Ave, Caesar, morituri te salutant

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.

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5 Responses to Ave, Caesar, morituri te salutant

  1. igli1969 says:

    Unfortunately, Americans in general, and politicians in particular, are susceptible to fearmongering. No one, especially congress-critters, wants to be accused of “doing nothing.” One wishes they would follow the doctor’s creed of “First, do no harm.”

    I think it is also ironic that economists in general both in 1929 and in 2008 were advising against interventionism. And if Henry Paulson and his Wall Street brethren are so smart, why are we in this position (which I cannot describe in a family newspaper)?

    I have heard, on talk radio (WBAL), that some members of Congress are claiming that the calls and emails, which had been running at least 90-10 before Monday, are now about 50-50. What was that line about “How can you tell if a politician is lying?” And I heard a recording of Senator Mikulski, in a barely comprehensible, rambling rant, admit that her constituants are against the bailout, which is why she is strongly in favor of it. Say what?

    It has been said that an honest politician is one who stays bought. I guess we have some of those, after all.

    Again unfortunately, I do not believe that those voting for this bailout will pay any price, as you suggested. The voting public has the attention span of a goldfish, and many of them vote reflexively (party line) 100% of the time.

    Chris C.

  2. Chris,

    I would tend to agree that, if nothing dramatic happens between now and November, the reelection rate will remain high (although lower than usual). What I meant was that the belief system that most of the public shares—namely that government is looking out for the “public interest”—has suffered a big wound. It is the consequences of this wound that will reverberate.

  3. James D. says:

    The big money men got themselves into trouble and are asking their buddies in the gov’t to bail them out. The President and Congress, despite the overwhelming evidence of the power of the market and the arguments of most economists, work to intervene in markets they have no hope of understanding. As a result, they take what would otherwise be an admittedly painful turn of the business cycle and spin it into a truly major financial failing. This, of course, will set in motion another round of “gov’t, please do something to save us”, and drag this mess out for a decade or more.

    1928 or 2008? History repeats itself indeed.

    So despite the writings of great thinkers like Hayek, Rothbard, von Mises, Hazlitt and others; despite the unprecidented power of the internet to spead the word; despite the preponderance of evidence that the free market is far more capable of correcting itself effectively than the most far-sighted gov’t plan, we still face the likelihood that the gov’t will vote on behalf of their cronies and leave the rest of us responsible Americans out to dry footing the bill.
    The 2 greatest perils to our feedoms have been in times of war and in times of economic stress. Strangely enough, the perils to our feedoms come not from without, but from our own gov’t (that Tom Jefferson was a pretty smart fellow). In both periods, gov’t wraps it chains around us at ever-increasing rates as it did in WWI and WWII and during the great depression. What will we be asked (forced) to swallow on this round? They’ve already banned much of the short selling. Will they make that permanent? What link in the chains of bondage will they forge this time?

  4. Velvet says:

    The worst part is bailout be-damned, all these guys are still collecting their huge million dollar bonuses. That makes absolutely no sense. How can anyone justify a bailout until everyone contributor’s belt is tightened to the max?

  5. Jim,

    Our freedoms are shrinking at an alarming rate and yes, given we have both war and hard times this assault will continue. As you say despite the capacity we have to read and promote alternative views, collectively as a society we have not yet had enough. Perhaps the tipping point is coming.

    Velvet,

    The numbers are staggering. Richard Fuld made $17,000 an hour to destroy Lehman Brothers! Here is one link to an article about the pay of some of the CEOs involved and another link.

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