Is Capitalism Really Dead? Could be, if the bailouts don't stop!

Written and submitted by Chuck Quarles on November 25...again, too much time on my hands (being out of work for the holidays and all :-)

Executive Summary – For those with short attention spans… here it goes:

The rash of so-called "bail-outs" are nothing more than a direct slap-in-the-face to capitalism, and threaten its very existence.

DISCLAIMER - This is just my opinion, and is not an effort to offend or otherwise make enemies out of people who would otherwise be my friends.


FIRST: Do me a favor... think back to late September/early October, 2008 for a minute...

• The political campaigns were in full-swing.


• The economy seemed to be in a bit of trouble, but nothing earth-shattering or anything to be overly alarmed at


• The stock market was not doing fantastic, but seemed to be doing as well as it could be with the press trying to drag down the economic news in order to hurt McCain prior to the election (see last blog on why McCain lost).
  

AND THEN...

President Bush announced the first "fanny mae" and "freddie mac" bailouts...and so it begins.

BRIEF ASIDE - Fanny Mae and Freddie Mac are quasi-governmental agencies that the liberals use in order to provide government money to subsidize risky and high-risk mortgages for people who would not otherwise qualify for a mortgage...

Can you say OCTOBER SURPRISE ???

President Bush, whom I admire as a person but (like his friend McCain) is not a real fiscal conservative, had sabotaged his own partie's chances for winning the election by pushing forward with the idea of the first bailouts! He made "it's the economy, stupid" quote from previous elections once again relevant and in a BIG way!

This was an estimated $700 billion dollar amount of money to now further subsidize the already-subsubsidizing company who sub-sub-subsidized risky mortgages...do you see a common thread there? SUBSIDY = giving people money so they don't fail; i.e. removing the risk. (you will need that definition again shortly).

Anyway, the floodgates were now open...McCain (in a bad move) came out in support of the bailouts, when he had a REAL CHANCE to distinguish himself from the unpopular Bush. So much for MAVERICK . :-)

Congress, after throwing in another several dozen BILLION dollars of pork-barrell projects into the mix, approved, and Bush signed gleefully the first bail-out.

Then came the AIG Bailout, the Bank Bailout, the proposed GM/Ford/Chrysler bailout, the city of Atlanta and state of California (thanks, Ahnuld!) are now lining up with their hands out....a new proposed bailout is announced seemingly every day.

American Express, the exclusive CREDIT CARD company, even got the government to agree to reclassify it as a BANK so that it could get a chunk of money from the BANK bailouts.

SO - Chuck - tie this together for me, you may ask. What does this have to do with CAPITALISM, the foundation of our entire economy???



Capitalism is defined as

• an economic and social system in which individuals NOT governements can maximize profits because THEY OWN (NOT the government) the means of production


• A large-scale system that allows private individuals, groups and corporations to operate as private entities for profit, i.e. NOT GOVERNMENT agencies


• An economic system built upon the profit motive (which involves investing money and hopefully getting a profitable return on your investment)

CAPITALISM, you see, involves RISK! Without RISK you can not achive your goals. What is the risk? The possibility of LOSING MONEY! If you have no risk, you have no reward...that is the essence of capitalism.

In short, subsidizies and bail-outs

• removes risk
• no risk means no reward
• suddenly, everyone is holding their hands out to take from the pot of money
• no one is left putting money INTO THE POT!
• wealth is transferred from the "HAVES" to the "HAVE NOTS" until there are no more "HAVES".

ANOTHER BRIEF ASIDE - ask yourself - do you know anyone who ever got a job from a "HAVE NOT"? I didn't think so...


Repeated and uncontrolled bailouts surely mean the death-knell of capitalism, and the beginning of years of MULTI TRILLION (with a capital "T") dollar budgets and defecits.

And all these defecits are being financed by whom? Mostly the CHINESE. They buy more US DEBT than any other country in the world...but that's yet another story.

In summary, if no one is willing to risk their money because the government will always bail them out, then no one will invest in spending and growing the economy, and jobs will be fewer and fewer. And risking money and capital, my friends, is the basis for a capitalist economy.


Many thanks for the indulgences of reading this, and as always, comments are welcomed and appreciated. Thanks also to Michael Gibson and Beth Willis for suggesting the subject of this blog.


