The Party?s Over

[John81]

September 19, 2008
PJB: The Party?s Over
By Patrick J. Buchanan

The Crash of 2008, which is now wiping out trillions of dollars of our people?s wealth, is, like the Crash of 1929, likely to mark the end of one era and the onset of another.

The new era will see a more sober and much diminished America. The ?Omnipower? and ?Indispensable Nation? we heard about in all the hubris and braggadocio following our Cold War victory is history.

Seizing on the crisis, the left says we are witnessing the failure of market economics, a failure of conservatism.

This is nonsense. What we are witnessing is the collapse of Gordon Gecko (?Greed Is Good!?) capitalism. What we are witnessing is what happens to a prodigal nation that ignores history, and forgets and abandons the philosophy and principles that made it great.

A true conservative cherishes prudence and believes in fiscal responsibility, balanced budgets and a self-reliant republic. He believes in saving for retirement and a rainy day, in deferred gratification, in not buying on credit what you cannot afford, in living within your means.

Is that really what got Wall Street and us into this mess ? that we followed too religiously the gospel of Robert Taft and Russell Kirk?

?Government must save us!? cries the left, as ever. Yet, who got us into this mess if not the government ? the Fed with its easy money, Bush with his profligate spending, and Congress and the SEC by liberating Wall Street and failing to step in and stop the drunken orgy?

For years, we Americans have spent more than we earned. We save nothing. Credit card debt, consumer debt, auto debt, mortgage debt, corporate debt ? all are at record levels. And with pensions and savings being wiped out, much of that debt will never be repaid.

Our standard of living is inevitably going to fall. For foreigners will not forever buy our bonds or lend us more money if they rightly fear that they will be paid back, if at all, in cheaper dollars.

We are going to have to learn to live again without our means.

The party?s over

Up through World War II, we followed the Hamiltonian idea that America must remain economically independent of the world in order to remain politically independent.

But this generation decided that was yesterday?s bromide and we must march bravely forward into a Global Economy, where we all depend on one another. American companies morphed into ?global companies? and moved plants and factories to Mexico, Asia, China and India, and we began buying more cheaply from abroad what we used to make at home: shoes, clothes, bikes, cars, radios, TVs, planes, computers.

As the trade deficits began inexorably to rise to 6 percent of GDP, we began vast borrowing from abroad to continue buying from abroad.

At home, propelled by tax cuts, war in Iraq and an explosion in social spending, surpluses vanished and deficits reappeared and began to rise. The dollar began to sink, and gold began to soar.

Yet, still, the promises of the politicians come. Barack Obama will give us national health insurance and tax cuts for all but that 2 percent of the nation that already carries 50 percent of the federal income tax load.

John McCain is going to cut taxes, expand the military, move NATO into Georgia and Ukraine, confront Russia and force Iran to stop enriching uranium or ?bomb, bomb, bomb,? with Joe Lieberman as wartime consigliere.

Who are we kidding?

What we are witnessing today is how empires end.

The Last Superpower is unable to defend its borders, protect its currency, win its wars or balance its budget. Medicare and Social Security are headed for the cliff with unfunded liabilities in the tens of trillions of dollars.

What we are witnessing today is nothing less than a Katrina-like failure of government, of our political class, and of democracy itself, casting a cloud over the viability and longevity of the system.

Notice who is managing the crisis. Not our elected leaders. Nancy Pelosi says she had nothing to do with it. Congress is paralyzed and heading home. President Bush is nowhere to be seen.

Hank Paulson of Goldman Sachs and Ben Bernanke of the Fed chose to bail out Bear Sterns but let Lehman go under. They decided to nationalize Fannie and Freddie at a cost to taxpayers of hundreds of billions, putting the U.S. government behind $5 trillion in mortgages. They decided to buy AIG with $85 billion rather than see the insurance giant sink beneath the waves.

An unelected financial elite is now entrusted with the assignment of getting us out of a disaster into which an unelected financial elite plunged the nation. We are just spectators.

What the Greatest Generation handed down to us ? the richest, most powerful, most self-sufficient republic in history, with the highest standard of living any nation had ever achieved ? the baby boomers, oblivious and self-indulgent to the end, have frittered away.

http://buchanan.org/blog/2008/09/pjb-the-partys-over/

[Danny Carlton]

Ironically socialism is inherently dishonest as well as doomed to failure. Capitalism, however, can only be successful if based on a strong moral foundation. Socialists have therefore worked feverishly to dismantle our nation's moral foundation so they can then claim capitalism is bad.

I disagree with Buchanan that this crash will have much of a lasting effect. The buffers built into the economy after the depression prevent most people from feeling an immediate effects of market crashes. Ironic that the very people that put in place such buffers want to now claim they don't work.

I'm surprised how both sides are making such a big deal about it. The "bad" loans the government will be buying are not all 100% insolvent. They are simply not available for repayment, immediately. They need patience and perseverance to manage. The government will be paying around 10 to 20 cents on the dollar, which leaves ample room for recouping most of that money if the debtors are treated well (something banks and mortgage companies seem incapable of doing). It seems to be too juicy of a campaign issue, though, for the talking heads to be realistic about it.

[Anon]

The problem won't be resolved because Americans are too used to living like they do. If you talk to any "older person" they saved and scrimped and slowly worked up to financial independence. Our generation today spends and spends and if they don't have it, they borrow it on credit (like the article says). However the article says our country is going to go back to living within their means...and I don't see that happening unfortunately. There are too many welfare babies and even middle class spoiled brats...or even rich spoiled brats....that want what they want, when they want it...and if they don't get it, its Bush's (or whoever's) fault.

My brother actually feels that with all the foreclosures and etc, that banks will eventually be stuck with so much unsellable property and etc that the government will eventually buy out all the banks and then we'll really be in trouble.

[matie-k]

Shew - you scared me with the title of this topic - thought it was something about your son!