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Posts Tagged ‘Capitalism’

Education and Student Debt

Posted by Steve Markowitz on August 26, 2016

Marshall McLuhan“The reason universities are so full of knowledge is that the students come in with so much and leave with so little.”  Marshall McLuhan

 

Republicans and Democrats attempt to differentiate themselves via their views of the government’s role in the economy.  With close examination, it is hard to find real differences between them.

Those on the Right promote the benefits of “true” capitalism that allows markets to set prices via supply and demand.  Those on the Left share the view that capitalism is too harsh and that the government needs to step in and smooth out inequities created by markets.  At the extreme Left, socialism is promoted, irrespective of its history of failure.

At the macro-economic level there is little difference between Republicans and Democrats.  Crony capitalism is rampant within both parties.  Republicans typically support large industries and those in the military industrial complex.  Democrats promote social programs that benefit industries including education, social services, medical services, and trial lawyers.  The result of crony capitalism has been a significant increase in governmental spending and a surging United States’ debt over the past 50 years.  This debt is in part responsible for the economic malaise that has been inflicted on the country over the past decade.

An example of crony capitalism and the damage it has done is the educational industry.  Through the US Department of Education, as well as at the state and municipal levels, the funds spent on primary education have been skyrocketing as indicated by the charts below.

Total Educational Spending

Spending Per StudentSat Scores

 

 

 

 

However, the increased spending has not resulted in improved education.  The chart shows how poorly our students are doing in basic reading comprehension.

Student DebtThe problem is more significant at the college level.  The educational industry, with support of the US government and its loan programs, has created the false narrative that all Americans require and deserve a college education, irrespective of whether or not it improves their economic well-being.  As a result, the amount of student debt now exceeds $1 trillion and a significant portion of college graduates cannot make an income level that would allow them to pay off the debt in a reasonable period of time.  Many have been forced to move back into their parents’ houses.

While a market-based economy can be a cruel arbitrator of scarce resources, crony capitalism has proven to be catastrophic to those who have been cajoled into inappropriate economic decisions based on government programs.  It is a major cause of the growing wealth disparity between the ultra-rich and average Americans.

Yes, both Hillary Clinton and Donald Trump have prospered under crony capitalism.  The same cannot be said for most Americans.

Posted in Debt, Education | Tagged: , , , , , , , | Leave a Comment »

Greed of Governments and Capitalists

Posted by Steve Markowitz on July 17, 2012

Greed is one of the less positive attributes of the human makeup.  How this reality is addressed is often dependent on one’s overall philosophy relating to control.

Progressives have the misguided view that human greed is manageable and can be controlled by the imposition of government laws and rules.  Given the abject failure of this tactic for so many years, it is surprising that there are still so many who ascribe to this view.

Free-market capitalists also acknowledged the inevitability of human greed.  Unlike Progressives, they take the view that governments cannot create laws or rules that will effectively offset the ingenuity of those who pursue greedy agendas.  Given this reality, free-market capitalists take the view that the best way to control human greed in a complex and dynamic economy is to use its benefits to create the most efficient economy and best allocation of scarce resources.  Specifically, human greed can best be managed by having other greedy people stopped individuals from collecting too much power or wealth.

Free-market capitalism is not without flaws.  There have been significant economic hardships and inequities created historically by capitalism.  However, much of these dislocations have been caused by government interference that removed the natural constructs created by a true capitalist system.  This has taken many forms including subsidies for specific individuals or groups, bailouts and printing money.

The brilliant economist Milton Friedman was perhaps the most foremost proponent of free market capitalism.  The video below with Friedman’s views on greed created decades ago is relevant today.  Since Friedman made these comments, the economic world has become quite perilous, the result of government interventions that stopped the forces of supply and demand from rebalancing themselves.

Unfortunately, instead of stopping the failed interventions we continue down the path of still more.  The result will be ever-increasing dislocations that did not need to occur had we taken Friedman’s advice.

Posted in Capitalism, Government Ineptness, Governmental Intervention | Tagged: , , , , | Leave a Comment »

NBC’s Ann Curry Calls Capitalism Unfair

Posted by Steve Markowitz on May 10, 2012

Last month NBC’s Ann Curry publicly said what many Progressives try to camouflage.  Specifically, she proffered the view that it is unfair for some Americans have more than others.  Her dribble included:

  • “…there’s an inherent unfairness to it….it’s about those with money having an easier life than those who don’t. And there’s something fundamentally unfair about that.”
  • “…not everyone has access to being able to get money, to work for money….until America becomes fair in terms of how able people are – can be to make money, until the playing field is fair, it is unfair.”