Warm regards and Happy Holidays,
Chuck Quarles

As usual, your comments are both desired and appreciated. Lay 'em on me!

Two reasons (among others) that McCain lost...

Respectfully written and submitted by Chuck Quarles on November 7, when he had a little too much time on his hands. If you read this and would like to comment, I appreciate it. I know it’s long, but like I said, I had a bit too much time on my hands this morning.

Executive Summary – For those with short attention spans… here it goes:

Two major issues with this year's election - (1) Conservatism was not represented adequately and (2) the rabidly-liberal press made it impossible for any Republican to be successful.

DISCLAIMER - These are certainly not the only 2 reasons, but the ones that come up in my mind most often. Certainly the large turn out by new and excited voters for Obama and the historical significance that he represented was another major factor, but I’m not touching that one, at least for now.

Okay. Now that has been said. The cat is out of the bag. Let's elaborate a bit on these two reasons...

FIRST: Let’s face it - John McCain is no conservative.

Conservatism consists of three “legs” if you will.

1. Fiscal conservative – government spending limited as much as possible, accented with tax cuts and what Reagan called “trickle-down” economics.
2. Social conservative – anti-abortion, pro-family, anti-gay rights, etc.
3. National Security / Military conservative – very strong national defense, with US taking lead in the world when it comes to military issues

So how did McCain represent these “three legs”?

• McCain, in my opinion, can really only claim the mantle on the military side, represented mostly by his long support of the military in Iraq and his pushing of the “surge”, which ultimately is leading to our success in Iraq.
• He did not have much of anything in the campaign to say about social issues (he left that up to the true conservative – Sarah Palin – to voice.) Historically he has seemed to side with pro-abortion wing of the Republican party
• As for fiscal issues, initially he talked a lot about curtailing “ear marks”, those multi-billion dollar expenditures that Senators and Representatives “hide” in bills to help out their own states and districts, however, again, that issue dropped off the radar as the economy sunk. His support of the Fanny Mae and Freddie Mac bail-outs sealed his fate with Conservatives on the fiscal issues – HE ISN’T ONE!

To McCain's credit, he realized that he must do something for the conservatives. He attempted to make up for this conservative short-coming by picking Sarah Palin for the ticket, which if you recall 3 month ago, is when the Republicans really seemed to get jazzed-up for McCain.

If it had not been for her, I think that the popular vote would have been a landslide in favor of Obama, not the relatively close count that it was.
That being said, even the rising up of Sarah couldn’t save McCain from himself and his lack of true conservative credentials.



SECOND - The Anti-Conservative media was too big of an obstacle to overcome. First, the media picked our candidate for us in the Republican Party.

If you recall during the past several years, McCain has always been a media “darling”, and was tagged by the media as a “maverick”, meaning that he would oppose Republicans and conservatism any chance he got. They fawned over anyone that would poke conservatives in the eye, especially another Republican.

McCain gladly accepted that mantle.

An example of this is the ridiculous “McCain – Feingold” campaign reform bill, which was vehemently opposed by conservatives and Republicans. (Yes, that bill is the reason why that stupid tag-line on all campaign commercials “I am blah-blah and I approve this message” is required, among other requirements).

So this love affair with McCain that the press had, and the media’s contempt and negative press for the other more Conservative candidates (think Mike Huckabee and Mitt Romney) proved too much and McCain was finally selected as the “last one standing” on the Republican side.

THEN the press turned on him (not unlike they turned on Hillary when Obama came along, but that is another story for later)…

Obama was christened as messianic and god-like by the press (One MSNBC correspondent - Chris Matthews - even talked about “tingling running up and down his legs” when Obama spoke.)

1. McCain was now in the media’s way to getting Obama elected, so they turned on him. The press all turned negative and extremely biased polls were taken by the press, and then reported on by the press (I thought they were supposed to REPORT the news, not MAKE the news).
2. No Republican or conservative could have held up that media on-slaught!!
   And Palin coming along only put “blood in the water” and worked the press up into an absolute frenzy. But more on that later, if comments on this blog are positive and I have time to write about it.

So – in the future – in my humble opinion – the Republicans must move back to the right and support all three legs of conversatism, and hopefully fair and balanced media will return when they realize the success of Fox News and other fair outlets may be the only way for them to be successful again. (not likely, though).

Regards,

Chuck Quarles

Comments are both requested and appreciated.