Bliss Is Better Than Ignorance

A friend has been up in arms about slanted, pro-Obama coverage.  It is not that the media is liberal, corporatist, or mainstream.  The media is a dumb wasteland.  I advised her to avoid making herself ignorant and turn off the TV or close the newspaper forever.

M, why watch the bozos on television?  You know that they are propagandists, and often ignorant ones.  Why waste your time with the likes of the guy you’re writing to (whom I’ve never heard of, incidentally, and I am happy about it).  You know that the television, radio, and print sources are, with few exceptions, sources of lies, propaganda, ignorance, and stupidity—usually all of them combined—so why help their ratings by watching them?    I haven’t watched television or read a Wall Street-linked newspaper in years, and I am better informed for it. 

Is America a Moral Nation?

The American left lacks morality.  It is not that it is immoral; rather, America's elite, educated class does not know what morality is and depends on theft for its status.  That has been true of all elites with the exception of some of the American and British elites of the 18th through 20th centuries, especially the so-called robber barons, who, despite moral flaws, created wealth in proportion to their obtaining it.  All other elite classes in history have obtained wealth through criminality. These includes the socialist elites in Europe and Asia as well as past feudal elites.

Left-wing ideology is  therapy for the American elite's moral emptiness.  Left-wing Americans believe that other members of society are as morally empty as they are, so others must be regulated and controlled.  The left's lack of morality is elucidated in its power lust, for it sees itself as regulator and controller--the dictator to others of what is moral.  Because it does not know what morality is, yet claims to act in the name of morality, the left's aims are inherently unstable and illogical.  The instability threatens public well being.  Most Americans are not as morally empty as the left;  it is the left's power lust from which most Americans need protection.  Education has emptied America of morality, and the Progressive ideology in which America is indoctrinating its children is therapy for the teachers' moral nothingness. 

In business schools ideologies like corporate social responsibility are their therapy.  They transfer their basic, human need for moral belief and faith to empirical science, to the state, and to ideology.  But positivism cannot replace morality, and it cannot replace faith.  The grasping for power is desperate;  the left transforms the millions of human beings it has butchered into symptoms of moral nothingness.  In the American educational system, the left's holocaust never occurred; my students do not know the Soviet, Chinese, or Cambodian death count.

America's move to the left is a symptom of torn moral fabric.  This is no longer a nation that is tolerant, free, or righteous. This is a nation that aims to print money, to get something for nothing, and to use the rhetoric of democracy to extract wealth from its victims.The victims will be the Americans themselves--those who who have supported Progressivism and those who have opposed it.

Whither the Economy?

I have been pondering the gold and stock markets this week, and I am concluding that there will be another leg to the downtrend, then a nice robust rally in the stock market for about a year. The rally may be as much as 50%.  That will absorb some of the liquidity that the Fed has created.  I am waiting for another fall before getting in.  The same is true of gold, but the fall might be sharper.  I have been totally out of precious metals since early April.  I am about 35% in the stock market. If it falls another 5-10% I'm in.

Can the Principles of a Free Market Survive in a Society Treading on Financial Eggshells?

Julie Masters  

The financial crisis has left the notion of a truly free market economy somewhat battered, perhaps down and out. For years both London and New York enjoyed have enjoyed prosperity with a culture of expense accounts and endless lunches. However, by 2007 things were beginning to look a little less rosy, and after 2008, the lunches and flamboyant Wall Street corporate gifts seemed like a distant memory.

Many commentators point to the injections of debt into many of the world’s largest economies as evidence that the neoliberal animal which has lived during this era has privatized its last rail system or cut its last tax.  Can liberalism be given a new lease on life with a political and economic reshuffling?

An era of Neoliberalism

Neoliberalism was an economic claxon--the growth of rich nations in recent decades has been exponential. Its advocates suggested it provided a path for investment and economic efficiency against the backdrop of socialist reform in postwar years. In fact, many would argue that as the disposable cash reserves among the poorer echelons of society fell (together with those of the state following tax cuts) demand fell.

It’s critics would further comment that the resultant low incomes created a stranglehold on demand that in turn thwarted employment and created a cycle of debt. It is fair to say that neoliberalism has defined the free-market policies of recent history. It is also fair to say that it has created enormous credit growth that, if perhaps managed more prudently, might provide a solution. But how could policymakers have come up with a means of avoiding the crash in 2008?

Lehman and the 2008 crash

The crash of 2008 began in 2007, arguably signposted by BNP Paribas's decision to cease activity in US mortgage debt. This wiped out confidence among the interbank community as, although losses could not be known, they certainly could be estimated in large multiples of trillions of dollars. This destroyed trust between banks, and business ground to a halt. However, it wasn’t until the US government allowed Lehman Brothers to go under that the situation could be seen. 

Overnight, complete confidence in the Western banking system collapsed. If an institution like Lehman could go bankrupt, then any bank could go bankrupt.  Until then the US had bailed out numerous institutions (with taxpayers’ money) to the tune of hundreds of billions of dollars, with the UK similarly bailing out Northern Rock. Corporate culture was from that moment on set to change.  Anyone working in London or New York during the booming years of the early to mid-2000s will remember that an expense account was simply there to be run up. 

Golf days and numerous corporate gifts were commonplace. What followed was an injection of government capital into the banking system, which was enough to save the banks, but not the associated economies. Could a more prudent system of financial regulation have prevented the crisis of 2008, keeping credit cycles constrained before they boiled over? 

There are numerous tools which economists and policy makers have at their disposal in this regard, one of which includes placing a ceiling on the risk portfolio of financial institutions, an exercise in drafting that, when combined with others measures such as liquidity buffers, could have prevented the catastrophic demise of Lehman, as The Wall Street Journal suggested at the time. What such measures do is provide a safety net. They allow the development and innovation of new financial products and services by keeping checks on the total amount of credit in the system. If it was possible for regulators, through historical identification of credit cycles, to keep one step ahead of innovation, then regulatory tools may have a place or provide a means to save neoliberal system.

The end of Thatcher/Regan economics?

Should neoliberalism be condemned to death?  It could be said that all it has created is history’s largest and deepest financial crisis, prior to which it suffocated productivity and created inequality in economies in which it was left to thrive. This would be a harsh and inaccurate view, with perhaps a fairer conclusion being that it gave a breakeven situation for the past few decades. Ultimately, the effects of a free market can have a hugely positive effect on kick starting economies, and as has been shown in Chile (which also adopted a system of neoliberalism) it can flourish. It could also be true that Western economies could also benefit from the stimulus economic freedom brings through neoliberal principles. However, if institutions are to avoid the cyclical credit risk that this brings, innovative regulation must be at the root of such an ideology.

Julie Masters, a freelance writer, has made a guest contribution. The views reflect those of the author and are not mine.