Friday, March 20, 2009

The Spring of the New Economy

The dawning of a new economy is upon not only America but the entire world. It is a time that cries out for new leadership, new laws, new regulations and new directions for all Nations. As the world economy collapses one Country after another it is obvious that the old ways of doing business do not meet the needs of a global economy. Most of the world other than Japan can trace their own economic hardships to the crisis of the American Economy caused by arbitrage, leverage, complicated financial derivative instruments and contracts based on the perception of assets.

Throughout the last three decades beginning with the Reagan Administration the Republican Party and those that refer to themselves as Conservatives have been steadfastly undoing the regulations and safety nets put in place by the New Deal of the FDR Administration. They were so successful at eliminating regulations on the financial industry that the industry began creating products that had no assets behind them, such as Credit Default Swaps and Leveraged Index Funds to name just a few of the hybrid beasts that were created to circumvent Government Regulation. Instead of modernizing the regulations that would have put these instruments under the microscope of Government Regulations, the Republican controlled Congress and the Bush Administration preferred to loosen regulations even more. These instruments were then sold all around the world with every sale increasing the leverage than they represented. When the house of cards began to fall, ( The Bush Administration blamed on the increasing Mortgage Defaults), not only did the US Banking Systems, Investment Banking Corporations and the Insurance Industry begin to collapse it also took the investors from around the world down with them.

Don't misunderstand, the Democratic Party is also at fault, after all it was the Democratic Party as a Minority Party during the Bush Administration that refused to stand up and stand in the way or question the new policies of lax Government Regulations. Now that the results of this failed policy of deregulation and lack of Government oversight has caused the collapse of the American Economy as we have know it since the Great Depression it is again time to set some rules in stone. Especially focusing on the Banking, Financial and Insurance Industry. The Republican ideal of a so called "free market" which allowed banks to be insurance companies and insurance companies to become banks and investment firms to be financial supermarkets allowed the formation of the Corporations who now claim they are too big to fail even though they have already failed.

These Corporations who paid lobbyists to pressure law makers into eliminating any regulation that would stand in the way of excessive unregulated profit are now the same Corporations that are running to the Government for financial salvation. The damage already being done, the Government finds itself in the position of being the investor of last resort. Beginning under the Bush Administration and continuing under the Obama Administration these Corporations receive re-financing from the Government without any conditions resulting in the fiasco of the AIG bonuses.

The reality of the situation is that none of these firms are "too big to fail", just as individuals and small business is being forced into Bankruptcy in record numbers these Corporations should have been guided through Bankruptcy by the FDIC for Banks and similar Government entities for the rest. The "good" assets would be salvaged and sold to financially sound private sector funds and the property and other assets of these Corporations would be sold off to meet as much of their debt burden as possible just as individuals are forced to do in Bankruptcy. The idea that Corporations should be afforded more protection than individual human beings is repulsive and perverse.

Change will come only with new ideas, and leadership that is ready, willing and able to express and implement the change that is needed to reorganize the financial system into one that serves and protects the individual not the corporation. The idea of the Central Government should be one that serves the People and defends against the greed that is perpetrated by those that seek to profit unfairly. The function of Government is to maintain, rebuild and modernize the infrastructure of the Nation. When Governments continually must spend large portions of their GDP on Military Defenses and weapons of destruction it hinders their ability to invest in the future of their people. As more and more Government is controlled by the Corporate structure less and less of the Government is dedicated to the needs of the Citizenry. The Obama Campaign seemed to articulate the need for Government to once again take the path towards working on behalf of the people, but as of yet there seems to be no concrete plans to pursue that goal.

Spring begins the rebirth of the earth after the death of winter, the People were hoping that the Obama Administration would be the Spring for America after eight years of the Winter of the Bush Administration. If the Obama Administration has any chance of succeeding they must begin to plant their seeds of change now otherwise nothing will bloom.
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