Witness the almost meltdown of Bear Stearns a few months ago, the nationalization of Freddie Mac and Fannie Mae, the new meltdowns of Lehman Bros. and Merrill Lynch, the bailout of insurance giant AIG? I have a little training in economics so for those of you that need a clear explanation, here it is—this was caused by greedy people who loosened rules to get more money, and expected the taxpayer to bail them out if there was any trouble.
What we have is another classic Book of Mormon last days parallel as pointed out by Samuel in Helaman 13.
“And behold, the time cometh that he curseth your riches, that they become slippery, that ye cannot hold them; and in the days of your poverty ye cannot retain them.
And in the days of your poverty ye shall cry unto the Lord; and in vain shall ye cry, for your desolation is already come upon you, and your destruction is made sure; and then shall ye weep and howl in that day, saith the Lord of Hosts . . . Behold, we lay a tool here and on the morrow it is gone; and behold, our swords are taken from us in the day we have sought them for battle.
Yea, we have hid up our atreasures and they have slipped away from us, because of the curse of the land.
O that we had repented in the day that the word of the Lord came unto us; for behold the land is cursed, and all things are become slippery, and we cannot hold them.
What we have is a classic example of the rich (bankers) trampling upon the poor (mortgage racket to sucker people into loans they have no business getting themselves into), to the point that when the notes come due, there is NO MONEY. We have all been suckered.
This problem is a fundamental cultural problem, from the credit card lenders, borrowers, mortgage lenders and their secondary market funds that have cut them up in ways unrecognizable, to the general obligation debt-financing of state government of everything from park trails to zoos, up to the Federal Government’s ponzi scheme known as Social Security, entitlement and defense spending for which there is no money—all driven by voters to vote the idiots in office and spend it out of fear of a terror attack, a layoff, cancer, hurricanes, or carbon dioxide.
News flash!!! We don’t have the money! Sure we can ask the Fed to print more dollars, which in turn make the dollar value plummet, and these mysterious bankers can get debt- financed backing from the Chinese, Saudis and all the Emirates, etc or they can just ruin our economy and China-ify us with this marvelous new fascist economic system that is all the rage in China and Russia (capitalism run amok at the top, with socialism and totalitarianism at the bottom).
So vote Obama who will double entitlements, start a MASSIVE new entitlement to fix health care, all while denying us the opportunity to drill for new energy because of the spotted caribou or a 2 inch rise in sea levels crippling our economy and remaining energy slaves to OPEC.
Or vote McCain who will cut taxes (you can only supply-side once every twenty years, man) and ONLY cut earmarks (drop in the bucket) and DOUBLE our defense spending.
There are no clear choices. It’s painful and disappointing. I guess all I can do is go back to voting on culture war issues that are all the rage because these clowns will do nothing to stop us from declaring bankruptcy and turning our country into a second-world nation.
As Mormons, we have all been taught the value of living within our means, getting out of debt, saving for rainy day. Our governmental fathers seem to think they are beyond that. To quote Jeremiah Wright from another angle, “America’s chickens are coming home to roost.”
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I can definitely see how the scripture you cited relates. It’s easy for our riches to become “slippery” when the very foundation is built on greed. However, I’m very passionate about the energy crisis and I would like to respectfully disagree with your statement in that regard. Drilling for oil in ANWAR and the Gulf Coast simply is not a worthwhile investment. If you look at the facts, it’s clear that any realistic amount of drilling would not produce enough oil to even make a dent in gas prices- not to mention the amount of time it would take to see any results. Drilling for oil is not a reasonable solution, nor is it the ONLY solution to our enslavement to OPEC. I know it’s human nature to look for the easiest way out- but there is no easy way out of this.
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Did I say we should drill in ANWAR? My post was about how we overspend. I’m anxious to see the movie IOUSA that was just released. I do think the failure to develop new sources of energy is a contributer to the problem. I support the mixed bag solution to energy: Drill more to help in the short-run (oil and natural gas), while developing wind, coal-to-oil, solar, nuclear, hydrogen, etc. for the long-run.
“As Mormons, we have all been taught the value of living within our means, getting out of debt, saving for rainy day. Our governmental fathers seem to think they are beyond that.”
We have been taught the value of living within our means, but we (like our ‘government fathers’) seem to think that we are ‘beyond that’ as well. I’m not sure that members of the church have been any more financially responsible than the rest of society.
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(3) Bill — You are so right. Our treasures could become slippery as well. This problem is the elephant in the room for all of us.
Peter…great post. I really liked it. Ron Paul’s policies are needed so much right now. The US is reminding me of the declining British Empire back in the late 1800’s when the German and American economies were emerging.
We are all having to learn to live in a multipolar world and I think the US is having the hardest time with it considering their attempts to Blakanize Bolivia, create a private pipeline from Baku which is increasing instability in Eurasia, aggresive attacks on other sovereign nations.
