Why The Bailout Should Not Happen: Time Magazine

Like you, I have been alarmed by what is happening in Washington and on Wall Street.

I have spent many hours over the past few weeks trying to understand the causes of the financial crisis that the world is facing today.

I’ve purchased 4 books on the subject, researched extensively in the Congression Record from 1994 on, studied what Warren Buffett and Charlie Munger his partner have been saying about derivatives for years, and more. I am trying to understand root causes and possible solutions. And I have come to the firm conclusion that the proposed bailout will cause even more problems than it is trying to solve, and that it would be the biggest step towards socialism this country has ever taken (and we have taken lots and lots of little steps.)

Today, Time Magazine published the best piece I have seen so far in the main stream media about why the bailout should not have happened. I recommend that you take time to read it: http://www.time.com/time/business/article/0,8599,1845209,00.html?cnn=yes

Also, if you happen to be interested in some of the tidbits I’ve uncovered about what is wrong with unregulated OTC derivatives, read my comments on Digg.com about the Time Magazine article: http://digg.com/business_finance/Bail_out_people_NOT_banks

Yesterday I read 20 pages from the biography of former secretary of Agriculture Ezra Taft Benson, who was harshly and repeatedly attacked during the Eisenhower years for NOT bailing out this country’s farmers, even when there was serious pressure to do so. But he stood firm on principle, and opposed popular political solutions like price supports and other government programs, because in the end, they never work. They create more problems than good.

When Secretary Benson was assigned by Eisenhower to accompany Soviet leader Nikita Krushchev on his visit to Washington (a visit which Benson opposed), he took him to a USDA experimental station in Maryland and gave some opening remarks: “Our farmers are free, efficient, creative and hard working…. Under our capitalistic free enterprise system they have developed an agriculture unequaled anywhere in the world.”

On the trip, Krushchev reportedly boasted to the Secretary, “Your grandchildren will live under communism.” “On the contrary,” Secretary Benson replied, “my grandchildren will live in freedom as I hope that all people will.” The Soviet leader responded, “Americans are so gullible. They are in the process of being fed small bits of socialism and one day will awaken to find themselves living under a totalitarian order.”

— Ezra Taft Benson, A Biography, pg. 339

It’s hard to find principled government leaders these days, who are true statesmen. I’m finding a few, but they are rare, and not always in leadership positions.

6 Comments

  1. After listening to Mitt Romney, I thought for sure you would be for the bail out. Great job at doing the research! I love Ezra Taft Benson’s stuff. I too have been reading hours and hours and hours about this mess.

    We were basically preparing to hand Paulson a $700b BLANK check and say, “I have no idea what is really going on, but it is scary. Here is our money and our freedom… You look like a smart fellow. Please save us.”

    To be honest, if I had to choose between the two, I would rather struggle through another depression than hand over my freedoms to a fascist (this seems more fascist than socialist to me) state. Although I don’t think we will need to live through a depression just yet.

    I am convinced that the base of this is our monetary policy: http://www.youtube.com/watch?v=PhB_0yeHm8U

    Here is another article on CNN from Harvard: http://edition.cnn.com/2008/POLITICS/09/29/miron.bailout/index.html

    Although Ron Paul has been predicting this for a LONG time, he made this statement to Congress in July with a special order and insert it into the Congressional Record: http://www.campaignforliberty.com/blog/?p=115

    I have a book to add to your reading list, #1 New York Times Best Seller. If you haven’t read it yet I think you will be surprised to find Paul’s book almost an echo of Ezra Taft Benson: http://www.amazon.com/Revolution-Manifesto-Ron-Paul/dp/0446537519

  2. Many things that what happened on Thursday and Friday of last week probably have Ezra Taft Benson rolling over in his grave. One thing that is yet another step on the road to serfdom was the regulatory powers that were hand over to the Sec. of Treasury. Benson felt very strongly that legislative power had been hand over to the executive branch. Too often the over the past 60 years the congress has handed over regulatory powers (the power to make laws) to government agencies. Think EPA et. al. Who knows what rules Shaky Paulson will come up with and heaven protect us from whomever “The One” puts in to the Sec. of Treasury position if the American public allow him to ascend to his throne.

  3. Gary

    The Loans were the powder keg, but the gas prices were the match. I think this mess would have been delayed if the energy prices would have been stable. When everyones energy costs and all the cost of goods and services were effected by the energy prices hit the economy, that is when everyone started defaulting on their home payments. Yes, to many people were in bad loans, but a lot of people were handling those loans until the increased price of energy was added to their budgets.

    Congress can be blamed for the high energy costs for restricting production and supply and for the policies that encouraged bad loans. If they would have left the markets free they would have adjusted for supply, production and the banks would not have accepted these risky loans.

  4. Jeff Bennion

    Just sent the following email to Senators Bennett and Hatch (not that they’ll care):

    ————————-
    Senator,

    Plank number five of the Communist Manifesto is: Centralization of credit in the hand of the State. I guess my 8-1/2 years in the military, including time risking my life in a combat zone, was actually in the defense of Socialism.

    You have lost my vote forever.

  5. Nate Skousen

    Paul, I enjoyed your comments in this blog post and on Digg. I found another article you might enjoy that really explains the core of the issue which trickles back to subprime lending and mortgage companies initiating risky loans in the first place. Compound that with derivative mortgage-backed securities and tons of money in assets quickly disappear. That is what we’re seeing happen right now. Anyways, here is the article… http://tinyurl.com/4ulu6u

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