Hope Deferred Maketh The Heart Sick
show comments
  • Luke Lea

    Thinking about stocks or money in general has never been my thing. I leave it to my wife. Nonetheless I must confess I cleared $18,000 over the past six weeks betting that Citibank is too big to fail. Each time the bottom falls out on bad news — well, on three separate occasions — I bet half my IRA that it will go back up again.

    Of course I have absolutely no idea what Citibank is worth. Probably nothing. It is a purely political bet, alas. Since this is money I’ve committed to my daughter’s education (gotta get that masters degree!) I’m quitting while I’m ahead.

  • Jim.

    So what do the bailouts count as — hot air and duct tape, or half-measures whose full measure would provide the foundation for real and sustainable growth?

    My own view is that these bailouts have too much in common with the Irish government’s bailouts of their shaky banks — lethally poisonous for any institution, public or private, that takes them on.

    The fact is that these debts are enormous. Total debt in the economy is three times bigger than the economy itself. Enormous, unsustainable deficits have transferred some of that debt to the government sector, allowing a limited set of actors (some consumers, some business) to de-leverage, but we’d have to keep those deficits running at 10% of GDP for the next 20 years to allow consumer debt to get to post-WWII “unleashable” levels.

    At *best*, bailouts and Keynesian deficits may buy us time. Complicating this situation is the fact that the amount of time we can afford to buy is far more limited than the Keynesians want.

    The question is, time to *do what*??

    Is there anyone out there thinking of what will, long-term, stabilize the system?

    From where I sit, the long-term balance point looks to be where the allocation of material wealth around the world, nation-by-nation, comes to match the wealth production of each nation.

    In a situation of 3rd-world productivity, this means 3rd-world wealth. (A good thing.) In a world of scarcity, this means 1st-world decline. (A bad thing.) So, it is absolutely in the interests of the 1st world to fight material scarcity. “Drill baby drill” makes a lot of sense. Opening up new frontiers anywhere would be an enormous help.

    If 1st world decline is inevitable, that means a restructuring of priorities. We have to prioritize; what is a must-have, and what is a nice-to-have? Many of our current government regulations are merely nice-to-haves, and can’t stand in the balance with must-haves like useful, productive work to occupy people and produce real wealth that people willingly pay for.

    A further danger in 1st-world decline is arrival at “communism by default”, or a situation where the guaranteed minimum of government handouts stays constant, and the per-capita income of the nation falls to meet (or go beyond!) it. This is happening already, with unionized jobs. This will hand us all the dire economic consequences of communism (the death of individual initiative, the destruction of flexibility and dynamism in the private sector, the temptation to enormous debt to maintain it) if we do nothing to avoid it.

© The American Interest LLC 2005-2017 About Us Masthead Submissions Advertise Customer Service
We are a participant in the Amazon Services LLC Associates Program, an affiliate advertising program designed to provide a means for us to earn fees by linking to Amazon.com and affiliated sites.