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In one of the extreme anomalies of U.S. history, a sitting Republican president has now nationalized the entire financial underpinnings of the country.  Reports today even indicate that the Department of Energy is working up a bailout plan for the Big Three automakers.

What’s left?

The big prize, of course,  Health care, which is the last thing on earth the federal government should take over.  Consider this:  In Canada, which long ago implemented the Obama single-payer health care plan, the government is drastically trying to pass a law MANDATING that the hospital waiting list cannot be more than 18 weeks’ long, which is way down from the six months to two years it is right now.

The media are trying to present a Hosannah Obama victory both as inevitable and as inexorable as the rising of the tide and setting (they’d say rising) of the sun.  Maybe so if the polls are right, but the point is that the media wants you to fall into lockstep.  If not, you’re out of step with history.

Regardless of the polls, Obama himself is dead wrong in almost all his ideas (okay, I was wrong–all of his ideas).  "Let me sleep with France and the namby-pampy socialists who cry retreat and defeat at every opportunity" should be his motto or moniker.  It will be his legacy if he’s elected, oh sorry day.

One can only hope if the sainted Obama, soon to topple Abraham Lincoln from his lofty perch as our greatest president according to Europe and the American media, sees his only opening as reversing the Bushian socialization plans.

We can only hope…against hope.

Standard and Poor’s today downgraded the rating of the New York Times to junk status.  Moody’s issued a statement saying it was considering the same.

It’s about time someone figured out that the liberal rag of Times Square is junk.  Problem is, S&P was considering just the newspaper’s grim finances.  I’m referring to its get-Republicans-at-any-cost, tax-everyone-to-the-hilt, disband-the-military and socialize-as-soon-as-possible approach to editorializing, which is what they prefer to do over just, you know, reporting matters.

Gee, doesn’t this sound eerily like the same approach the Demofiends and especially Hosannah Obama are taking?

By George Friedman and Peter Zeihan
Courtesy of Strategic Forecasting

French President Nicolas Sarkozy and U.S. President George W. Bush met Oct. 18 to discuss the possibility of a global financial summit. The meeting ended with an American offer to host a global summit in December modeled on the 1944 Bretton Woods system that founded the modern economic system.

The Bretton Woods framework is one of the more misunderstood developments in human history. The conventional wisdom is that Bretton Woods crafted the modern international economic architecture, lashing the trading and currency systems to the gold standard to achieve global stability. To a certain degree, that is true. But the form that Bretton Woods took in the public mind is only a veneer. The real implications and meaning of Bretton Woods are a different story altogether.
 
Conventional Wisdom: The Depression and Bretton Woods

The origin of Bretton Woods lies in the Great Depression. As economic output dropped in the 1930s, governments worldwide adopted a swathe of protectionist, populist policies — import tariffs were particularly in vogue — that enervated international trade. In order to maintain employment, governments and firms alike encouraged ongoing production of goods even though mutual tariff walls prevented the sale of those goods abroad. As a result, prices for these goods dropped and deflation set in. Soon firms found that the prices they could reasonably charge for their goods had dropped below the costs of producing them.

Though if I were to agree with an economist most times and overall, it would be Milton Friedman, on the advice of Mad Money host Jim Cramer, I just read The Great Crash 1929 by economist John Kenneth Galbraith.

I’m not one to read books about the dismal science in general, but Cramer’s advice definitely was timely, so after reading it, I too am recommending Galbraith’s book unhesitatingly.  It’s a great read and highly enlightening.

Great Crash is written in a common-sense, common-person’s style that makes it a quick, engaging read.  (I finished it off in about three hours or less.)  However, you may want to look up the definitions of these words before reading it: usufruct, eupeptic and parthenogenesis.  Otherwise, you’ll encounter clear, concise, simple writing.

I must confess that, after reading Great Crash, I now have a more liberal leaning on governmental intervention in the economy, as Galbraith makes it clear that easy steps could’ve been taken to ameliorate and end the Great Depression possibly while it was in its early stages.  (Hint: Don’t balance the budget and keep money flowing.)

I found this passage on the next-to-last page of the book most illuminating for our current crisis:

"…it would be unwise to expose the economy to the shock of another major speculative collapse.  Some the new reinforcements might buckle.  Fissures might appear at other new and perhaps unexpected places.  Even the quick withdrawal from the economy of the spending that comes from stock market gains might be damaging."

Might?

By George Friedman 
Courtesy of Strategic Forecasting

A complex sequence of meetings addressing the international financial crisis took place this past weekend. The weekend began with meetings among the finance ministers of the G-7 leading industrialized nations. It was followed by a meeting of finance ministers from the G-20, the group of industrial and emerging powers that together constitute 90 percent of the world’s economy. There were also meetings with the International Monetary Fund (IMF) and World Bank. The meetings concluded on Sunday with a summit of the eurozone, those European Union countries that use the euro as their currency. Along with these meetings, there were endless bilateral meetings far too numerous to catalog.
 
The weekend was essentially about this: the global political system is seeking to utilize the assets of the global economy (by taxing or printing money) in order to take control of the global financial system. The premise is that the chaos in the financial system is such that the markets cannot correct the situation themselves, and certainly not in an acceptable period of time; and that if the situation were to go on, the net result would be not just financial chaos but potentially economic disaster. Therefore, governments decided to use the resources of the economy to solve the problem. 

Put somewhat more simply, the various governments of the world were going to nationalize portions of the global financial system in order to stave off disaster. The assumption was that the resources of the economy, mobilized by the state, could manage — and ultimately repair — the imbalances of the financial system. 

Courtesy of Strategic Forecasting

The finance ministers of the G-7 countries are meeting in Washington. The first announcements on the meetings will come this weekend. It is not too extreme to say that the outcome of these meetings could redefine how the financial markets work, certainly for months and perhaps for a generation. The Americans are arguing that the regime of intervention and bailouts be allowed to continue. Others, like the British, are arguing for what in effect would be the nationalization of financial markets on a global scale. It is not clear what will be decided, but it is clear that this meeting matters. 

The meetings will extend through the weekend to include members of the G-20 countries, which together account for about 90 percent of the global economy. This meeting was called because previous steps have not freed up lending between financial institutions, and the financial problem has increasingly become an economic one, affecting production and consumption in the global economy. The political leadership of these countries is under extreme pressure from the public to do something to solve — or at least alleviate — the problem. 

The Demofiends have ultimately triumphed.  Now they have the Wall Street titans lining up for federal handouts, with the middle class soon to follow (or precede).  Next up:  Our Hugo Chavez-clone, Barack Obama, as taxman-in-chief.

It’s an ugly sight what’s going on in the financial markets, and I doubt it would be worse if government had done nothing.  By guaranteeing so many things to keep the financial markets and Wall Street afloat, the federal government under King George II has now a) whet the appetite of the Wall Street pigs for Washington to guarantee everything they do and b) spooked the public into thinking that "taxes and mandates are the solution to everything" Obama and the Demofiends are the way out of the mess.

I earlier warned that, a la Sarbanes-Oxley, if we looked too closely at the cooked books of every company in America, we’d soon conclude that they’re all bankrupt, and that’s now the prevailing sentiment on Wall Street.

It’s not true, of course, but when the sky falls, everyone believes it and everyone ducks for cover.

For that, we can thank over-regulation, not under-regulation.

Plus, let’s face it, it’s just time that we all had to face the pig in each of us and learn some painful lessons.

Lesson number one:  There’s no such thing as a free lunch.