The American stock market is continuing to melt down. At one point yesterday the Nasdaq was down over 9% and the Dow was down over 8%. Stark numbers indeed. So far today both indexes are down over another 4%. Gold was up both days. This is turning into the mother of all bear markets, and I must confess I am enjoying watching the carnage unfold exactly how my book describes. We bears love nothing more than saying, I told you so.
Unfortunately, most Americans do not seem content to just let the collapse happen without doing something foolish and tragic. CNN reported yesterday that a man with an MBA in Finance killed himself, his wife, his mother-in-law, and their three children. A story which makes me miss the old days of the depression when husbands merely killed themselves so that their family would have the life insurance money. I would guess that the majority of Americans are not crazy enough to do something like that. Instead they suffer from a milder form of insanity that prompts them to look to the government to help them through this crisis. This seems strange to me because most Americans seem to realize, at a gut level anyway, that it was the government that got them into this mess in the first place.
Without the government’s fiat money, further exacerbated by the government created Federal Reserve, and the cozy attitude of deregulation when it came to Wall Street firms (and their lobbyist’s money) this crisis simple could never have gotten this out of hand. But now the people are looking to the very culprit who caused the problem to fix it somehow. This scares me far worse than the collapse of our economy. “Desperate times calls for desperate measures” would seem to be the slogan of government intervention, and Obama, our next President, has been preaching all of the rhetoric of the next FDR.
I sincerely believe that Barrack Obama is a good man. He seems honest, decent, and concerned. But he also seems to be operating out of the wrong tool-box. It seems to me that he looks at the mess we’re in and doesn’t see how the powers that were given to the government to solve the crises of yesteryear have simply made far bigger ones today. Instead he looks out at society and feels that the power has been held by the wrong hands. If only the power were taken from those hands and put into wiser ones, this crisis could be solved. I believe Obama’s administration will see a replay of many of the failed policies of The New Deal. The New New Deal. And that’s really got me worried.
Obama will inherent a country that is overrun by inflation, but instead of return to sound money I expect to see laws passed that aim at price controls. Unemployment will be on the rise, so I expect Obama to embrace more public works programs. The prices of housing and the stock market will be falling, so I expect the government will attempt to enter into some sort of price maintenance program. I expect that each of these policies will be tried, and, just as always happens, each of these policies will fail. The situation will become even more desperate as angry mobs start to demand action. What happens next… I do not know.
One thing I do know, the American Empire will not survive this crisis. As has already been predicted by international voices as diverse as Iranian President Mahmoud Ahmadinejad to the German Minister of Finance. I can only hope that we allow our empire to go into that long good night gracefully and with dignity. Perhaps have a wake where we can sit around and talk about the good times: reminisce about when we saved the world from Fascism; speculate about how things might have been difference if we had taken different actions during the Cold War; laugh out loud at the absurdity of our “War on Terror.” That is a fitting end to an empire. Not going out in a blaze of glory as we muster up our military for one last hurray, but instead having a sense of good humor about the thing. To celebrate the event, and not fight it. I can only hope.