A colleague sent over this insightful piece titled “The Financial Markets and Fear Itself“, on the coming “Lost Decade” in America, which is reminiscent of the Japanese lost decade of the 90′s.
The authors view however is not that we will not lose a decade because of zombie banks, but rather because of the “governments insistence on taking over the direction of capital to new investment purposes.” Basically, the government is going to stifle innovation by directing too much money to where it thinks innovation will come from.
The first 80% of the article does a good job of explaining what did not go wrong in the markets over the past year. It explains who not to blame. The last 20%, however, is where it gets juicy as it explains who to blame for the lost decade to come.
In the 1980s, America flirted with industrial policy and protectionism to meet what was regarded as a Japanese economic threat. But our entrepreneurial bias prevailed in the end: While the Japanese bureaucracy was directing that country’s technology giants to dominate the manufacture of computer memory chips, perceived as the “strategic” resource of the 21st century, Silicon Valley was mostly left to its own chaotic, mercurial devices — and ended up focusing on microprocessors, software, multimedia, and networking. Given birth were the personal computer industry and, in due course, the Internet. Try to imagine Microsoft or Google springing from the plan of a bureaucrat at Japan’s Ministry of International Trade and Industry.
That’s a nonmistake we apparently won’t make again. With its vast ambitions across broad swaths of the economy — from health care to energy to education — look for endless acts of industrial favoritism from Obamanomics. President Obama, with his confident judgment that the future is “green” energy, that government can deliver “affordable” health care, that everyone can and should go to college, has all the hubris of a miti bureaucrat of the mid-1980s and little apparent appreciation that America’s strength is the decentralized economic agenda thrown up by entrepreneurs and inventors and opportunists whose every impulse Washington doesn’t try to corral and control with mandates and incentives.
Read it all…it’s good stuff.
No related posts.
“America’s strength is the decentralized economic agenda thrown up by entrepreneurs and inventors and opportunists whose every impulse Washington doesn’t try to corral and control with mandates and incentives.”
Strange that everyone is bashing the new President before he even gets a chance. Bush and bandits basically bankrupted America. Trillions of dollars spent on a false war to steal resources using honest taxpayers money. Banks lending money to people and corporations that shouldn’t have it. Corporate socialism is alive and well in America and Canada. Taxpayers bailing out dinosaur car companies, banks and multinational corporations who’s only goal is to rape and pillage for money. Taking away personal freedom under the guise of security. Fortress America, brave new world. Bull**t. The next 10 years will be nasty but Bush not Obama is the biggest contributor to this mess.
@taxpayer, I can see you are new to this forum. Please have a read through many of the previous posts in the Finance and Politics categories. You may be shocked to see that your analysis of the money spent is incorrect.
To summarize, basically Bush spent about $800 billion on the Iraq War over an 8 year period, while Obama and the Democrats in Congress have spent or dedicated over $8 TRILLION within the past 12 months. That is a factor of 10 difference in the amount and factor of 8 difference in the time. This is not a wait and see situation…this has already happened.
Also, to blame Bush for corporate socialism is a bit extreme. I believe that started with the repeal of the Glass-Steagal act by Clinton in 1999. It was definitely kept unchecked by Greenspan’s management of rates as well, but I see very few examples of how Bush was directly involved in pushing poor lending. Again, Clinton was the one who pushed Freddie and Fannie to lend more aggresively to the poor. Bush merely maintained that policy. A mistake yes, but not his initiative.
Conor
Hi Conor,
Yes, Clinton put many of the cards in place to mess the economy up but Bush didn’t fix it and on top of that started a war that turned America’s reputation of “The Land of the Free” to “Fortress America”.
“Bush merely maintained that policy.” for 8 years basically sums up the title of this post. “The Lost Decade”
We have already lost a decade under Bush. The question is are we going to lose 2 decades to more bad politics and mismanaged public funds?? Looks like it.
Cheers.
I find it interesting how you combine foreign policy with the economy during the Bush years. Nobody combined the two during them, but now people find it easy to point blame. There were no complaints or fingers pointed at Bush during the housing market boom through 2007. Yet we like to blame him for the war that made our reputation become “Fortress America” and then tie that in with the economy. Again, how exactly did that war bankrupt America? How does the $800 billion look like a big expense compared to the $12 Trillion that the Democrats have spent or guaranteed?
Let’s stick with one argument at a time because they are seperate arguments. One has to do with spending Trillions of dollars that will severely deflate the Dollar and could cause massive inflation. The other has to do with spending a tiny fraction of that amount to fight a war that made us look bad in the eyes of the international media. They are very seperate discussions in my opinion.
I think many people are guilty of being complacent with the mass delusion of free money and no accountability over the last 8 years or so. It’s frustrating to see massive waste after massive waste of taxpayers dollars with only the lawyers, overpaid politicians and government paper pushers making all of the money from inquiries trying to figure out who stole what. While 800 Billion dollars is a fraction of the 12 Trillion you mentioned it all just becomes one huge fraud committed on honest taxpayers that pay for these bandits. I mean where do you start there have been so many screw-ups. On both sides of the floor. Most governments as far as I can see are created to expand and take. They are getting better at it all of the time. It is difficult for me to separate the issues when they all are related to bad government. Isn’t the our new North American Dollar called the Amero?
Cheers.
I am a fairly new visitor to your site. I liked the articles very much and appreciate the insight you give readers into these issues.