can’t be turned around. They’re going to sink.
Greece has been taking on water for many years. But this was the first time a finance minister of any country signaled to lenders that they should head for the lifeboats. Then, looking around, the press noticed that one of the lifeboats had already been launched. In it were no crying widows and no shivering orphans. Just one very satisfied Lloyd Blankfein, chief executive of Goldman Sachs. He had sold the Greeks their debt, said the papers; now he has sold
Continue reading Government Sachs
By Monty Pelerin, on February 11th, 2010 The public is in an ugly mood regarding politics. For the country, this anger may represent a turning point. For politicians in Washington, it is just business as usual. Can they be this tone deaf? Does their arrogance prevent them from recognizing what is happening?
According to Rasmussen:
A new Rasmussen Reports national telephone survey finds that 63% of likely voters believe, generally speaking, that it would be better for the country if most incumbents in Congress were defeated this November.
Despite these signals, Washington is unable or unwilling to change direction. Proposed and enacted policies have been rejected by the public. Yet, Washington’s only response is to increase the dosage of what the public has already rejected.
What Washington appears unable to comprehend is the fact that they have lost their magic and credibility. The public sees the empire for what it is, little more than a facade. The public has rejected the myth of government as savior and replaced it with the view once expressed by Reagan — government is the problem, not the solution.
Arrogant continuation of policies not wanted by the public only reinforces the view expressed in Rasmussen’s book, In Search of Self-Governance where he describes the view of the American public as follows:
Continue reading Washington is Oblivious as Well as Useless
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Friedrich von Hayek
Friedrich von Hayek founded the Mont Pelerin Society.
“Monty Pelerin” is a pseudonym chosen by this blogger to convey general agreement with the philosophy, goals and spirit of the Mont Pelerin Society. No other connection exists between the blogger and the Society.
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