President Barack Hussein Obama tells us:
Your warranty will be safe. In fact, it will be safer than it has ever been. Because starting today, the United States will stand behind your warranty.
This reads like something out of “Atlas Shrugged”.
I predict disturbing inflation or so over the next three or four years – and that is if we eventually turn back from this course, or at least stop walking along it. If, on the other hand, this goes on, with the government taking responsibility for one thing after another, as each intervention creates a crisis bigger than the last crisis, leading to more interventions, then I predict hyperinflation and widespread inability or unwillingness of government to provide order and protect property. Obama is not going to get under your car and fix it, and as the government takes on an ever growing multitude of tasks it is incapable of performing, its performance in its area of core competence (hurting people and breaking things) will deteriorate.
This crisis did not start with Obama, it did not even start with Bush.
During the final years of the Clinton presidency, Clinton greatly strengthened the CRA, which was glowingly reported by the newspapers
More than $1 Trillion Invested through CRA
Lenders and community organizations have negotiated $1.09 trillion in CRA dollars from 1992 to 2000.
A more accurate report of the same facts would be
Politicians shovel one trillion dollars of off budget money to irresponsible and improvident members of narrowly targeted voting blocks, for which taxpayers are going to wind up on on the hook
Government regulation winds up as off budget handouts to voting blocks (in this case mostly Hispanics) and well connected insiders (in this case some elements in Wall Street). Crisis ensues as the bill comes due. To maintain the superficial appearance of normality, there is a drastic increase in intervention, but the synthetic normality is a mere facade, like putting makeup on a corpse.
We now have trillions of dollars of capital flowing away from well managed businesses, to businesses with implicit or explicit government guarantees – businesses that will rapidly lose that money – a huge increase in the already huge off budget expenses of government, in addition to the huge and rapidly growing on budget deficit. Unacknowledged off budget government expenditures far exceed government’s ability to tax. They will not necessarily exceed government’s ability to borrow – yet.
Tags: CRA, financial crisis, inflation, smashing capitalism