When NBC’s weatherman Al Roker then asked of Curry: “But don’t we also teach our kids, in a sense, life isn’t always fair,” she retorted that America must first level “playing field.”

While Curry professes concern for those that have less, she and her husband maintain two houses and travels first class on airlines.  If truly worried about leveling the playing field, Curry would start by sharing her wealth with those that have less than she.  On this matter, Curry has much in common with Warren Buffett who wants to level the playing field by taking money from others and redistributing it.

Curry’s logic is flawed on many levels.  Taking it to the extreme, those of us who were not blessed with great height or athletic skills should have the opportunity to play in the NBA.  To offset our “disabilities”, we should be given special dispensation to level the field on the basketball court.  Come to think of it, this logic is inevitably where Curry in a Progressive friends would take us.

 

Posted in Uncategorized | Tagged: , , , | Leave a Comment »

Government Versus Private Sector

Posted by Steve Markowitz on March 31, 2012

With the 2008 financial meltdown and the ongoing lengthy economic challenges, Progressives have attempted to create the narrative that the failings were caused by flaws in capitalism.  In fact, while greed and some of the downsides of capitalism are at the root of the problem, the larger culprit is the government and its interventions into the economy.  It was the government’s policy of keeping interest rates artificially low that led to many of the excesses including the housing bubble that directly led to the meltdown.

While the flaws of capitalism are readily admitted by any serious student of economics, the more dangerous flaws that emanate from governments are rarely addressed by the elitist Progressives.  The chart below puts a bit of humor this serious subject.

Posted in Governmental Intervention | Tagged: , , , , , , | Leave a Comment »

Americans Going for the Good Life

Posted by Steve Markowitz on March 20, 2012

Whether one believes in a Capitalist or Socialist system, human nature dictates most of our actions and interactions in society.  Capitalists believe that the free market is the best mechanism for self-regulating these individual desires.  Those that are Socialist leaning put more faith in the government to do the regulating.  While Capitalism has shown to be an imperfect mechanism, central planning and interventions by Progressive governments have proven disastrous.  The current sovereign debt problems affecting many Western countries are the result of such interventions.

Perhaps the most significant Progressive governmental intervention today is the efforts to fix the ongoing sovereign debt problems.  Their solution; push interest rates to near zero to keep the cost of sovereign debt service low and at the same time enable the commercial banks that are also insolvent access to nearly free money.  To assume there will not be serious unintended consequences to what is the most significant governmental intervention ever attempted on a worldwide scale is akin to a nearly religious belief in alchemy.

Today we focus on one consequences already occurring as a result of the low interest rate policies.  This artificially created low interest rates on the safest investments, governmental bonds, also affect interest rates up the chain including those at the higher risk levels.  In other words, return rates for even risky investments have been lowered proportionally.  As a result, investors’ returns have decreased to historically lower levels creating the desire (demand) to move up to higher risk in an effort to increase meager returns.  The longer the current artificial interest-based recovery continues with assets such as equities appreciating, the greater the incentive for investors to increase their risk tolerance.  This is a similar the housing bubble caused by the earlier low-interest Federal Reserve policies that not only made mortgages easier to afford, but pushed investors into buying the risky securitized bonds that ultimately failed; i.e. the toxic concoction that created this mess in the first place..  Now governments are trying to turn the tide with the same low interest rate policies.  That’s insanity!

The low-interest rate policies of the Fed are again cajoling people into risky investments that will result in another bubble and bust, possibly in the bond market.  Following is a clip titled A Day In the Life of a Financial Advisor.  With a bit of humor it shows the spiral that many Americans now face; chasing increased returns without enough concern for risk, the missing control ingredient in the Progressive model of capitalism.

 

 

Posted in Interest Rates | Tagged: , , , , , , | Leave a Comment »

Wealthy Obama Supporter Ted Leonsis has Buyer’s Remorse

Posted by Steve Markowitz on September 27, 2011

Ted Leonsis came from humble beginnings to become a high-level executive at AOL where he made his fortune.  He is currently CEO and majority owner of Monumental Sports & Entertainment that owns three professional sports teams; the Washington Capitals (NHL), the Washington Wizards (NBA) and the Washington Mystics (WNBA).  Leonsis also owns significant real estate holdings in the Washington DC metropolitan area.

