Stand back for a moment and see the financial crisis from another
viewpoint. Here Patrick Buchanan, the respected conservative
standard bearer in the USA, looks at America's dire situation . But
there's nothing here that does not equally apply to Britain.
For 'Citigroup' read RBS; for 'Bear Stearns' and for 'Fannie and
Freddie' read Northern Rock and Bradford & Bingley; for 'GM, Ford
and Chrysler', read Land Rover and all the other (foreign owned) car
companies. For be sure that if WE are not persuaded to bail out
Vauxhall, it will close and production move to Opel in Germany which
will be subsidised by Germany!
xxxxxxxxxxx cs
========================
HUMAN EVENTS 27.11.08
(http://www.humanevents.com/)
Socialist Republic
by Patrick J. Buchanan
(former US Presidential Candidate)
Barack Obama and George W. Bush seem to have come away from their
study of the Great Depression with similar conclusions:
To wit: After the Crash of 1929, the Federal Reserve did not move
fast enough to save the banks and inject cash into the economy.
Second, the New Deal, far from being wastrel deficit spending, was
not bold enough. So it was that America wallowed in depression for a
decade until the unbridled spending and mammoth deficits of World War
II pulled us out.
Bush and Obama seem determined not to make the same mistake.
We are all Keynesians now.
Thus, we have the $700 billion Bush bank bailout, the $700 billion
"stimulus package" Obama wants by inauguration to "jolt this economy
back into shape" and the $800 billion fund Hank Paulson created to
get consumers borrowing and buying again.
These come on top of Bush $455 billion deficit, the $29 billion
bailout of Bear Stearns, the $105 billion in pork to grease the $700
billion bailout, the $100 billion to $200 billion to keep Fannie and
Freddie afloat, the $140-billion-and-counting for AIG, the $25
billion for the greening of GM, Ford and Chrysler, the $25 billion
more to save the Big Three and the $20 billion for CitiGroup.
Now much of this overlaps, and some will be retrieved. But we are
still staring at a deficit that could approach $2 trillion.
How would this stack up historically?
A deficit of $1.4 trillion would be 10 percent of gross domestic
product, dwarfing the postwar record 6 percent run by Ronald Reagan
in the Jimmy Carter recession.
Bewailing the "Reagan deficits" has been a staple of Democratic
oratory. This will stop. But the politics of this is not the point,
the policy is.
Consider what we are about to do. Bush in 2008 spent 21 percent of
GDP. States, counties and cities spent another 12 percent. Thus, one
third of GDP is spent by government at all levels. Obama and Co.
propose to raise that by another 10 percent of GDP. We may soon be
north of 40 percent of gross domestic product controlled and spent by
government.
That is Eurosocialism.
And where, exactly, are we going to get the money?
Americans save nothing. We spend more than we earn. Thus the levels
of consumer debt, credit card debt, auto debt and mortgage debt. U.S.
foreign-exchange reserves amount to a piddling $73 billion.
The only nation with the kind of cash on hand we need now -- if we
don't print the money and invite another gigantic bubble -- is China,
with its $2 trillion in foreign-exchange reserves.
Will Beijing lend back the dollars it has piled up by selling to us?
China certainly has an incentive to keep Americans spending. For our
purchases of Chinese-made goods have often been responsible for 100
percent of China's growth. China does not want to kill the American
goose that lays those golden eggs -- until the goose can't lay any
more eggs. Then they won't need the goose.
But should China decide to lend us the money, what will Beijing
demand in interest rates and assurances that we will not default.
After all, the U.S. debt is 70 percent of GDP, our savings rate is
near zero, and our merchandise trade deficit is still running at 5
percent to 6 percent of GDP.
Unlike the 1950s, we are today dependent on foreigners for two-thirds
of our oil and for much of our manufactured goods -- toys, TVs,
radios, cameras, cars, shoes, clothes, bikes, motorcycles -- and for
the $700 billion to $800 billion we borrow each year to pay for these
imports.
With U.S. homeowners, consumers, companies and banks now going bust,
why must the nation borrow trillions more to bail them out? So we can
maintain our status and standard of living as the last superpower.
Bush and Obama are competing to shovel out trillions of dollars, so
we can return to the good times of yesterday.
But wasn't yesterday the root cause of today? Didn't saving nothing
and spending more than we earn, purchasing what we cannot afford in
cars, consumer goods and houses, buying far more from abroad than we
sell abroad -- didn't that cause this crisis and crash?
A family man in America's condition, awash in debt, spending more
than he makes, would cut back consumption, find a second job and get
out of debt. Or declare bankruptcy, accept the shame and humiliation,
change his wastrel ways and start anew.
Is it different for a nation?
Yet we seem to believe we can borrow and spend our way out of a swamp
of unpayable debt into which borrowing and spending have plunged us.
