Saturday, March 21, 2009
The hungry, rabid 200 pound gorilla
(aka our federal government and its private central bank) is completely out of control. The feds are eliminating any hope of the private sector recovering in a normal manner. Instead, the government sector is crowding out the private sector, making the identical mistakes that helped cause and without question prolonged the last economic depression.
The government is far too incompetent to decide which companies live or die and they really don't try to do any form of due diligence anyway. Congress generally bails out only those corporations that it owes political favors to due to prior campaign donations and other behind-the-scenes political ties. The agenda is political, not economic. This creates a form of corporate fascism that crowds out independent, successful, well-run, entrepreneurial businesses and strikes at the very heart of what makes America great. One need only look at the story of the FDIC chastizing a well-run bank for not making enough bad loans to see George Orwell's worst case Big Brother scenario happening right in front of our eyes.
The more debt the government takes on recklessly in a foolish attempt to reverse a deflationary debt crisis, the stronger the deflationary forces will become and the longer the current Depression will last. This global economic depression will be more severe for America than the last one in the 1930s was - the choices that have been made and that are being made right now at the federal level guarantee it.
The only wild card is the currency, which is the reason to own physical gold as your main cash equivalent while weathering the storm. Three more banks and 2 decent-sized corporate credit unions (i.e. their customers are other credit unions, not the public) went under today after the close and widdle Timmy Geitner is set to talk about his shiny new plan to save his friends (I mean the country) early next week. Another brief panic leg down in the stock market wouldn't exactly be surprising...