Leonsis, like many wealthy Americans, has been a supporter of Barack Obama.  In fact he has stated that he donated to the President the maximum amount allowed by law.  This week he published an open letter on his blog (posted below) that put an end to that support.

In his letter titled Class Warfare – Yuck!, Leonsis takes the President to task for his divisive rhetoric that is creating a rift between Americans in different economic categories stating, ” This is a bad move all designed by some pollster who said this is the way to get votes during the re-election.  It should be stopped.  We should be healing and creating teams NOT dividing and pitting people against one another.”

On paying more taxes, Leonsis says what many Americans believe: “I pay taxes.  I am willing to pay even more taxes but I would want accountability that the money was being spent wisely on infrastructure investments; education and retraining; and anything that makes us more competitive and gets people working again.  That seems fair doesn’t it?

Leonsis’s letter expresses great frustration and disappointment with Barack Obama.  It is an eye-opening look on how successful and bright America’s got sucked in by the personal magnetism of Barack Obama, without concern for the substance behind the man

Glaringly missing from Leonsis’s letter was any admission of his mistake in judgment and culpability in helping bring Obama to power.  It was naïve of Leonsis and others to expect this man to bring the Country together.  Obama’s resume was well known prior to the election.  It indicated a total lack of the executive skills.  In addition, Obama’s myriad of associations with radical Leftists who held American capitalism and capitalists in disdain was well publicized.

To Ted Leonsis is should be said: better late than never.  It will take significant efforts to bring the Country together, a requirement before tackling in the serious economic problems we face.  Unfortunately, the Country will have to wait for a new president before adressing on this pressing matter.

Class Warfare – Yuck!

Let me get this on the record.

My dad was a waiter.  My mom was a secretary. Neither attended college.  I grew up in Brooklyn, NY and Lowell, Massachusetts.  I attended public schools.  My parents – in their best year – earned $31,000 combined.  My dad worked for tips – often received in change – as he worked a counter for breakfast and lunch at a diner.  My dad, too, once lost his job. I remember the angst in our household.

I attended Georgetown University which at the time wasn’t a need blind school via college loans. I paid them all back five years after I graduated.

I have great empathy for middle class or lower middle class America.  My horizons as a young adult were not expansive.  I was programmed to be a produce department manager at a grocery store in my neighborhood.  That was my dad’s aspiration for me.  I would have been proud to work hard to become a leader in a grocery store and I bet I would have been good at it, too . By luck and hard work, my career took a different path.

I say this as I read all of the rhetoric about Class Warfare, the rift that is being created between economic middle and lower class and as the President said “those millionaires and billionaires.”

The real rift in philosophy though is do you want the Government to create jobs and stimulate the economy or do you want America’s small business to be the engine of growth?

Economic Success has somehow become the new boogie man; some in the Democratic party are now casting about for enemies and business leaders and anyone who has achieved success in terms of rank or fiscal success is being cast as a bad guy in a black hat.  This is counter to the American Dream and is really turning off so many people that love American and basically carry our country on their back by paying taxes and by employing people and creating GDP.

This is a bad move all designed by some pollster who said this is the way to get votes during the re-election.  It should be stopped.  We should be healing and creating teams NOT dividing and pitting people against one another.

I know the President isn’t speaking to me specifically when he talks but many times I hear stuff and I cringe personally.  As a friend told me the other day who lives in China, “Every time your President talks of late, it costs us billions in market cap and in confidence in your country and your economy.”  Why do we devalue success in the US when the rest of the world is trying to emulate what we have created as an economic system?

So for fun:  I take the Acela train to Philly and NYC all of the time.  Alone – no traveling companions to prep me.  I have never seen our President on the train, have you?  I own 50 hours on NetJets for the rare occasion I do travel by private plane.  Does Air Force One charter out?  Stop making private planes an issue.  This is a tiny issue for us to deal with for our country.

I do have a nice home with a house keeper.  I have only one home.  I bet there is more staff at the White House though?  And Camp David.  What kind of real estate tax is the White House paying?  Nice jewelry here. Click away.  Stop it.  Upgrade the discourse.

With my investments and board seats and companies that I own, I am at a leadership position in concerns that employ more than 200,000 people.  We do our best to be good corporate citizens.  I know in the companies that I own personally or am the largest shareholder that we support now more than 500 charities.  We care.  Pick some business leaders that you work with and make them heroes.  Don’t demonize them.  Showcase them as great Americans that care and hire and employ people.  Employment is the biggest issue you will face when re-election comes.  If people aren’t working, they will blame you and your administration.  And since you have never worked before in a real job for a real company, you need help from people who have been there.  Don’t push them away!

