Sentence First, Trial Later

A few weeks ago I went to see the new “Alice in Wonderland” movie; the one with Johnny Depp as the Mad Hatter. While it didn’t have too much in common with the book I loved as a child, there was one congruence namely that it portrayed a topsy-turvy world where up was down, true was false and real was imaginary.

Well I keep looking for the rabbit hole and the Cheshire Cat because fact is looking more and more like fiction.

Perhaps someone can explain to me where it is written down that profit is private and debt is public. Let me explain.

It doesn’t seem to matter whether we are talking about Greece, General Motors, Goldman Sachs or some other G Spot, one central fact remains. When they are making a profit, they get to keep it but when the ink turns red then all of a sudden it’s my fault and my problem and some latter-day Robin Hood wants to rob me in order to pay them.

Now before someone wants to point out that Goldman Sachs was not bailed out directly by taxpayers, but instead received tax dollars as a creditor of AIG, Goldman received $12.9 billion in the “backdoor bailout” of AIG because of the credit default swaps it owned that AIG had insured. Goldman and other of AIG’s counterparties were paid by the government 100 cents on the dollar in this bailout, whereas creditors in bankruptcy court often get less than 50 cents on the dollar.

It was about this time that the phrase “too big to fail” crept into the lexicon of every liberal democratic on Capitol Hill as well as union leaders and “talking head economists" on television.

Now, I freely admit that I’m no John Maynard Keynes nor a Milton Friedman but doesn’t anyone other than me see a fatal flaw in this scenario?

What would be so bad about Greece going belly-up? I’m sure they’d still have ouzo, retsina and feta cheese to sell. Of course, it might mean that the 35% of all Greeks who work for the Athens government might have to forgo their six weeks of paid annual vacation and retirement at age 35 or whatever it is but why should I have to pick up the tab? And that tab is purported to be at least 1 Trillion dollars which, it seems, is Obama’s favorite number.

And yes, I know it’s supposed to be a problem for the countries who switched to the Euro but as they can’t and won’t bail out the Zorbas alone, enter the International Monetary Fund. And guess who is the biggest contributor to the IMF? Why, yours truly of course to the tune of some 20%.

And the bailout of General Motors had nothing to do with that company’s inability to make and sell cars that people actually wanted to buy. But it had everything to do with the United Auto Worker’s sweetheart labor contracts and the fat paychecks the union bosses were addicted to. And they, after all, were a large part of the reason why Obama and his lefties on the Hill became the regime we have today.

Free market capitalism is risky. Competition is risky. If the risk of losing ones shirt is removed from Wall Street, many would argue that this will provide an incentive for Wall Street to engage in more risky behavior and for the “too big to fail” institutions to get even bigger. One need look no further than the so called Troubled Assets Relief Program (TARP) for an example of how bailouts make big banks and Wall Street firms bigger.

Don't just take my word for all this: Neil Barofsky, the Special Inspector General for the TARP program was quoted in CNNMoney.com in saying that,

“After financial institutions threatened the stability of the economy by making irresponsible bets, the government responded by sending them massive infusions of capital. In addition, Treasury gave companies cheap loans to encourage them to buy risky assets like mortgage-backed securities that were a major cause of the credit crisis. The report also notes that “too big to fail” firms only got bigger because of TARP.”

And this is the dirty little secret, the fatal flaw in Obama-era economics.

So if you think this can't happen again, remember who is writing the legislation including one Senator Dodd who got a sweetheart deal from a mortgage company and whose defence was that he didn't understand what he was signing.

Furthermore, can no one see that what happened to General Motors a year or so ago and what is happening in Greece today is precisely the future of these United States while the same idiots in DC including the “Idiot in Chief” continue their policy of print and spend?

Are we too big to fail?

Who will bail us out? The Chinese. Not for much longer.

Pass me the little bottle whose label reads. “Drink Me”.

Or any other bottle for that matter!