Elites at Sea: More Water, More Bailing
I’ve spent a lot of time over the last 30 years hanging with elites, both in politics and in so-called C-Suites in Corporate America.
Two toys that are greatly prized by such types (and that, like the size of their bank accounts and summer homes, serve to separate them from me) are planes and boats.
The latter category, it strikes me, provides spectacular opportunity for metaphorical riffs in the current economic crisis. Because the elites in Washington and on Wall Street are not only spending an inordinate amount of time bailing these days — they also seem increasingly at sea.
Mind-numbing numbers. Anywhere from $200 billion to more than $1 trillion for Fannie and Freddie. $700 billion for the banks and whomever else. $25 billion and maybe more for the auto industry.
And now, $300 billion in what Michelle Malkin has helpfully termed “Citibail” and maybe $500 billion, maybe $700 billion … the number changes every day … in a new “stimulus” package.
Wild swings on the Street. The Dow up on the bailout. The Dow down on fear that it’s not enough. The Dow back up before the election. The Dow cratering after the election. The Dow back up on the announcement of a Treasury Secretary pick.
Erratic policymaking. Washington rejects the bailout. Washington approves the bailout. Washington is going to help the automakers. Washington isn’t going to help the automakers. Obama is going to create 2.5 million new jobs. Obama may or may not go through with his promised tax hikes.
Washington is going to buy troubled assets. Washington isn’t going to buy troubled assets. Washington is going to keep back half the $700 billion. Washington is using much of the rest of the $700 billion to back Citi’s troubled assets.
Does anybody in Washington have a plan? Does anybody on Wall Street have a grip? Does anybody in America think that any of this is going to do any good?
In contrast to the confused, hair-on-fire goings-on in our political and financial capitals, out in the heartland, consumers, everyday businesspeople and markets — while understandably concerned – are acting in rational and predictable fashion.
After years of wild excess, real Americans are cutting back, hanging onto their cash for the rainy days ahead, driving less. Businesses are trimming overhead, reviewing investment and expansion plans, cutting prices, being more circumspect with loans and mortgages.
As a result, energy and retail prices are coming down. I paid $1.69 a gallon for gas the other day, and the average price for a gallon of regular is now under $2.00 — providing hundreds of billions of dollars in real stimulus in and of itself.
Housing prices and the stock market are correcting. Interest rates are going up, providing a place for investors to find returns as stock prices fall.
Yet we have some analysts speculating that “all financials will be owned by the U.S. government in a year.”
Given their respective behavior patterns, whom do you want in charge of your economic destiny at this moment?
Me too.
I have a much, much better idea than handing $1 trillion to Citibank to cover their years of mistakes — CEO Vikram Pandit has been getting bad marks from confused markets for months now — and to government bureaucrats to sprinkle out indiscriminately like so much fiscal pixie dust.
Give it to the people who are behaving rationally.
Cut taxes drastically. Not with rebates or credits, as is Washington’s usual pattern when ivory-tower types are trying to direct behavior from on high. Slash rates. Individual rates. Corporate rates.
Get rid of some taxes altogether. Take the estate tax. Yeah, yeah. You hear all the time about it would only help a small group of elites. That’s because everyone else has their assets tied up in unproductive tax dodges to avoid the tax. Get rid of the estate tax for all time, and all those assets … not to mention the money and time spent on tax planners and preparers … will flow into productive uses, just when it is most needed.
Capital gains taxes. First of all, what capital gains? But you want to re-inflate Wall Street? Dump ‘em. Altogether. Today. You’ll see some capital flowing at warp speed to the best possible uses, uses directed by the market instead of tax policy.
Do we believe in the elites whose flailing has churned global markets into a state of blind, raging hysteria? Or the people and business owners who instinctively respond with calm, reasoned action?
Give us the cash. We in the “heartland” will use it in ways that are solidly grounded in classic common sense — not continual bailing for new answers as Wall Street takes on more and more water.
UPDATE: Ed Morrissey in HotAir blogs about the lesson America has learned about consumption and points out that it’s a lesson Washington could stand to learn as well.
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