The verdict is finally in and it is clear that the Socialists have won this round in the battle for our economic future. Despite decades of rhetoric to the contrary, when push came to shove, leaders of both parties revealed their true colors by mortgaging our future and the future of our children for the sake of political expediency and crony capitalism.
Rather than let their cronies at the Wall Street investment banks suffer the consequences of their incompetence and outright thievery, our popularly elected political leaders bailed them out at taxpayers expense to the tune of at least $1 trillion that we know of. Given government’s inability to control costs we should multiply that by at least a factor of 10 and estimate the future burden on our children and grandchildren to be at least 10 trillion dollars. This would bring the real cost in line with all previous bailouts.
For example, the initial cost projections on the Iraq war by the Bush administration were set at $50 billion and we have already exceeded 500 billion and are quickly on our way to 1 trillion. There’s no reason to believe that the current bailout of mortgage bankers Wall Street banks will come in at anything less than 10 times the initial forecast.
We run the very real risk of turning into Japan and their lost generation. The Japanese form of crony capitalism featured national banks that were deemed too large to fail and they were propped up with the collective savings of the Japanese people. As a result Japan has had zero to negative real growth in their equity markets for the last 20 years and there’s no sign of them coming out of the hole anytime soon. The policy decisions taken this week by our collective leadership have launched is firmly down that same path and there’s no end in sight. What will be the next set of corporations that are being too large to fail? The auto industry? Wal-Mart? The entire service sector? The only bull market we have left any more is the one for government intervention and the taxpayers don’t have many bullets left.
How will we explain this one to our children? Where is our sense of shame? Did we really sell our wisdom so cheaply? The promise of free money and a declaration that consumption is the highest good? The era of bread and circuses is fully upon us and we are holding auditions for the role of Nero.