The de facto nationalization of the fifth largest US investment bank should send a wake up call to all rational Americans. However, as the old Indian saying goes, you can only wake up someone who is sleeping.
It was a scant two decades ago that the divorced actor, Ronald Wilson Reagan, took over the office of President. His team of economic advisors included Larry "Cocaine Larry" Kudlow and a former divinity student, David Stockman, with no experience in budgets or finance. These men made a tryst with destiny, 'Reaganomics'. We can borrow and spend with abandon and all will be right with the world.
That tryst with destiny made by those men must now be redeemed by all of us.
The core tenet of Reaganomics is that budget deficits don't matter. The government can always borrow and defer paying the debt to generations unborn. Another component of Reaganomics is that the dollar can be trashed with only favorable consequences for the economy.
Reaganomics has also been the policy of Bush I and II. President Clinton made an effort to reverse that policy. He, however, was impeached and his wife accused of murder.
The legacy of Reaganomics is clear:
- Bubbles in the equity and housing markets
- Our key financial institutions dependent on the largesse of foreign potentates
- Use of financial institutions to enrich the chosen few (Neal Bush)
- De facto repudiation of the Monroe Doctrine as foreign sovereign wealth funds buy up natioanl resources from Canada to Mexico to Argentina
Was a DJIA at 12,000 or a 3 bedroom house selling for $500,000 worth the price of having Citibank grovel before a Saudi Prince who blames the US for 9/11?
Is having GOOG trade at $500 worth the price of having our President terrified of upsetting the Communist Chinese?
To the legacy of Reaganomics, I suspect that patriots like Patrick Henry would say "Forbid it, All Mighty God!" and Thomas Jefferson would surely remind us that "Eternal Vigilence is the Price of Freedom!"
We know that an obese draft dodger will say, "Economy booming! Vicodin cheap!" We know that an cowardly AWOL drunk will say "Mission Accomplished". We know that CNN will say "some say that Obama's middle name is of Arabic origin"
Alas, the question is what will the voters say?