I pay taxes.  I am willing to pay even more taxes but I would want accountability that the money was being spent wisely on infrastructure investments; education and retraining; and anything that makes us more competitive and gets people working again.  That seems fair doesn’t it?

I voted for our President.  I have maxed out on personal donations to his re-election campaign.  I forgot his campaign wants to raise $1 billion.  THAT is a lot of money–money–money–money!  Money still talks.  It blows my mind when I am asked for money as a donation at the same time I am getting blasted as being a bad guy!

Someone needs to talk our President down off of this rhetoric about good vs. evil; about two classes and math.

Our country was founded on the premise of “life, liberty and the pursuit of happiness”.  Is anyone happy right now with all of this?

Hit a reset button ASAP.

Rethink how to talk to businesses and sell business leaders on your plan to make America great!

Many of us want to be a part of the solution.  We aren’t the problem.

Posted in Class Warfare, President Obama | Tagged: , , , , , , | Leave a Comment »

Verizon Strike Shows Inflexibility of Labor

Posted by Steve Markowitz on August 7, 2011

Last night 45,000 Verizon workers went on strike including those represented by the International Brotherhood of Electrical Workers and the Communication Workers of America (CWA).  The major issues behind the dispute are concessions requested by the company of employees for their health care and pension costs, as well as work rule changes.  Currently Verizon unionized employees contribute nothing to the cost of their health care, a benefit few America workers have.

A CWA spokesman said of the strike: “Even at the 11th hour, as contracts were set to expire, Verizon continued to seek to strip away 50 years of collective bargaining gains for middle class workers and their families.”  While such emotionally charged rhetoric has been used by unions for decades, it does not relate to economic reality.

Most of large industrial companies that were held hostage to union demands in the past have long since closed their doors, with the few that remain requiring governmental bailouts.  These companies went out of business because they became uncompetitive, in part due to union inflexibility.  For example, when Japanese steel and automobiles began showing up in United States during the 1960s and 70s, American manufacturers needed to become more efficient and competitive.  None responded to the challenge.  While management must take part of the responsibility, the UAW unwillingness to adjust to the new business climate also played a major role.  Similar to the current situation with Washington politicians and America’s need for budget cuts, union bosses do not get reelected by their members for making concessions, even if required for a company’s survival and their members’ job security.

The current Verizon strike is a microcosm of a systemic problem facing the American economy.  While labor costs are completely flexible on the upside, there are artificial impediments in place that inhibit the required flexibility on the downside.  For example, during the bubble years, wage rates were increasing faster than inflation as employers had to appropriately compete for labor that was in great demand.  Since the economic meltdown, the government continually increases time period that unemployment benefits are paid, now for ninety-nine weeks.  This generous benefit incentivizes the unemployed to stay home and collect, especially if only lower paying jobs are available to them.

This inflexibility of labor costs is one reason that the unemployment rate remains stubbornly high and the economic recovery is delayed.  There are many economic imbalances that caused the ongoing lengthy recession, including inflated labor rates.  While governmental attempts to forestall the required economic rebalancing, including some that are painful, may be based on good intentions, they are not based on any economic reality.

The capitalistic system now in place in the United States has been bastardized to the point where it is capitalism in name only.  Capitalism requires that supply and demand be allowed to set the cost of products, price of labor, and profits and losses.  Interfering with this important self-regulating mechanism, such as labor rates and bailing out failed companies, has resulted in quickening cycles of boom and bust.  It is also responsible for the historic recession that is now into its fourth year.

It is understandable that workers do not want give back any benefits they had in the past.  However, with America’s official unemployment rate at over 9%; the Verizon unions’ position is out of whack with economic reality.  America is approaching a crossroads in which it will be forced to return to its capitalistic roots or continue down a road of decline.  You can bet that the developing world is rooting for the latter as they more fully embrace capitalism.

Posted in Capitalism, Unions | Tagged: , , , , , | 6 Comments »

NLRB’s Boeing Decision Assaults Capitalism

Posted by Steve Markowitz on May 14, 2011

In the never ending quest for power, federal government agencies continue to limit personal freedom and damage capitalism.  Even with this long-running reality, last week the National Labor Relations Board (NLRB) issued a ruling that is over the top for our Progressive government.

