Sunday, October 19, 2008
Posted by Daniel Greenfield 8 Comments
Wall Street habitually creates its own problems by tying its fate and fortunes to bogus investments and whether it's dot com companies with no business plan or bad mortgages, the bubble sooner or later bursts. Greed builds the sand castle but plastered sand can't hold back the tide of economic reality. And like all forms of irresponsible behavior, it creates the justification for overreaching government regulation and intervention, in other words socialism. The last stock market crash created the virtual dictatorship of FDR which ended the Second American Republic (1865-1933. This one may well do the same for the reign of Obama that will bring an end to America altogether.
The real problem is the extent to which our economy and industries are centered around Wall Street. America's industries were once built up by men of initiative who had a vision and turned it into profit. Today America's industries are run by self-promoting CEO's whose job is to somehow create enough hopeful expectations for their company's next quarter to raise the stock and then get out with a golden parachute before the whole thing tumbles down on them.
That has meant outsourcing American industry and just about everything else to Asia in order to cut short term costs, despite the fact that this has wiped out entire industries in the United States. It has also meant outright fraud, pointless gargantuan mergers, companies senselessly rushing after trends they don't understand and pushing corporate socialism, another short term gain for a long term loss.
What Wall Street has done to American industry in a nutshell, is wiped out long term thinking and planning. CEO salaries have become ridiculously inflated because the CEO has become the superstar figure who provides credibility for the company's short term plans. The CEO meanwhile doesn't need to think about the future of the company or his industry 20 years from now. He likely doesn't even have an industry and if he lasts more than a few years before jumping on board as the CEO of a completely different company in a completely different industry, then he's already a marathon man.
Despite the macho posturing of Wall Street brokers and analysts who like to pretend that they're playing a man's game, the stock market is part casino and part three card monte. It isn't honest industry, instead it's destroying honest industry. The old monopolies crushed private enterprise through sheer power, today's companies destroy it through their incompetence and fraud and complete the process by inviting in the government to clean up their failure.
Extended worldwide the global economy is an entangled mess of financial chicanery in which billions can go missing without anyone noticing, because the fortunes being moved around are themselves fictional. The modern way of economics has made money abstract and in doing so it has also made it unreal. People rack up credit card bills because instead of spending money they were passing around a plastic card. Banks dole out bad mortgages because in the end it's only numbers on a balance sheet that can be sold to someone else. Insurance companies invest in securities that are themselves composed of debt, because debt long ago became a commodity. Meanwhile operators in India put on their best American accents and call American households to collect their debts. The problem is circular and it isn't going away.
We have the land and the individual initiative exists too, though diminished by socialism's incursions. But the regulations from the government have squeezed free enterprise on on side while a stock market oriented business model has destroyed the traditional values of American business. The collapse of the entire structure might well be the best bet for a clear cutting that may allow traditional American free enterprise to emerge unrestricted again.