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The Government is Fundamentally a Reactionary Institution

CongressI have pulled this quote from a guest post by Bill Bonner in the Christian Science Monitor which I have excerpted below.

He hits the nail on the head. Dead on. The government is reacting to help those who benefit by maintaining the status quo as they are the entities lobbying and contributing to their campaigns.

So for the real estate market, instead of letting the banks and the real estate companies take the pain all at once they try to stop the hemorrhaging. And by doing so, we are not getting healthy but struggling in a long period of pain.

The only way this changes is when the power shifts and the people who are being affected rise up and tell Washington they have had enough. The problem for our elected politicians is they typically fails to see the uprising as they are surrounded by the lobbyists and purveyors of the status quo. In their eyes nothing has changed. Yet when the elections arrive they are thrown out of office and we have a small window of change.

That is until the new politicians fall under the Washington DC spell.

Please read the excerpt by Bill Bonner, and then the whole article here.

But the feds are always caught in the middle. And they almost always take the part of the present. If they hadn’t stepped back in the fall of 2008, future investors might have gotten much better deals on their stocks. Future bankers would have found the debris of the last bubble cleared away by now. Future businessmen would have found the landscape freer of debt, with future consumers much more ready to buy things.

But then, the future doesn’t vote or give campaign contributions. No Michigan politician represents future auto companies. They represent the Big Three. Nor do they carry the hopes and desires of future autoworkers with them into the House every day. Uh uh… Instead, their mobile phones have the phone numbers of the present autoworker union chiefs.

Government is fundamentally a reactionary institution…always looking out for the here and now. But let’s not get distracted…

How do you solve a slump in the US real estate market? Easy. You let Fannie and Freddie get what they’ve got coming. You let it happen. Prices collapse. Better yet, raise interest rates and kick Fannie and Freddie on the way down. Then, houses are cheap…people are ready to buy again…and a whole new cycle can begin.

2 comments

  1. Great article, I agree Bill is dead on with it. Thanks for passing it along.

  2. I will admit that I am not a student of economics, high finance, or monetary policy. And I even understand that Congress and the President feel the need to do things in the economic realm because they get blamed when things are not right in the economy even though except for taxation and government spending their ability to "fix" things is sort of laughable.____This Administration and Congressional Leadership has little practical, hands-on experience in real world business it is scary. Academics, life-time government workers, and long term elected officials-little wonder the policies they are developing are so limited in success.

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