The NLRB has attempted to block Boeing’s ability to open a second manufacturing plant in South Carolina for its 787 Dreamliner airplane.  Boeing’s other Dreamliner factory is located in Washington state, its main manufacturing facility.  In making the decision to build the South Carolina plant Boeing stated it could not “afford a work stoppage every three years“, as has happened in its unionized Washington plant.

Washington is a compulsory union membership state.  Should a union be voted in, all workers within the facility must join it giving unions great power through work stoppages, i. e. strikes, which are expensive and disruptive to any company’s operations.  South Carolina is a right to-work state in which employees cannot be forced to join a union, thus limiting its power.

In making the ruling the NLRB claimed that Boeing’s decision to open up the South Carolina plant was in “retaliation” against union workers in Washington.  While such retaliation is illegal, Boeing’s decision was instead strictly economic.  The NLRB’s attempt to interfere with Boeing’s economically-based decision is dangerous not only because it favors some states and their workers over others, but also risks having more American manufacturing moving overseas.

Arthur Laffer and Stephen Moore published an op-ed earlier this week in the Wall Street Journal that was critical of the NLRB decision and included some telling statistics relating to the 22 right to-work sates versus the 28 compulsory union states.

  • Between 2000 and 2009, right-to-work states grew faster than union-shop states: 54.6% versus 41.1% in gross state product, 53.3% versus 40.6% in personal income, 11.9% versus 6.1% in population, and 4.1% versus -0.6% in payrolls.
  • Between 2000 and 2008, nearly 5  million Americans moved from union-shop states to right-to-work states.
  • Right to-work states have a 23% higher per capita income growth rate union shop states from 1977-2007.

The statistics presented by Laffer and Moore, while telling, but are not surprising.  In most industrial states heavily unionized industries have been on a downward spiral for decades with many moving production outside the United States.  Unionized companies are less productive.  Where there is competition from nonunionized companies, whether domestic or from overseas, unionized companies produce goods and services that are more costly.  Consumers, whether union members or not, buy the best products at the lowest prices.  In the long-term unionized companies cannot compete, making survival unlikely.

The NLRB’s Boeing decision is nothing more than the Obama Administration once again paying back unions for their political support.  While good politics for the President, it is bad economics for the country.  This decision rewards less productive workers in Washington over more productive workers in South Carolina.  Forgetting how unfair this is to the South Carolina workers, is makes the Country less productive.  Should the NLRB’s ruling hold, the next time a company decides to open a second plant it will go outside the United States and the NLRB’s jurisdiction.

Capitalism in the United States is under attack.  We have been traveling down a dangerous and slippery slope for years that includes bailing out unsuccessful companies and rewarding unproductive workers.  The US’s federal deficit and debt makes a continuation of such illogical policies unsustainable.

Only by limiting the power of the federal government can we stop the corruptive and unsound policies of agencies like the NLRB.  This reality is gaining traction with voters as Libertarian candidates like Ron Paul are no longer considered on the fringes.

Posted in Unions | Tagged: , , , , , , , , , , , , | 5 Comments »

Fannie Mae’s and the Financial Crisis

Posted by Steve Markowitz on May 20, 2010

As the ongoing recession marches from one crisis to another, our politicians in Washington look for scapegoats.  While their crosshairs have been focused on Wall Street Banks, who are not blameless, they should start by looking in the mirror.

Many, including this Blog, have pointed the finger at our government for its responsibility in sowing the seeds for the financial crisis that led to this recession.  Governmental intervention in the markets was a primary cause of the subprime mortgage mess that led to the financial ongoing meltdown.

Heide Malhotra published an aritcle this week in The Epoch Times that discusses the government’s role stating:

  • MyCommunityMortgage (MCM) loans, a product offered by Fannie Mae, was created to allow low income families who could not afford homes a way to purchase them.  This program was Washington’s attempt to get more Americans into home ownership, i.e. social engineering.
  • MCM helped low-income public service workers purchase homes with no down payment mortgages.
  • Fannie’s MCM program came as the result of a study by the Federal Reserve Bank of Boston that indicated minorities were being discriminated against by lenders.  However, in a 1998 report economists Stan J. Liebowitz and Theodore E. Day found the study flawed.

Malhotra quotes economist Eric Falkenstein: “Fannie Mae’s MyCommunityMortgage™ was at the forefront of the credit crisis, and had many sub-programs, all targeted at low income communities and borrowers.”  This program was “doing what the private sector would not, serve the historically underserved.”  In other words Fannie Mae made imprudent loans.  They and the Progressives that promoted the program should have seen the train wreck coming.

