1/21/2010

The New America


Dear Americans:

There seems to be a slight decline in your status as the most powerful nation on earth. We your adoring neighbors to the north respect all you have accomplished in your 200+ years but have noticed you are starting to look a little long in the tooth.

We note that you appear to have noticed this yourselves as you have made several cosmetic intrusions in an attempt to hide the evidence of your declining state.

You have gone out and got yourself a new President and we all were very excited and happy with your choice. However over his first year in office we have noticed a few things which does cause us some alarm.

Your new President is now taxing banks, dictating compensation, firing CEOs, dictating lending practices, and now wants to ban proprietary trading at banks. President Obama has correctly taken the pulse of his America and decided that everyone now hates banks. This gives him free reign to do and take whatever he wants from them.

Do the banks deserve this treatment? Of course they made their deal with devil (the government, not President Obama) and now he is coming to collect.
Your humble scribe is then forced to wonder if everyone hates them why didn’t they just let them go bankrupt.

There seems to be a new America emerging, a new American capitalism. A capitalism that no longer is willing to accept the risk in the good old risk reward equation. In fact you appear to be no longer willing to accept the reward in that equation either. Well that is, of course, if those rewards are not coming to you personally.

Banks, insurers, car manufacturers are now all free to do really stupid things for years and years and no longer have to worry about the consequences. If you are deemed to big to fail you will be saved no matter how stupid you are.

Of course after your resurrection the government will now dictate all the terms of your new existence.

It seems odd to me that you appear to be willing to throw away a system that made you the most powerful country on earth simply because of a recession?

The common theme running through mainstream, or should I say Main Street, USA is that capitalism has failed them. Is this not the most glaring case of recency bias you can think of?

You are trying to kill the very engine that made you who you are. All because markets went down for a while? In case you have not noticed or sold everything in March of 2009 the market has almost made it all back. When things get bad we have to remember that we are trading the 100 year DOW chart not the 3 year DOW chart. Making decisions based on the 3 year chart is insane.

Americans want to blame someone. So you have blamed the banks, not just some of the banks but all of them.

Let's think about this, if you bought a house in 2007 for $500,000 and took out a $500,000 mortgage to pay for it, and then you went broke, you are an idiot.

Idiots are supposed to go broke. That's capitalism. If you are a bank CEO and bought billions of CDO's with borrowed money and then the market collapsed you are an idiot. Idiots are supposed to go broke.

But no, we now live in a world without consequences. It's not your fault, you can't be the idiot. It's the bank fault, it's the mortgage brokers fault, it has to someone else's fault.

Well guess what. IT’S YOUR FAULT!

If the banks and auto manufacturers that were broke were allowed to go through the bankruptcy process they would be better off than they are now. The system would be better off. We would all be better off because the idiots have been eliminated and the geniuses have been made stronger as they now have less competition.

Capitalism is a hard beast. It has to be. It just doesn’t work unless there are consequences to stupid actions. We have all seen that communism doesn’t work as an economic system, i.e. Cuba and North Korea; socialism can work as it does in the Scandinavian countries but you have to pay for it with 60% taxes and the like.

Americans now seem to want a socialist state except for the part where they have to pay for it. Hence the 1.4 trillion dollar deficit.

So now the knives are out. The government needs money and they are going to go after banks to get it. The government knows the people will be with them on this one. You can all blame the banks, take their money, and continue on in your world without consequences.

We should all remember that at some point even plastic surgery can’t hide the truth.

10 comments:

longandwrong said...

The only thing I don't like about this post is that I agree with you 100% :-)

It isn't just prop trading that banks should stop doing, they must also stop lending money to companies to allow them to buy other comapanies...

http://news.bbc.co.uk/1/hi/uk_politics/8470776.stm

Solfest said...

I knew you would come around LW.

Everyone please read the article LW posted.

What can you say, unbelievable, yet it's happening.

daytrader233 said...

Hmmm, I wonder...

Which came first? The idiot that borrowed too much money? Or the idiot that was willing to loan it to him?

Solfest said...

Does it matter?

I guess the anger from the borrowers stems from the fact that they are not too big to fail.

So fail they did.

The bankrupt banks should have got the same treatment.

daytrader233 said...

According to the FDIC website, 170 banks have gone bankrupt since 2008.

http://www.fdic.gov/bank/individual/failed/banklist.html

TST said...

Economy is like trading. Without confidence and capital, money can't be made.

Jules said...

Solfest,

my question is: do most of the people in America like what they have been?

I actually like what Obama's doing. D's going to be affected (and no more 4-monitor setup for me..), but it doesn't change how I feel about the steps that Obama's taking to finally do something for his people.

I agree with you that people who can't afford a 500k home should not take out a 500k mortgage to purchase it. But we know that most people lack the ability to make wise decisions. They trust their government to give them good guidance. If I remember correctly, they were ENCOURAGED by the previous administration to SPEND. And so they did.

I would still blame the bank. I would blame them the same way I blame Nigerian scammers for robbing unwary retirees of their life savings.

I like Obama. For a while I didn't. But now I like him.

If only he would spare D's bank...

Solfest said...

What is he doing for his people?

A politician will say and do anything that gets them votes.

That is why all democracies are eventually doomed.

The only way to get elected is to promise to spend more and tax less.

Because if you ask people that is what they want.

It's an idiotic thing to do of course, but I can't think of a democracy that is currently doing otherwise.

So my answer to my question, what is he doing for his people, he is burying them in debt.

Oh and one more thing.

Read Atlas Shrugged. :)

Please before it's too late.

Sandy said...

Lucidly put, words to live by and remember.

Thank you solfest.

While it seemed that real capitalism (Adam Smith / Ayn Rand, possibly Friedman type) did seem like a possibility in the industrial surge after WWII, the bankers and political oligarchy bastardized it long ago into the mutant zombie capitalism that we have today.

Fair trade and common sense that required nurturing never stood a chance.

And we are all paying now.

longandwrong said...

It gets worse...

If the home of laissez-faire capitalism does something crazy then we in Europe have to do something even crazier (OK, I declare some self-interest but that doesn't stop it being mad)...

http://www.guardian.co.uk/business/2010/jan/22/gordon-brown-tobin-tax-banking