We are headed either for default on our debts and bankruptcy as a
nation, or something less honorable: a quiet cheapening of the debts
we have incurred by inflating and destroying the dollar, robbing our
creditors of what we owe them and robbing our own people of the value
of what they have earned. And so it has come to this.
What would the Founding Fathers think of us now
Socialist Republic
by Patrick J. Buchanan
(former US Presidential Candidate)
Barack Obama and George W. Bush seem to have come away from their
study of the Great Depression with similar conclusions:
To wit: After the Crash of 1929, the Federal Reserve did not move
fast enough to save the banks and inject cash into the economy.
Second, the New Deal, far from being wastrel deficit spending, was
not bold enough. So it was that America wallowed in depression for a
decade until the unbridled spending and mammoth deficits of World War
II pulled us out.
Bush and Obama seem determined not to make the same mistake.
We are all Keynesians now.
Thus, we have the $700 billion Bush bank bailout, the $700 billion
"stimulus package" Obama wants by inauguration to "jolt this economy
back into shape" and the $800 billion fund Hank Paulson created to
get consumers borrowing and buying again.
These come on top of Bush $455 billion deficit, the $29 billion
bailout of Bear Stearns, the $105 billion in pork to grease the $700
billion bailout, the $100 billion to $200 billion to keep Fannie and
Freddie afloat, the $140-billion-and-counting for AIG, the $25
billion for the greening of GM, Ford and Chrysler, the $25 billion
more to save the Big Three and the $20 billion for CitiGroup.
Now much of this overlaps, and some will be retrieved. But we are
still staring at a deficit that could approach $2 trillion.
How would this stack up historically?
A deficit of $1.4 trillion would be 10 percent of gross domestic
product, dwarfing the postwar record 6 percent run by Ronald Reagan
in the Jimmy Carter recession.
Bewailing the "Reagan deficits" has been a staple of Democratic
oratory. This will stop. But the politics of this is not the point,
the policy is.
Consider what we are about to do. Bush in 2008 spent 21 percent of
GDP. States, counties and cities spent another 12 percent. Thus, one
third of GDP is spent by government at all levels. Obama and Co.
propose to raise that by another 10 percent of GDP. We may soon be
north of 40 percent of gross domestic product controlled and spent by
government.
That is Eurosocialism.
And where, exactly, are we going to get the money?
Americans save nothing. We spend more than we earn. Thus the levels
of consumer debt, credit card debt, auto debt and mortgage debt. U.S.
foreign-exchange reserves amount to a piddling $73 billion.
The only nation with the kind of cash on hand we need now -- if we
don't print the money and invite another gigantic bubble -- is China,
with its $2 trillion in foreign-exchange reserves.
Will Beijing lend back the dollars it has piled up by selling to us?
China certainly has an incentive to keep Americans spending. For our
purchases of Chinese-made goods have often been responsible for 100
percent of China's growth. China does not want to kill the American
goose that lays those golden eggs -- until the goose can't lay any
more eggs. Then they won't need the goose.
But should China decide to lend us the money, what will Beijing
demand in interest rates and assurances that we will not default.
After all, the U.S. debt is 70 percent of GDP, our savings rate is
near zero, and our merchandise trade deficit is still running at 5
percent to 6 percent of GDP.
Unlike the 1950s, we are today dependent on foreigners for two-thirds
of our oil and for much of our manufactured goods -- toys, TVs,
radios, cameras, cars, shoes, clothes, bikes, motorcycles -- and for
the $700 billion to $800 billion we borrow each year to pay for these
imports.
With U.S. homeowners, consumers, companies and banks now going bust,
why must the nation borrow trillions more to bail them out? So we can
maintain our status and standard of living as the last superpower.
Bush and Obama are competing to shovel out trillions of dollars, so
we can return to the good times of yesterday.
But wasn't yesterday the root cause of today? Didn't saving nothing
and spending more than we earn, purchasing what we cannot afford in
cars, consumer goods and houses, buying far more from abroad than we
sell abroad -- didn't that cause this crisis and crash?
A family man in America's condition, awash in debt, spending more
than he makes, would cut back consumption, find a second job and get
out of debt. Or declare bankruptcy, accept the shame and humiliation,
change his wastrel ways and start anew.
Is it different for a nation?
Yet we seem to believe we can borrow and spend our way out of a swamp
of unpayable debt into which borrowing and spending have plunged us.
We are headed either for default on our debts and bankruptcy as a
nation, or something less honorable: a quiet cheapening of the debts
we have incurred by inflating and destroying the dollar, robbing our
creditors of what we owe them and robbing our own people of the value
of what they have earned. And so it has come to this.
What would the Founding Fathers think of us now
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