I hate all kinds of central planning. I love free markets. The actions of the United States government in this past week and in the past months since our financial system have started its collapse has been the definition of socialism. Our politicians keep telling us that this is a necessary evil. It has to be done in order to protect our savings, our money, our economy. The reality is that they are destroying our savings, our money and our economy.

The Federal Reserve played chicken and decided to allow Lehman Brothers to fail to test the waters. The market responded by collapsing through the floor. This is what should happen and needs to happen. The Fed then decided they could not let AIG fail and bailed them out with $85 billion freshly printed dollars and an almost 80% stake in the company. So now the government owns Fannie Mae, Freddie Mac, and AIG. What if WalMart fails? Are we going to go to the government to buy groceries? This is ridiculous.

Our financial system was maybe a couple of days away from a complete meltdown. This would have been one of the biggest market crashes in history but, the government stepped in and estimated that they would spend half a trillion dollars or more to stabilize the markets. They are going to set up an entity similar to the RTC of the Savings and Loan crisis that would buy all the bad debt from all the banks. Who is going to own this bad debt? You and me. I don’t know about you but, I don’t like making bad investments. Especially not ones that I have no say in.

So now we are falling into the hellhole of socialism. There is nothing remotely good about socialism. The theory sounds nice but, the execution has always been the same. I don’t care if you want to redefine what socialism is to keep it a theory–it is never going to work. Central planning–regardless of the form–is never going to work.

Government has no money. They don’t produce goods and therefore cannot produce wealth. They can only steal from us. That is what they are doing right now. They are stealing our money to make sure that their friends on Wall Street don’t lose their shirt. Instead, we will lose ours. I don’t think you really support this. What is your benefit that Fannie and Freddie were “saved”? That AIG was “saved”?

If you have a mortgage that you couldn’t afford, you now still have a mortgage you cannot afford and on top of that, the dollar’s value is about to fall through the floor. Maybe you worked for Fannie, Freddie, or AIG and might have been out of a job if they collapsed. You’ll find a new one–yes, you will. Instead, we are going to put this giant band aid on the problem to push the day of reckoning later. It doesn’t help you. It is just going to make sure that you hurt harder later.

If the government wants to help America and the American people, they can pay off our mortgages. They can eliminate the interest on our credit cards. Pay our student loans. Get the people out of debt. How about, we bail out the American people? Why are hard working American people bailing out these giant corporations so that their executives can get their millions of dollars in salaries? I don’t want to pay their salaries. They made bad choices, they should live with it.

Millions of Americans made bad choices to buy a house they couldn’t afford. Bail them out. If we are going to have bailouts, we should bailout the American people. Not the multinational corporations.

The economic blow back of these policies are predictable. The ban on short selling of almost 800 financial institutions is market manipulation. The markets are going to go up in what will appear to be a bull market. There is no bull. We have not hit a bottom of any sort. The Dow Jones was more likely to have tanked below 10,000 than to have hit any bottom. With the government announcements of the biggest bailout that we have ever seen, the market responded by skyrocketing. The volatility of this past week could have either made you a lot of money or lost you a lot of money.

No one knows when this fake bull is going to take off the mask and reveal it is really the nastiest bear we have ever seen and send the market sinking like a rock. Playing the stock market now is exceptionally dangerous but, it can also make you an enormous return. Because of this “temporary” ban on short selling, the market will fall through the floor when it decides to correct. The officials say that they want to restore equilibrium but anyone who understands economics has to laugh at that. Eliminating short selling is doing the exact opposite of creating equilibrium–it is ensuring we stray as far away from equilibrium as possible. So when it hits the market that the stocks are not worth this much–and they aren’t–it will snap back like a rubber band.

Our markets are going to collapse. It is hard to determine when with all this government interference and manipulation but the law of economics cannot be suspended. If we really enter into a full blown form of socialism, we will all be equally poor in no time flat and our markets would have collapsed because of it. The alternative is that we stop bailing out the corporations and we enter into an incredibly painful depression. It won’t be fun but, at least there will be a future option of being better off. Socialism ensures that such an option won’t exist–there will only be one option: equality in the sense that we will all be equally poor.

By Tommy Leung

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Tags: aig, american socialism, bail out, free markets, market crash, panic of 2008, socialism

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