Besides the international financial turmoil caused by MCM, Fannie Mae is insolvent with a negative net worth of $8.5 billion.  They now request an additional government bailout of $8.4 billion.  Out politicians are too tied up with culpability to pull the plug on the bailouts.

In recent weeks Congress has put Wall Street bankers on the hot seat with questions of dubious relevancy.  Along with President Obama, they blame capitalism and greed as the root causes for the financial meltdown.  Their protestations, why partially correct, are also designed to deflect from their responsibility in creating the biggest financial mess since the great depression.  Had they and their Progressive associates not changed the charter of Fannie Mae to intervene in the social policy of home ownership, the meltdown would have never occurred and the bankers could not have acted on their greed.

The Knuckleheads in Washington continue to try additional interventions in the markets (i.e. bailouts) to cure problems that their initial interventions caused.  Given that we are nearly two years into the crisis and the problems persist, it is evident that these Progressives haven’t learned from their mistakes.

As Einstein so ably said: “Insanity is defined as repeating the same behavior and expecting a different result“.

Posted in Fannie Mae, Free Markets, Governmental Intervention | Tagged: , , , , , , , , , , , , , , , | Leave a Comment »

Bailouts for Mortgagees: Here We Go Again

Posted by Steve Markowitz on March 25, 2010

When the President signed the healthcare reform bill this week he instituted historic changes to America’s healthcare system, about one sixth of the Country’s economy.  Anyone who thought that Obama and his Progressive friends in Congress were finished were dead-wrong.  Even before the ink was dry on the bill they are on to the next major realignment of capitalism.

The New York Times just reported that the Obama Administration will introduce a major initiative offering substantial assistance to those behind on their mortgages or even if they are merely underwater, owing more on the mortgages than the current value of the homes.  According to the Times, the program will include:

1. The government encouraging lenders to write down the loans.

2. The government repackaging millions of loans for borrowers whose home values have gone below the amounts owed on the mortgages.

3. Holders of the affected mortgages will be asked to take losses, but less than if foreclosures were forced to occur on the homes.  The newly repackaged loans will then be insured by the Federal Housing Administration; i.e. taxpayer guaranteed.

4. Lenders will be cajoled into reducing payments for unemployed workers for some period of time.

The Obama Administration’s wading into the mortage market with what is another bailout is a further march down a path that is destroying capitalism.  First, we bailed out the banks that created this mess in the first place.  Then we rewarded auto companies who produced cars that consumers did not want with a bailout.  And now we will bail out people who barrowed too much for houses they could not afford; yes others who helped create the housing bubble.

The bailouts are all justified by Progressives as saving us from far worse disasters.  This argument has proven fallacious by the fact that each bailout is succeeded by yet another one.  We are traveling down a slippery slope of never ending bailouts.  But, they will be forced to end at some time, unless you believe in perpetual motion.

When the government gives a bailout it can be funded in two ways.  Taxes can be used in which case the government charges the people who do not receive bailouts.  In other words the government taxes those who used prudent behavior to pay for those that were imprudent.  The alternative is to barrow funds and charge the next generation for this generation’s foolish behavior.  Neither choice can be morally or economically justified.

Capitalism, while imperfect, is the most efficient system for regulating a complex and dynamic economy.  It accomplishes efficiency by rewarding individuals who produce things of value; i.e. goods and services, better than others.  However, it is equally important that capitalism punish those that make poor decisions that are not productive, often referred to as the moral hazard.  Bailouts remove or lessen the punishment for bad decisions, leading not only to inefficiencies in the economy, but more significantly to more imprudent behavior by capitalist as the fear of the consequences of failure fades.  Without punishment, capitalism will not work, period.

President Obama is fully aware of the negative consequences of bailouts.  His continuance down the bailout trail can only be because of: 1) a lack of political courage to correct our economic problems that will require pain, or 2) because this trail leads to socialism, the Holy Grail for the Progressive movement.

Let us recall the words of Peggy Joseph shortly after Barrack Obama was elected (video below).  This was the young lady that with tears in her eyes said “I won’t have to worry about paying my mortgage” referring to the result of Obama’s election.  It seems Ms. Joseph understood the President-elect better than many who voted for him.

Posted in Bailouts, Business, Capitalism, Mortgages, Progressives | Tagged: , , , , , , , , , , , , | Leave a Comment »