Posted By: kr100 @ 10/10/2008 8:53:27 PM
Comment: The root cause of our financial debacle is Congress and its puppet Federal Reserve and FMae / Mac, not the recklessness of bankers or borrowers. The latter committed the acts but are nonetheless an EFFECT of the former that created the environment enabling and encouraging recklessness in the first place.
We are now seeing a collapsing skyscraper of cards built on ersatz prosperity floating on politically-motivated credit expansions. The similar credit-induced boom of the 90s was a soap bubble compared to the blimp deflating now despite futile efforts to patch it. The current crisis is the result of a sub-market interest rate combined with wanton expansion of a fiat money supply, diluting wealth further drained by taxes that no longer fund tangibly-productive activities. This is fundamental, thus everything else being discussed is secondary.
The politicians focus on details and empiricisms instead of basic principles to create a smokescreen preventing Joe Public from seeing reality; they focus on pixels (details) to prevent people from seeing the picture (objective logic).
The politicrooks then pour gasoline on the fire by instituting "reforms" and bailout voodoo that only further dilute the currency, and which cannot, due to its coercive essence, spur activities capable of creating real value on net to back the newly minted dollars. The bailout is a criminal-minded numismatic money-shuffling game.
Congress then musters the gall to consider nationalizing the banks, a small step into the already Fascist / Corporatist essence that characterizes the U.S. banking "industry".... illustrating how those who pull the strings talk "business" yet have no desire to reveal the antithetical relationship between value and coercion, thus have no concept of the difference between Capitalism and Fascism, value-adding business vs. institutionalized theft.
If banking were free of the corrupting regulations pitting legislated "value" in discord with genuine choice-based valuations, competitive factors would establish the cost of money at levels of risk averting reckless behaviors in the first place. Since this is a fundamental point, the gross distortions of value and risk would have been mitigated regardless of the industry or type of financial instruments involved, which makes all the talk about derivatives, shorting, margins, etc. entirely secondary.
Get the coercive essence of government out of the marketplace and, surprise, things becomes volitional, democratic, competitively accountable, additive of value, and genuinely beneficial to society.
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