I was opposed to George W. Bush's presidency from the very start. I have always known he was no conservative and that he bore no allegiance to the Constitution. My very first political column here at WND warned of the likelihood that his administration would attempt to use 9/11 to destroy American liberties, and I warned voters prior to the 2004 election that voting for George W. Bush would make the Republican voter "a willing accomplice in the ongoing bipartisan destruction of your country."
With yesterday's announcement of the fifth and largest bailout to take place this year, the Bush administration has shown itself to be easily the most left wing since FDR was ensconced upon the Cherry Blossom Throne. The administration's plan to purchase $700 billion in financial assets, announced on Saturday, represents the federal acquisition of just over 5 percent of the entire U.S. economy as measured by Gross Domestic Product. This additional 5 percent is beginning to approach the 7.5 percent of GDP that was the entire amount of federal spending in 1908.
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As I pointed out in last week's column, the principle of counterpush states that to enact a controversial policy, the president pushing that policy must come from the party that is nominally opposed to it. Because it is the Republicans who are the supposed party of small government and free market, only a Republican president could hope to get away with spending what is supposed to be the taxpayer's money to buy private assets priced at one-twentieth of the annual national economy. What is particularly egregious about this action by the administration is the way in which it is primarily the bankers who caused this financial crisis who can be expected to benefit from it. The Telegraph reported this weekend that the very individuals who were responsible for Lehman's failure are expected to reap $2.5 billion in bonuses from the English bank that acquired Lehman's U.S. operations last week.
The reality is that the American financial system is not a free market, and it is not even remotely capitalist. It is actually a parasitical system in which the financial elite prey upon the capitalists by virtue of having purchased political approval for their predation. Moody reported that financial services firms earned more than one-quarter of total corporate profits in 2007 – 27.4 percent, to be precise. They did not earn these profits through producing anything or from making business operations more efficient; they obtained it from behaving rather like pirates pillaging passing trade vessels.
As the financial collapse has shown, these profits were mostly the result of a vast construction of financial con games, none of which had anything to do with providing the investment money required by individuals who are starting new businesses and growing existing ones. As anyone who has ever had any contact with the venture capital industry very well knows, the "vulture" capitalists only provide money to those companies that don't need it; their main purpose is to take their share of the loot when a private firm sells its shares to the public through the government-approved and licensed channels known as the stock exchanges. Mob-run casinos are more honest and take a smaller house cut.
The administration's attempt to keep this shameless con game going will not work because it is based on the false Keynesian premise that controlled inflation, which slowly transfers wealth from savers to the bank owners, is sustainable over time. Keynes knew it wasn't; he defended his flawed economic theory by pointing out that in the long run, everyone is dead. But Keynes has been dead for six decades, the long run has arrived at last. And although the Federal Reserve has been frantically printing and distributing its magic helicopter money for the last month, it is unlikely to be able to do more than buy the bankers and politicians a little more time to prepare for the next round of crashes, bankruptcies and bailouts. If they actually thought it had a chance of succeeding, they wouldn't have banned short-selling.
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This crisis is largely external to the current scope of American politics, so it isn't something that George Bush, John McCain or Barack Obama can even theoretically fix; it's quite clear that they don't even begin to understand what is happening, much less why, to say nothing of how they should respond. The only presidential candidate who understood the situation – he has condemned it for decades – was the candidate that the vast majority of the American people thought was too outlandish and too out of touch to support, Dr. Ron Paul. So, naturally, the answer to government manipulation of the economy for the benefit of the financial elite will be to give the government even greater power to manipulate the economy for the benefit of the financial elite.
Still, the financial system has at last been exposed for the fundamental fraud it always has been. The global economy concept should be the next to fall. Although they don't realize it yet, Americans are facing their most important nexus since the Civil War. They can return to the small government, free market principles of the Founding Fathers, or they can continue to trust in the paradigms and promises of the predatory charlatans who have brought them to this pass. Given that most of the vital limits on democracy put into place by the Founding Fathers have been methodically removed over the last 200 years, the intelligent observer can bet securely on the latter.