Economic Infection

Alexis DeToqueville wrote in his classic “Democracy in America” that “there is a general distaste for accepting any man’s word as proof of anything”.

Not so today. When asked why he voted for the first bail out bill, Congressman Paul Kanjorski said “the worst problem that we have is probably a lack of faith and trust by constituents out there to take our word for it that there is a problem”.

“Democracy in America” was written centuries ago, fast forward and here’s a modern day politician telling us to turn back on our heritage and just take them at their word when it comes to handing over a trillion dollars in tax payer money to Wall Street crooks.

Kanjorski said “I've been watching this disaster, if you will, unfold for probably two years now, and particularly since last August -- not this immediate past August, but the August before that, when the subprime mortgage problem was created. And then we saw the deterioration that occurred in October when the auction market started to fail. And then we saw the infection spread throughout the financial system.”

The mistake everyone makes is that the subprime mortgage problem was created in the past few years, it wasn’t, it’s been brewing for decades ever since the Savings and Loan bail outs of the 80’s.

Our current economic problems were created while our government stood mutely on the sidelines watching and collecting payoffs while thousands of subprime players including firms on Wall Street, investment bankers, hedge funds, non bank subprime lenders, mortgage brokers and realtors together created the housing bubble that has just burst. This seven hundred billion is a mere drop in the bucket compared to the trillions and trillions Americans owe on their homes and will not fix the problems.

There is an infection spreading, it’s called the “malaria of power” and it’s not limited to the financial system, it has spread to the people running our government and financial system.

Henry Adams said “the effect of power and publicity on all men is the aggravation of self, a sort of tumor that ends in killing the victim’s sympathies, a diseased appetite, like a passion for drink or perverted tastes; one can scarcely use expressions too strong to describe the violence of egotism it stimulates”.

For over thirty years egotistical politicians have told us to take their word for it, that politics don’t matter, the only things that matter are our stocks and portfolios. We should just shut up, invest our retirement and homes in crooked stocks, sit back, watch our diversified portfolios grow and let the free market prevail.

This is precisely why we’re on the brink of bankruptcy today. The greedy bankers sucked all the money out of our homes into their pockets. And they’re not satisfied with our homes, now they’re going for the US Treasury.