Friday, September 19, 2008

Economics takes a Holiday

As we approach the election for the next president of the United States I urge all readers to consider carefully the path forward as we witness, through the financial markets, something quite remarkable. The demise of conservativism. What should now be paramount to all of us is avoiding the demise of something more basic and fundamental. Exercise your right both to speak up and to vote. Never has there been in my lifetime a more crucial moment when civil discourse and dialogue is needed amongst the citizenry. Speak up, but also listen.

Some years ago I came across a quotation from a scottish academic musing on the birth of the United States as a democracy. Alexander Tyler observed in 1787 the stages of democracy and opined that it would last about two hundred years as it progressed from stage to stage.

There are eight stages of democracy he observed:

From bondage to spiritual faith;

From spiritual faith to great courage;

From courage to liberty;

From liberty to abundance;

From abundance to complacency;

From complacency to apathy;

From apathy to dependence;

From dependence back into bondage.

Tyler and others also felt that when the majority voted themselves the power of the purse, democracy was passing its potential for greatness.

The events of this past week and the political reaction to the age of conservativism by the very powers that professed it is certainly interesting. Below are the reactions of conservatives to the results of deregulation. Massive transferrance of wealth not to the society at large, but to those who enjoyed the benefit of deregulation until it turned and collapsed beneath its own weight.

- Bear Stearns
- Economic Stimulus progam
- Housing Bailout Program
- Fannie & Freddie
- No Short selling rules
- Fed liquidity programs (Term Lending facility, Term Auction facility)
- Money Market fund insurance program
- New RTC type program

Another observer of the events of this week sees it like this;

"If you are a fan of irony, consider this: The conservative movement has utterly hated FDR, and his New Deal programs like Medicaid, Social Security, FDIC, Fannie Mae (1938), and the SEC for nearly 80 years. And for the past 8 years, a conservative was in the White House, with a very conservative agenda. For something like 16 of the past 18 years, the conservative dominated GOP has controlled Congress. Those are the facts.

We now see that the grand experiment of deregulation has ended, and ended badly. The deregulation movement is now an historical footnote, just another interest group, and once in power they turned into socialists."

This election should not be about conservatives and liberals. It should be about a nation and its electorate projecting and protecting what we believe to be good and right about this country.

John Barnyak