Greg Goodwin
I am amazed and disappointed how the
financial systems and the world's mentality have been manipulated to think that
bailouts and government intervention into the financial systems is a good
thing. As I watch the markets go up and down with the policies of governments
determining who they are going to bailout or not, whether it be banks,
corporations, or governments, the stock markets go up and down and the
commodity market typically inversely tracks the stock market. There are major
problems with this approach of governments intervention into what used too be a
free enterprise system.
The major problem with these bailouts
is non-productive monies, money created by governments along with their central
banks. In the past and will prove itself in the future, money generated through
buying and selling of goods and services is the only way to bring the world
economy back on its feet, not money created by governments along with central
banks. It is not only inflationary but puts more and more control of the
economic systems with governments and central banks and the banks primary
dealers, who determine where those monies go. Additionally the only ones
reaping the real benefits of this approach are the governments and central
banks and their primary dealers.
Sure the stock markets and commodity
markets are making money as they go up and down but again, it is not productive
money, just buying and selling paper. At least the commodity markets you can
have real assets you are buying and selling (something you can touch or hold in
your hand) but that too have become very heavily buying and selling of paper.
It is somewhat working for now but when this paper house of cards comes falling
down again, and it will, 2008 will be revisited and I believe much worse.
These markets, instead of investing
in the potential of companies and commodities to grow and invertors grow with
them, it has become a gambling casino betting, hedging, and speculating on
short term movements in these markets. This mentality of these markets does
very little for the economy as whole but only benefits those gaining from these
movements. For instance, corporations in the past used to mainly rely on their
selling of their stock to grow the corporations where in the last few decades
they have been relying more and more on banks for that expansion capital. With
the credit markets being so tight, those monies aren’t as available today
as they were and as a result, they too have jumped into the hedging and
speculating game and it has been more of a priority to do this than to reinvest
in the structures of their corporations. The result is corporations are being run
by bean counters and investment people instead of experts in their fields of
their given marketplaces. Obviously corporations need the financial types in
the upper levels of management but as far a directing corporate direction, the
last twenty years have proven this direction of mainly bottom line mentality
hasn’t worked out well for the entire economic system.
This mentality within the largest of
corporate America of turning to bailouts and government influences has caused
the economic system to be influenced and directed by fewer and fewer economic
powers. It has to stop and go back to the basics of economics and that is
buying and selling of goods and services and expand their businesses through
market growth, not government intervention. If they don’t succeed in
their business endeavors, they have to fail and let the healthy companies
prosper and compete within that market, not having them bailed out. As we have
seen in the banking industry, bailing them out not only burdens the market but
the economic system itself. Until failure is an accepted part of business for
the biggest of corporations, the government, the central banks, and their
primary dealers will have more and more control until they dictate everything
in all the markets.
Remember, a free enterprise system is
just that, a system of trade where the markets determines the outcome of a
company not government determining the winners and losers, as they do more and
more everyday in today’s business world. The only place for government is
minimally regulate markets and the free enterprise system, to level the playing
field for all involved with it. Not regulating and bailing out of the most
influential of the economic system.
Breaking News
I truly believe the real systemic risk
to the free enterprise system is the largest of banks, financial instructions,
and other large corporate entities, in collusion with the central banks and
government to bail them out while destroying much of the rest of the free
enterprise system. If you don’t think so, check this out and you will see
what I mean. The good ole’ boy system at its worse:
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