Tuesday, February 8, 2011


Capitalism without losers. Just how damaging is a world without losers?  Yesterday’s consumer credit data made it pretty clear that the consumer is starting to re-leverage.  This is extremely positive for economic growth in the near-term, however, it is alarming in the long-term.  Consumers haven’t actually straightened out their balance sheets, but why should they?  No one loses in this market.  There are no repercussions for excessive debt and out of control spending.  So the lesson to consumers is obvious – you don’t need to be prudent.  You don’t need to save.  You need to borrow.  You need to leverage yourself up.  After all, you are American.  You have a right to own an Ipad, a flat screen TV, a luxury automobile, a McMansion and all of the other things that are not privileges, but our rights as Americans.  And we know this is true because it is what the government promotes via their endless “no losers” capitalism policy.

This government’s policies are directly tied around the idea of getting credit going again.  After all, it is the core of the theories that have driven economic policy for decades now.  For the last 30 years we have focused on building a banking behemoth that specializes in bankrupting its clientele. We have de-regulated the banking sector to the point where they have a virtual monopoly on the US economy and without them we think we can no longer survive.  We are so dependent on credit growth that we have all mortgaged our futures away just to keep this economy afloat and the music playing for one more decade.

We reward those who buy homes when they are overvalued.  We encourage speculation in markets when the fundamentals aren’t there to support them.  We pay people for sitting at home and doing nothing.  We bailout companies that made bad bets.  We reward people for buying cars they can’t afford.  And worst of all, we don’t even prosecute the people who helped cause the recent credit crisis.  Oh, capitalism without losers.

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