If you help (bailout) a productive citizen who has come on hard times, that’s admirable. If a loan will help him though the mess, I will do it any time. An individual that is, but not a huge corporation which got into trouble because of stupidity. If you help a productive man out of a jam, and he keeps producing, he may eventually get on his feet, and it will have proven to be OK, and a blessing to you and he.
But look at the banks, which have gobbled up a trillion smackers, and according to Paul Volker, “Several trillion more,” will be necessary. They are no where near breaking even or showing a profit, because of all the stupid loans they made. I called my bank and asked him if he was making a profit, and was OK. “Of course! I’m careful about who I loan to,” was his answer. What reason on this earth, could there be to pump $3-4 TRILLION or more into the Wall Street commercial banks, to save them? If they do it, the government will own the banks, and control, for all practical purposes, the entire banking sector. (If there ever was a reason for mass phone calls, telegrams, and letters to the boobs in D.C., in an attempt to stop this crime, this is it.) What would happen if they were allowed to go down the tubes? No more big, bad loans to failures? I suppose. Bad loans are everywhere! Failures are everywhere. More thousands of former bank employees laid off? So what? Millions are already laid off. Ever wonder who paid for those massive, modern buildings, such as Citi’s, which must have cost hundreds and hundreds of millions, and which probably replaced an architectural wonderment, in the name of being modern and spending money created out of thin air? The entire banking industry creates money out of thin air, and has loaned it willy-nilly to one and all, without the slightest modicum of common sense.
A Ponzi scheme? Of course! They copied the United States Government, which seems to have originated it. After all, the Fed creates money out of thin air, has the US print it for a couple of cents per bill, and then loans it to the Treasury at INTEREST. If “several trillion more” is printed, to bail out rotten commercial banks, who have been so poorly run as to be laughable, guess who is going to be punished for their foolishness? You and me with hyper-inflation, a-la Germany in 1924, Zimbabwe today, and a hundred other failed systems in history. A trillion is 12 zeros. What do you call 15 zeros? I actually don’t know, but we’ll find out. All un-backed paper money eventually goes to zero, and this is absolutely a fact. Why not eliminate the Fed, let the commercial banks go to hell in a handbag, and let’s start over again? The D.C. Gang, is actually legislating us into an economic bottomless pit. (I’m getting carried away. Sorry!)
The Detroit auto industry, as opposed to the auto industries in various southern states, are in deep trouble because of foolishly granting unions everything they asked for over the years, rather than risking a strike, and bringing the matter to a head. If a Detroit union auto worker gets laid off, he gets 90% of his salary while not working! There are a hundred union giveaways that are so silly, stupid and outrageous, that no smart businessman would have ever given in to, but over-paid, under-talented corporate CEO’s did. Down south, there are no union auto workers, everyone gets decent wages and benefits, and the industry is in the black, in spite of low business and sales. The Detroit three, are building plants in China to save money, while Mercedes, BMW, Korean, and Jap car builders are building plants here. Make sense? I think not. Why should Detroit get any bailout? I can think of none. Should big, commercial banks who are in trouble because of stupid loans they made, get bailed out? I cannot see why, and neither can 90% of America. Three years ago, I wrote about the housing bubble and that it had to crash. Obviously, no one pays any attention to me, because I am not part of the D.C. Gang, and am not an “in” person with the media. But I wasn’t alone. Lots of writers had brains enough to recognize a bubble, just like we did when the stock market crashed. Myself, as well as a host of others, told everyone not to buy a home at the high prices, and that if they had a mind to ever move, sell before the crash. Myself, as well as a lot of others, told stock holders to get out a long time before the market bit the dust.. A few did, but most didn’t. $7 trillion was lost when the dot com bubble burst. The stock market is a long way from the bottom, and gold and silver have unlimited high prices in failing currencies, but few will listen.
I am saying that there should be no bailouts of any kind, for anyone, at any level, using any government money, be it federal, county, state, or city. This includes welfare of all kinds, and public housing as well. A voluntary, private, bailout, is far different than taking tax money and distributing it without the permission of the tax payer. If I wish to give a few bucks to someone who needs it, that’s my business, but government has no business, nor Constitutional authority to bail our or subsidize anyone, or anything.
Government has gotten so big, that government payrolls now, are larger than payrolls of the entire U.S. manufacturing sector. All the handouts, welfare, bailouts, and other assorted unconstitutional payments, has made the long term U.S. debt, $70 trillion and climbing quickly. Obviously, this is un-payable, other than by the printing press, which would render dollars worthless.
What would happen if no bailout money were printed and issued? Simple. Those who screwed up would pay with their job, company, bank, or whatever business they were in. Would it hurt? Of course! Is anyone bailing out Circuit City, or the thousands of businesses, chains, auto dealerships, restaurants, and the like? No. They suffer, lose their investment, credit rating, and income. Why bail out the auto manufacturers, and not the dealerships which sell the cars and are going under? Why bail out the banks which made inane loans, and not bail out the thousands of businesses who will lose everything? No one should be bailed out. The bailouts will only cause hyper-inflation, which will punish the stupid as well as the innocent, and especially if they store their surplus assets in dollars. I’ve been preaching this for a decade now, and have convinced enough people, that I have taken my son and daughter into this firm, and I am sure my scribblings have caused a lot of others to get metals elsewhere. This is good, but accounts for a fraction of one percent of those out there who should listen, and use their heads for something other than a hat rack.
We are taking another cruise. Leaving Monday, and returning 2/7. Leaving Ft. Lauderdale, and going to Panama Canal, Aruba, Bahamas, Puerto Rico, and a few other places. There will be no columns till Tuesday, 2/9. If you need to read, go to Archives, and find over 800 others I have written. Send this one to a lot of people who need it, maybe. While I am gone, my daughter and son will take care of any of you, and I’ll try to convince David to stay on an extra hour every day, which would be 4PM Mountain Time.