Hooray for Socialism!
By Al Lewis, WSJ, DECEMBER 4, 2011
A 500-point spike in the Dow Jones Industrial Average last week, echoed in stock exchanges around the world, is about as loud as the applause gets on Wall Street.
The spike came because the U.S. Federal Reserve found a clever new way to pump more dollars into failing European banks.
It was the sound of capitalism applauding socialism.
The Fed rallied the Bank of Canada, the Bank of England, the Bank of Japan, the European Central Bank and the Swiss National Bank in a scheme to artificially lower the price that European banks pay to borrow U.S. dollars.
Private money-market funds are increasingly fearful of lending to European banks, so our Fed decided it's up to the central banks of the world to collude and intervene. Even China got in on the act, agreeing to ease monetary policy in response to its own rapidly slowing growth.
The message Wall Street wants to hear is that the Fed will do anything to keep its bloated institutions from collapsing under the growing weight of their own government-aided follies.
As of March 2009, the Fed committed $7.77 trillion to rescuing the U.S. financial system, according to a recent report Bloomberg News put together after fighting the Fed for this data for two years.
No wonder the Fed didn't want this number out. It's more than half the value of everything produced in the U.S. in a year.
It's also about half the size of the national debt that allegedly free-market Republicans in Washington are so busy blaming allegedly socialist President Obama about.
If this isn't scary enough, the Fed—run by a guy first appointed by President Bush—has now decided that to rescue America, it must rescue Europe, where reckless debts stand like global dominoes in line to topple the whole board game.
We've already seen one U.S. firm fail because of its investments in Europe—$41 billion MF Global—and we can only guess what's next, if not more bailouts, rescue plans, paper money and creative-finance liquidity injections.
None of these things actually do anything to stimulate economies.
As we have painfully witnessed since 2008, jobs, retirement plans and homes continue to disappear.
Banks continue to horde and mismanage the free money they are loaned, and they continue to raise fees and squeeze customers any way they can.
Economists continue to use the euphemism "mixed" in meaningless reports based on artificially improved data.
And our fearless Fed Chairman Ben Bernanke continues to say, "See, if we didn't do that, we'd be in another Great Depression."
The only question now is whether the Fed can keep this global Ponzi scheme going throughout our lifetimes, and leave it to our children to suffer, or whether the whole thing will blow any day.
The cruel irony is that if it blows, we'll get another Great Depression, anyway, with several times more debt than the one we were due in 2008.
The Fed will have saved us from nothing. It will have only shown the world that it was scared.
So scared, it was willing to abrogate justice and free-market principles, and do what Europe's own leaders—as socialist as they are—have been unwilling to do: Pull out the fire hose and spray more free dollars at the banks.
And then sit back and listen to the capitalists cheer.
Al Lewis is a columnist for Dow Jones Newswires in Denver. He blogs at tellittoal.com; his email address is email@example.com