Front Sight, Press

A coup d’état took place in this country during the past two weeks. If you didn’t notice, perhaps you were distracted by the Dolphins whipping the Chargers, or Tina Fey’s grotesque parodies of Sarah Palin, or perhaps you were immersed in blogs trying to prove that Barak Obama is a domestic terrorist. Regardless of the distraction, while our attention was diverted, a revolution took place. No shots were fired, but plenty of blood was shed. The United States ceased to be a capitalist economy and became a managed socialist state. The nation’s financial system has been nationalized. The government now calls the shots on who sinks or swims, who will have credit, where money is to go, and how much the robber barons of Wall Street will be compensated for their tender ministrations. The odds are good that the government owns the mortgage to your house. If you receive a paycheck a month from now, it will likely be possible only because the government insured the business loan that allowed your employer to cut your check.

The coup d’état began with the Fed-managed fire sale of Bear Stearns. Then came the collapse of Lehman Bros., and the liquidation of Merrill Lynch. Fannie Mae and Freddie Mac were taken over by the government. AIG was bailed out with a massive guarantee program. Washington Mutual fell to another Fed-orchestrated fire sale. Wachovia went down in flames, and Citigroup and Wells Fargo are fighting over the corpse. Then came “The Bailout” — $800 BILLION worth of government purchases and guarantees of “illiquid” loan baskets, with boatloads of pork to buy the votes of recalcitrant legislators. Today, the Federal Reserve began buying commercial paper, again to pump “liquidity” into the system. This amounts to a nationalization of the American financial system. There is no significant area of the financial markets that is not currently under the management of the federal government.

The supreme irony here is that capitalism has committed suicide. The greed, the risk taking, the predatory behavior and lack of responsibility among the most powerful financiers in the world has triggered a global financial collapse. And, government itself is an “un-indicted co-conspirator” by pushing the financial markets to write “sub-prime” home loans that everyone knew would eventually come back to bite us in the ass. We the People did our fair share by taking out mortgages we could never afford to pay off and running our credit cards up to the max. We drank the Kool-Aid. Welcome to the Peoples Socialist Republic of America.

I can’t say I know where this will ultimately go. I also can’t say that I’m gutsy enough to deliberately choose to plunge the world into a real depression if such choices were up to me. What I can say is that a profound change has happened in our economy and our politics. The “Reagan Revolution” is dead. American capitalism as we have known it has ceased to exist, and this will have profound implications for generations to come, just as the Great Depression of the 1930’s did. I will also observe that this feels like extortion, like we are being forced under threat of destruction to hand over our economic self-determination to the benevolent government.

The government got what it wanted: more power. The robber barons of Wall Street walked away with billions of dollars in their pockets. You know who will get the bill.