I love the people of the US but I feel its government is no longer representing its peoples interests nor the inteterests of citizens around the world. Your message Peter is much needed….keep it up no matter what flack you get.
The secret combination of the governement and the banking industry have gotten together to sock it to the Americian Taxpayer, even though our taxes do not even cover the payment on the interest on our debt.
One idea is to nationalize the Federal Reserve and direct all the interest to the US tresury and not back into the Fed. We could in theory completely eliminate the income tax since the payments would already go to the government.
The total mortgage debt that is at risk is about 110 Billion so why do we need to bail out banks to the tune of 700 billion soon to be 2 or 3 trillion?
Peter,
I’m afraid I don’t completely follow you. Yes, to a large extent the recent collapse of investment banking is the result of greed by bankers. It’s also a result of greed by people who felt entitled to bigger houses than they could afford, by mortgage brokers who didn’t bear downside risk. It’s a result of the SEC not doing the policing it should have been doing. It’s a result of Congress preventing anybody from policing derivatives and exempting swaps from the bankruptcy laws. It’s also the popping of a bubble, albeit a big one. Frankly, there’s plenty of blame to go around.
And we (meaning the U.S.) have plenty of money. We have other countries and our own citizens eager to lend money to the government (so eager, in fact, that Treasuries are paying pretty close to 0% interest). We have a relatively strong base of workers on whom we can impose taxes and, if you include future workers, an almost limitless supply of taxable income. Which is not to say that funding our current consumption at my daughters’ future expense is good policy or a good idea, but the fundamental value is still there.
And Jeff, no secret combinations in this. If there were, it would have been orchestrated a whole lot better than it was; as it stands, everything has been way too ad hoc to support any conspiracy theory. As for the debt: I don’t know the numbers on total outstanding mortgage debt, but there is over $1 trillion in outstanding credit default swaps; the collapse of Lehman, et al., is bound to have triggered a lot of that. I think the bailout is a horrible idea, although it may be the only politically palatable one, but it’s worth realizing that, in spite of the role the subprime crisis played in triggering this collapse, it’s not just bad mortgages that the government proposes to be on the hook for.
Steve has some great information about this current crisis over at BCC; the W$J and the NYTimes have fantastic coverage, too. This American Life did an amazing show about the subprime mess, and Portfolio magazine has a fair amount of good information up. (Slate’s information is good, too, although I’m not a big fan of their new money blog.) Over the last two weeks, NPR’s Marketplace has also done a great job following what has been going on. (Cable news networks, on the other hand, have not–my wife wanted to hear more about Goldman’s and Morgan Stanley’s decision to become more-regulated banks this morning while cleaning up, but all that any “news” station had on was coverage of the Emmys.) While I would be the last to suggest that bloggers know something before blogging, it’s probably worth studying up on what’s happening before deciding we need to go back to the gold standard or that somehow this will abolish the federal income tax.
NPR did a fantastic story explaining how we ever got into the subprime mortgage mess. How the total amount of money in the world doubled in a relatively short time. They needed somewhere to invest. They choose mortgages. When all the good mortgages ran out to invest in, lenders lessoned their rules. More mortgages more money. I can’t believe how dumb are supposedly super intelligent Wall Street investors were.
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(7) Sam, I thought I was clear how wide a swath this greed was, from main street to Wall Street. The reasons were all that you listed as well as the maneuver to use public taxpayers as a hedge against moral hazard for Fannie Mae and Freddie Mac. In other words, stupid government intervention (such as making moral hazard in housing investments on the back of taxpayers), as well as lack of policing derivatives as you have suggested, have all contributed.
My suggestion is the let the house burn–no bailouts, especially when it gives the Treasury almost dicatorial power over who gets the cookie jar and who doesn’t with no oversight from the legislative, executive, or judicial branch. This is a power grab, folks, pure and simple.
I have to agree with Peter B. It is time for accountability, from the individual citizen up to the greedy wall street CEO’s and greedy government Crooks. Sometimes the bitter pill cures the best. The Prophet has said “get out of debt”. What part of this don’t we understand? There are still honest CEO’s and government representatives that should become an example to all.
I am ever so pleased that you misquided less than 15,000,000 idiots will be forgiven by God for following this “religion” founded by a false prophet. How I stumbled on this website is the clue to God’s work.
“How I stumbled on this website is the clue to God’s work.”
You are right; God does work in mysterious ways to bring you to His truth. 🙂
I wonder if the government is simply a reflection of it’s citizens? If most Americans were living within their means it seems that they would require their elected officials to do likewise. It starts with us as members of the church, since our religious beliefs require us to live within our means. We can influence our neighbors as they see our example and eventually we can turn this ship around.
Of course, my government representatives will hear from me along the way….