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-- Posted Thursday, 19 February 2009 | | Source: GoldSeek.com
By James West
The last thing you do when you see somebody drowning is swim out to them in an effort to effect a rescue. If you do, you may end up drowning too as the frantic victim blindly latches onto anything that floats. Barack Obama and the United States are swimming out to the drowning auto industry, and if the thrashing auto industry is able to grab on, it will pull the drowning United States economy down into the depths where both will expire. Its too bad that the great human rights and foreign policy potential of Barack Obama is being eclipsed so completely by the financial crisis, which is neither his fault nor his area of expertise. Already, the youngish Tim Geithner exhibits the folly of the inexperienced statesmen. He acts like a genuine economist – all theoretical and no pragmatism. G.M and Chrysler both need more money to stay afloat as a result, they say, of the fact that conditions in the auto industry have worsened since they first came cap-in-hand to congress two months ago. Coincident with that news item is the multitude of corroborating ones that confirm that auto sales are indeed down to their lowest levels in decades. The auto industry, as is evidenced by stagnant inventories, needs to be pared back. This takes no money, and should have been the immediate and decisive conclusion two months ago. Ask yourself these questions: If G.M. and Chrysler were to suddenly disappear from among auto manufacturers, would the demand for cars suddenly increase due to their demise? Obviously not. Would the remaining auto manufacturers of the world suddenly not require any bailouts to stay afloat? No way. The excess of productivity engendered by an excess of liquidity resulting from cheap and abundant credit has caused the obesity of the world economy to attain an unsustainable mass. Keeping the obese alive by feeding them an enhanced protein and fat diet has but one certain outcome. Swimming out to save one so bloated can have but one result for the would-be rescuer. The only intelligent response is to diet. Eat less. Exercise more. Spend less. At the outset of new leadership, the United States is suffering a crisis of leadership. If I were Barack Obama’s financial advisor, I would direct him to the example of Mohamed Naheed. While watching BBC World News last night, I learned about the new president of The Maldives, the tiny Indian Ocean archipelago nation that is renowned for its idyllic sunsets viewed by tony tourists from remote tropical beaches. The Maldives principal revenue source is tourism. They are not exempt from the effects of the global slowdown, and the new president is apparently keenly aware of that, and has acted decisively to protect his nation’s economy. Mohamed Nasheed, the new president of the Maldives, was imprisoned and then exiled for two and a half years by former president Maumoon Gayoom on a trumped up theft charge. Nasheed had been agitating for democratic reforms in a government prone to despotism. After 30 years as rule, Gayoom was defeated in the nation’s first democratic elections by Nasheed. Nasheed has decided to lead the defense against the global financial meltdown by setting an example. He is auctioning off the presidential yacht, and converting the presidential palace into a university. He is going to operate the business of government from a renovated townhouse. "When we started this administration, the presidency was costing more than $150 million a year," he said. "This is something we simply can't afford. We've brought it down to $4 million. "I don't feel the cut, and we can use the rest of the money for old age pensioners, for schools, for housing and very many things we need now." That kind of humility and practicality is not a typical characteristic of any government. What would be the reaction of the citizenry of the United States if Barack Obama were to act in such a manner? Would he be applauded or reviled? Interestingly, the BBC’s coverage of the issue elected to highlight the negative reactions to such moves, airing the comments of a young man who expressed anger at the prospect of the government’s sacrifice of dignity for fiscal responsibility. No opportunity was provided by the BBC report to anyone who sought to express admiration for the president’s move. And that perhaps as much as anything, underscores one of the fundamental causes of the financial crisis, as well as its perpetuation. The sense of entitlement that is a natural character of G7 nations precludes the ability to mange our affairs with the humility required to ensure wise stewardship of our national affairs. James West MidasLetter.com
-- Posted Thursday, 19 February 2009 | Digg This Article | Source: GoldSeek.com
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