The bailouts, stimulus bills, bloated budgets and exponential expansion of Government that we see evolving everyday recently raises questions about the viability of Wall Street and the stock market. The market continues its plunge with no let up in sight. It has sunk below its recent lows and may be headed toward 5000 on the DJ index. The government is taking over the auto industry, at least that part that is owned by Americans, and has effectively nationalized a few of the larger banks already and likely will be taking over even more in the near future. AIG is an insurance company that is now owned by the Government. The Feds own 80% already and today’s news is that the ownership position will increase in a matter of days. As the Government increases its ownership of the assets of the industrial and financial base of our economy the power, influence and independence of Wall Street and the Stock Market come more and more into question.
It has to be remembered that the Government now owns Fannie and Freddie effectively and that between them they control over 50% of the mortgages outstanding in the country. The Government already holds a grip on the transportation industry through regulation and the upcoming cap and trade of carbon emissions will greatly enhance the power of Government to control the commercial activities of virtually every commercial or even industrial enterprise in the country. The just announced budget makes clear the direction the Government is taking with regard to dominance and control of our economy. Even in the areas where the Government doesn’t take a direct ownership position like it has already in some of the banks, auto, insurance and mortgage business it can control the business practices and procedures of virutally every business in the nation through tax provisions and regulation. The oil and gas industry is already very heavily regulated and has been for decades. More regulation is coming there in this vital industry in the name of fighting global warming and pursuing so- called green energy.
Do you have any doubt in your mind that the next major airline that gets in serious financial trouble will come under the control of the Government just like the Big Three have already? It will happen if our current course is followed, sure as night follows day. Mining will not be far behind. No matter how hard the push to switch to the alternative energy sources may be it will be decades at least before we get there. The fact is coal still provides about half of all our electricity power. The cap and trade policy will make the costs of power soar in the near future. The new restrictions on carbon emissions and thus the new engineering methodes required will be very expensive and someone will have to pay. As the cost accelerates for the c0nsumer there will be a hue and cry for something to be done and our good friends in Washington will gladly step into the fray. The position will be that the Government doesn’t need to make a profit on electric production and electricity is necessary to the general welfare of the citizenry and therefore the Government will take over. The owners won’t be able to make a profit because the regulators will not let them raise rates enough to cover the new engineering and construction costs required under cap and trade. Nanny Government will come to the rescue again of the middle class and the needy. That will be the spin. Everyone will pay more for electric power through other tax provisions and methods, especially the “rich” and the consumers rate will be kept lower on the backs of everyone, not just those who use coal power for electricity. We will get the usual Government efficiency we all have come to love like with the IRS or Social Security. Who cares if the industry is subsidized by all of us, we all own it and we will be making the world a cleaner and cooler place. Of course the entire medical field and medical insurance will be either owned outright by the Government or regulated so highly that you couldn’t tell the difference between ownership or not. Those important industries will be “run” by the Goverment. The budget makes that clear. The Government will pay for your medical care, assign you the doctor and hospital and regrettably guide and direct future research and development of new drugs and medical procedures. That is a huge portion of our economy and certainly an intrusion into some of our most private and personal decisions.
We are heading in a socialist direction. There is no real argument about that. The left is still avoiding that term and even the term “liberal” and using the term of art for the moment which is “progressive”. But when the Government either directly owns or controls major aspects of our commercial and industrial base, it is socialism. You can argue about degree or methods but the direction and end result can’t be denied. As the Government takes over more and more of that base it cares less and less about the Stock Market. We are beginning to see the first hints of that attitude now. The current administration is obilivious to what it happening on Wall Street. It is an indifference. I rather suspect they enjoy seeing the market crater and additional industries fold and become part of the walking wounded. That is just so many more easy fruits on the tree ripe for the picking. The reach of Governmet now is huge. It is not retreating and the budget just submitted calls for even more expansion and an increase in the pace of that expansion. The “real” economy, that is non government workers, is about 85% now but that number will dramatically decline over the next decade if the proposals on the table and the budget become law. The Governmet will own most of our wealth and control what it doesn’t own outright through taxes and regulation. That may be the world you want but it is not my vision of America. Some will be delighted. Especially th0se eltites who get to control the destiny of millions with the stroke of a bureacratic pen. Agreee or disagree but give the matter thought. Size does matter in some things. It matters a great deal when evalutating the relationship between Government and the liberties and freedom of its people. We ultimately get the Government we deserve. I hope we deserve better.
If you give me six sentences written by the most innocent of men, I will find something in them with which to hang them. Cardinal Richelieu, advisor to Louis the XIV. That is the kind of attitude the KGB took under Stalin.