Constitutional Freedom

From The Political and Financial Markets Commentator

Secretary Geithner Speaks To The Democrats

I hate to have to keep bringing up the inadequacies of Tim Geithner, but because he is in charge of a little thing like saving the economy and banking system of the free world, I feel like I have to. In a dinner Monday night with House Democrats, it appears that he was able to tell them everything that he has been able to tell us about the plan to fix the banking system and the financial system: Not much. Some of the comments that were allegedly made by the guests are equally instructive as to the mentality of our legislators.

To their credit however, in their never ending goal of self-sacrifice for the benefit of the taxpayer and in an effort to save money for our cash strapped society, dinner was held at a restaurant providing good food at a good price.

“Treasury Secretary Timothy Geithner tells House Democrats that White House efforts to fix the nation’s economy are working — but he’s also urging them to be patient.

Geithner met with Democrats in a closed session Monday night, where one lawmaker urged the administration to “Hurry, whatever you’re doing, please hurry.”

Members interviewed after the meeting say it reflected the political challenge they faced — explaining the policies of a president of their party to a public angry over bank bailouts and an unending recession.

House Democratic Leader Steny Hoyer of Maryland compared the current economic situation to a crippled ship, noting that “The boat is not taking on more water, but you haven’t yet pumped it out.”(KVEWTV.com)

As you can see from the 3rd paragraph the focus is still on the political ramifications of the medicine, rather than the critical nature of the medicine itself. Wrong focus because they will be answering far tougher questions if this crisis is not resolved.

Nice stock market rally on Tuesday led by comments out of Citigroups Pandit. There were also comments made by Barney Frank regarding the re-institution of the uptick rule for shorting stocks.

I would like to thank the people of Constitutional Freedom for giving me the opportunity to share some of my thoughts.  I am the writer of The Political and Financial Markets Commentator which discusses politics and finance around the world and how it affects all of us.

GREAT QUOTE! ~ by Dr. Adrian Rogers~ very timely

“You cannot legislate the poor into freedom by legislating the wealthy out of freedom. What one person receives without working for, another person must work for without receiving.  The government cannot give to anybody anything that the government does not first take from somebody else.  When half of the people get the idea that they do not have to work because the other half is going to take care of them, and when the other half gets the idea that it does no good to work because somebody else is going to get what they work for, that my dear friend, is about the end of any nation.  You cannot multiply wealth by dividing it.”

The previous post notes that the government has thrown water at a nation drowning in troubled waters. However, I think the government did a little better than that – they threw us fish (well at least some of us). For me, the bigger question looming behind the billion-dollar bailout is who exactly are we bailing out? The poor? Well I am not sure $13 dollars a week will do much to help an already fledgling American people. The rich? I wouldn’t say so, because one of the few coherent parts to the bill actually limited “bailed out” executive pay. The middle class? Not so sure about them either unless they are altruistic non-profit gurus hoping to secure a research grant. Oh, perhaps it is the thousands in Las Vegas that have been awaiting construction of a railway to Los Angeles, because Las Vegas isn’t star-studded enough. Or maybe it is just Harry Reid who’s excited.

While it is unclear who the bill was set out to serve, what is even more unclear is why it passed within 48 hours and was read by virtually no one. Was there something in it we were not meant to see? Was it that urgent? I’m still awaiting my $13 extra a week.

Some cry out that the bill is unconstitutional. Unwieldy, yes, unconstitutional, I don’t think so. Clearly it was passed in a legal, albeit hasty manner. The Constitution in fact says nothing that would prohibit massive bailouts for fledgling corporations or Southwestern railways. Instead the Constitution is there to preserve our freedoms. It allows Americans, even elected ones, to do stupid things. Why? So that they will be influenced by and attune with the will of the people. Perhaps the biggest problem here is that no one knew what the Senate was voting on, including the Senate.

Was the bailout a good idea? In my humble opinion, no. But some people think so. For some, this is hope that the economic crisis will end. It is hope that America can turn itself around. And once in a while you can give a starving man a fish and settle his stomach and allay his fears. And sometimes that is enough for him to go on living and to keep his way. I think there are many starving in our country right now and I am glad they might get their fish dinner. At least I hope they do. But next time maybe the government can teach us how to catch that red snapper. Teaching someone to fish takes more time, more effort and more responsibility. However, it reaps far greater rewards for all in the end.

The Senate is currently debating the stimulus package, which is an attempt to “rescue” our economy.  Here is food for thought thought.  The reason the economy is in such dire straits, is primarily due to the excessive debt held by so many consumers.  So to suggest that we can “rescue” them with another $800 billion in Federal debt seems almost ludicrous.  It’s like we are all drowning and the government says, “Well we all need water, so let’s throw them a bunch of water.”

As a counter argument here is the thought.  Americans took on a lot of debt (primarily to buy a home etc.), under the assumption that they would be able to eventually make more money and therefore cover the cost of that new bigger mortgage.  They had a belief about the future.  Well now the future is bleak as capital has all but disappeared for businesses.  So people are laid off as companies cannot make it through this hard time with their borrowings.  To  make matters worse for companies, commodity price have all shriveled up (oil, gas, copper etc), causing more lay-offs, causing a self-defeating death spiral.  The government has the credit to kick start the economy, throwing money to all parties in order to “prime the pump” and get the economic engine running again.  The 800 billion is less than 10% of the total GDP, but should be enough to really help out.

With these two arguments it’s hard to make up one’s mind about who is right and who is wrong.  It is the belief of the author that the economy does need help, however, a massive government spending program is not the answer.  The answer is to cut taxes, and DECREASE government spending on pork-barrel projects.  Lower taxes will change the behavior of citizens as it will dramatically change the future projected earnings for each person.  As an case example, please consider the country of Ireland, which not too long ago was drowning in 50%+ taxes which companies and citizens could not pay.  More and more people were losing their jobs and the country (being socialist) was desperately trying to serve all the people.  When a novel idea was heard and executed.  Let’s cut taxes to 0-10%.  Now Ireland enjoys a GDP per capita nearly twice that of the rest of Europe.