The events in Washington DC are a chilling indicator of just how badly average Americans misunderstand their current predicament. Amidst the applause, the outpouring of joy and nonsensical optimism lies an astounding depth of ignorance as to the motives and intent of the Anointed One and his retinue. The self-reinforcing cycle of bad education and badly educated Americans allows socialists to usurp our economic freedoms. It blinds most Americans to the true motives of a Democratic Party that has abandoned democracy for the unbridled power of a socialist regime. Laura Ingraham’s radio show featured clips of typical Obama fans expressing (or attempting to) their rationale for supporting this newly-minted president. Most of them couldn’t complete a sentence, much less coherently explain why they’re so infatuated with Mr. Obama. Their random utterances were nothing more than mindless parroting of Obama sound bites that had been repeated over and over by the mainstream media in the months running up to this coronation ceremony. They clearly don’t understand what they’ve voted for, who represents them and what will happen once Democrats make themselves voter-proof at every level of government.

Barack Obama knows exactly what he’s doing, as do all of his advisors and departmental nominees. The only person along for the ride is the Gaffemeister himself, the honorable Joe Biden, ably assisted by his wife, whose only priority in life appears to be the endless refinancing of his real estate holdings. And, of course, keeping his son and relatives out of the media spotlight.

As the celebs and rock stars pour into the capital to spend thousands of dollars on overpriced event tickets, limos and hotel suites, the proletariat fill the streets, cheering on the passing of free-market economics and equal opportunity. The TV anchors and print propagandists are beside themselves in apoplectic, eye-twitching ecstacy. But no one in the mainstream media asked how this will all shake out - not in the months since the election and certainly not in the last few days. 

How will the overtly leftist campaign promises of Barack Obama be transformed into government policy and legislation? How will Obama, ably assisted by Nancy Pelosi and Hary Reid, shred the Constitution and destroy everything that makes America different, and therefore, better? It will be obvious. It will be plain and straightforward, and the Republicans will be aghast at how easily a republic can be dismantled and replaced with a totalitarian system. With unbelieving eyes, they will see legislation passed in Congress and signed into law at the White House, confirmed by the Supreme Court and put into action by the bureaucracy. Every last bridge back to a free society and a free market will be set ablaze. And, it will be saluted with great fanfare by the media cabal, academics and the liberal elite. It will be cause for a celebration. Freedom will be snuffed out with guitar riffs and wild applause.

It’s only a matter of time before everybody in America begins clamoring for a bailout. At the height of the crisis in September of 2007, it made sense to pump money into the credit markets to keep the economy from grinding to a halt. Problem was, banks started using those taxpayer funds for just about every purpose except lending. On top of that, investment banks and securities brokers demanded to be chartered as bank holding companies so that they, too could get a little bailout boogie. The TARP fund was gamed and compromised within hours of the very first fund transfer. Treasury Secretary Paulson tried a mid-course correction and a head fake, only to find that the momentum he’d whipped up in Washington also meant that this runaway beer truck he created was impossible to stop and impossible to steer. It’s no doubt that Paulson was dismayed and angered by the actions of self-serving bank executives. That initial $700 billion went over the guardrail, never to be seen again. But, the banking sector’s behaviour created a wave of me-too bailout supplicants. And so, the bailout boogie began.

Not all of Wall Street was hurting, but they received funds anyway. Hank Greenberg’s monster, AIG, didn’t need a nickel. The insurance holding company could have been auctioned off in pieces, since each individual piece was a free-standing, self-sufficient and profitable enterprise, with the US government acting as receiver and funding day to day operations until the entire enterprise had been sold at a profit. This is something the government actually knows how to do. It happens in bankruptcy court every day of the week. Instead, taxpayer funds are given directly to the executives who created the mess in the first place. No one gets a pay cut, no one has their stock options taken away, no one is fired. Instead, they make a mocking ’sacrifice’ by not taking oversized bonuses that they didn’t deserve in the first place. This is absurd. It encourages parasitic behaviour and it emboldens other people to scheme and game the system.

And so, the gravy train is pulling into the station. Every purported victim, every charlatan and schemer, every influence peddler and power broker, is busy lining up to get their ‘fair share’ of the taxpayers’ personal net worth. Yes, that’s precisely what they’re doing - they are stealing the personal net worth of the upper middle class, which pays 80% of all taxes collected. Aided and abetted by politicians and bureaucrats, Americans are going to find a huge number of players doing the bailout boogie. It will quickly spread beyond carmakers, insurers and homeowners, and it probably won’t stop until the government goes broke or the dollar is worthless. We’ve crossed over the hump, that dividing line, between pretending that our government has some fiscal control and just throwing all common sense out of the window.

