I am struck over and over again by the self-proclaimed “responsible” journalists and politicians who tell us why it would be irresponsible to not pass a bailout. Their coin of the realm is fear; directed at a public that runs to a doctor at the first sign of a sniffle, fear worked tonight as the United States Senate voted for the bailout.
Here is a typical fear monger, James Stewart, writing in today’s Wall Street Journal:
If this crisis continues unchecked, millions of innocent people are going to be hurt, in weeks if not days. The ensuing financial chaos will inflict untold additional suffering. There was another time in history when Congress did nothing in the face of crisis, allowing banks to fail and the free market to exact the “brutal process of resizing” that some are now calling for. Herbert Hoover was president.
Stewart writes nonsense on many levels. On the first level, the current financial crisis will indeed “inflict untold additional suffering;” but with the financial bailout , the suffering will reach levels that we can’t even imagine; and the suffering will last far longer than we can imagine. This is because, contrary to what Stewart believes, Hoover was an interventionist president. Much like the politicians of today, Hoover tried to keep up the prices of falling assets; and in so doing, he turned a financial panic that would have run its course in a year or two into the Great Depression.
Franklin Roosevelt simply expanded on the interventionist policies that Hoover had begun. The great economist and historian Murray Rothbard explains:
Laissez-faire, then, was the policy dictated both by sound theory and by historical precedent. But in 1929, the sound course was rudely brushed aside. Led by President Hoover, the government embarked on what (Benjamin) Anderson has accurately called the “Hoover New Deal.” For if we define “New Deal” as an antidepression program marked by extensive governmental economic planning and intervention — including bolstering of wage rates and prices, expansion of credit, propping up of weak firms, and increased government spending (e.g., subsidies to unemployment and public works) — Herbert Clark Hoover must be considered the founder of the New Deal in America. Hoover, from the very start of the depression, set his course unerringly toward the violation of all the laissez-faire canons. As a consequence, he left office with the economy at the depths of an unprecedented depression, with no recovery in sight after three and a half years, and with unemployment at the terrible and unprecedented rate of 25 percent of the labor force.
So, in the face of the historic Senate vote, let’s be reminded what is really happening. This is no rescue which will save the common man; instead, as Robert Prechter writes, “the government is taking diseased livers out of its alcoholic buddies and shoving them into the public’s guts and vice versa.”
Or, perhaps you are squeamish and would prefer a non-medical metaphor. Lila Rajiva calls this bailout “economic treason.” Rajiva writes:
…this bill is nothing more than a loud crude Ave Caesar to the bankers…This bill was never about helping anyone but the same crowd who got us into this mess. It’s legislative chicanery that does little more than clear the board and shuffle the cards for the next round of government-backed gambling with financiers who hold the trumps (and Buffetts) and make jokers out of all of us.
Ave, Caesar, morituri te salutant means: “Hail, Caesar, those who are about to die salute you.” This greeting was spoken by gladiators to the emperor before each match. How many gladiators meant it and how many simply said it under coercion, we do not know. Many Romans did believe that their emperors were gods.
Today’s politicians will not benefit by this ancient superstition. The economy is about to receive mortal wounds, and many in the public feel nothing but contempt and anger toward our self-proclaimed emperors. Their contempt will reverberate for many years to come.