No one won today in Congress. Today’s historic vote defeating the bailout bill is just an opening battle in an ongoing war that may last for decades.
Today’s defeat of the bailout may be a pyrrhic victory. The bipartisan, reactionary forces led by Secretary Paulson, Fed Chairman Bernanke, President Bush, House Speaker Pelosi, and Congressman Frank will be back again very shortly. And let’s make no mistake; although those who support the bailout may call themselves Republicans or Democrats, they are reactionaries—reactionaries in the sense that they long for a world where entrenched wealth gets to keep it forever. After they destroy America, those who now are poor or middle class need but stand by and hope for a few handouts.
They want a world of old Europe that our Founding Fathers fled and overthrew. Thanks to our Founding Fathers, there is no nobility in America, or permanent titles of privilege, or permanent grants of wealth. In America, many families have made great fortunes; and then their children and grandchildren have squandered their fortune. Contrary to popular belief, if you look back 100 years, there are great turnovers among those who constitute the wealthiest in America.
Those who are currently on Wall Street and the reactionary politicians who enable them want to take no chances on what the market will reveal next. They desperately want to steal America’s money; they are willing to destroy America; and in the process, they will throw every man, woman, and child overboard in their cowardly attempts to get on the first lifeboats.
Consider for a minute Congressman Barney Frank, who postures as a friend of the little man, and is tirelessly working for this bailout. Guess who is the largest recipient in Congress of campaign money from mortgage bankers? Guess who received over $600,000 of campaign money this year from political action committees—including those representing Wall Street interests. That’s correct—it is Barney Frank.
We are told a free market is to blame for our current mess. Nonsense! It is reactionary politicians like Barney Frank and President Bush. In a free market, many more financial institutions would be bankrupt already; great fortunes among their major shareholders would have been lost and their CEOs disgraced. In a free market, there are no politicians to steal other people’s money so that those who have wealth can keep it. The free market punishes fools and the greedy without remorse.
Yes, this is a bailout and not an investment in America, as some are nonsensically claiming. If this was a good investment, Henry Paulson would be liquidating his own vast wealth in order to get in on the ground floor. Until he does this, don’t let anybody tell you that this is an investment in America.
As I sat at my computer this afternoon and saw the terrible plunge on Wall Street unfolding, I couldn’t help myself. I got up, turned on the TV, and tuned to CNBC. Commentator after commentator was asking breathlessly some form of these questions: “Why is the public against the bailout? Don’t they know that this is for their own good and how much they will suffer if Congress doesn’t pass this?” As I listened, I heard in their voices the belief that the bill will be passed eventually; I heard how they were looking forward to the suffering of the “peasants” who dared to oppose them. Talk about wolves in sheep’s clothing.
They may be right, some form of the bill may pass; but they have overplayed their hand. A populist uprising has begun. A populist uprising is never principle driven; but instead, it is fueled by anger, fear, and class hatred. Down the road, especially as economic conditions worsen, this will not be a good thing. Think of the French Revolution and you will know how badly a revolution driven by populist sentiment can end.
So where do we stand right now. If by some miracle, no bailout is passed, Chairman Bernanke and Secretary Paulson are fired, and in November, the public repudiates every politician who voted for the bailout, then a deflationary depression will begin. That’s the best case scenario. Those financial institutions that have failed will be revealed and liquidated. Many fortunes both large and small will be lost, and the social carnage will be enormous. Yet, out of that, in no more than a year’s time, the rebuilding will begin; and a healthy and sustainable economy will emerge.
If, on the other hand, the reactionary forces prevail, more money will be thrown after bad; foreigners will withdraw from our capital markets; and eventually, a hyperinflation will begin. In that terrible scenario, it is likely that the United States will split apart; and many cities will descend into anarchy. You can see why I prefer the deflationary depression.
The choice behind the two doors—deflationary depression or hyperinflation—is a terrible and tragic one. Don’t trust reactionary forces to make the choice that is best for you.