Political pundits and TV newsreaders make much of ‘crony capitalism’ - as if all capitalism is based on monopolistic tendencies. The mainstream media will usually characterize this as conspiratorial corporate collusion aimed at hapless consumers. Monopolies or price-fixing never last because they’re inherently inefficient and unmanageable in a dynamic free-market system. One needs only to look at OPEC, an openly conspiratorial and monopolistic bunch. Whenever OPEC oil ministers agree to set market prices at an artificially high benchmark it only takes a couple of weeks before one of their own is exceeding their production quota or lowering their prices. Despite all their machinations, they can’t control the price of oil. It’s market forces and human nature at work - good, bad or indifferent.

Typically, ‘crony capitalism’ involves government intervention or collusion, because the ‘cronies’ involved are usually government officials, elected or otherwise. Free-market capitalism by its very nature wouldn’t tolerate an unfair advantage, because market forces and competition would undermine the enteprise with an unfair or unethical advantage. This was true when our own government got involved in the corrupt practice of handing out special charters to politically connected individuals who would then form steamboat, railway, subway or trucking lines. These government-sponsored businesses were inherently inefficient and unprofitable not only because of the amount of bribery and graft involved, but because workers and management didn’t apply themselves, confident that their government charter protected their incomes. This is as true today as it was in the 1840s, when crony capitalism first began to appear. Compare Northern Suffolk Railways, a profitable private-sector operator, to Amtrak, a government-controlled operator that costs taxpayers millions each year. Fannie Mae and Freddy Mac, both government-chartered lenders, were subject to corruption and political gamesmanship that triggered the mortgage meltdown.

Pure capitalism has little in common with crony capitalism. In fact, crony capitalism is more closely aligned with socialism, where the government owns businesses outright. When government gets involved in business, those businesses will be run with the vision, energy and efficiency of government itself. In other words, it will be a disaster. Which doesn’t provide us much hope now that government is part-owner of banks, broker-dealers, insurance companies and carmakers.

The last 6 months of 2008 will be marked as a turning point in America’s history and its status as an economic superpower. The real estate crash could have been contained had it not been for Wall Street’s unethical packaging of questionable home loans. Those loans were resold to other banks and governments as secure, rated investments. As housing prices corrected in the US, which does occur occasionally, those multi-trillion dollar investments became suspect. Once banks and investors lost confidence in these shaky loan packages, they were effectively worthless. No one wanted to buy them or guarantee them. Trillions of dollars evaporated overnight.  As a result, the global financial system was severely damaged and the world economy nearly collapsed. Someday it will be revealed how near the brink Wall Street pushed us for the sake of a sales commission.

The George W. Bush administration and Congress acted swiftly (pork-barreling nothwithstanding) to shore up the American side of the ledger sheet. Whether the initial $1 trillion was well spent is a matter for economists to debate. It provided a badly needed confidence-booster  and signaled to the world that America would attempt to clean up its mistakes. Since September 2008, trillions more have been pumped into the financial system. As of January 2008 that number stands at approximately $7 trillion. Just to provide some perspective: At 3% interest, that $7 trillion demands almost $1 billion in interest payments per day. At 1% interest, it will take almost a 1,000 years to pay off the debt based on our government’s past performance for loan repayment. America had already piled up $40 trillion in national debt before this most recent debacle.

Given the gravity of the situation and the magnitude of the destruction, it’s outrageous that no one’s been arrested, investigated or even pilloried in the press. Of course, Bush administration officials have been grilled endlessly, but what about the clowns on Wall Street who created this mess? What about Obama’s housing advisor Franklin Raines, who was a key player in the mortgage meltdown as CEO of Fannie Mae? The press has diverted attention away from the people who created this mess to an intense scrutiny of the people trying to clean it up.

What gets lost in all the noise is the hard fact that someone’s going to have to pay down this debt. It doesn’t appear that Wall Street honchos are going to cough up a nickel. Franklin Raines isn’t going to return his $45 million bonus. That leaves average working Americans to pick up the tab. That means a century or more of diminished economic growth, personal opportunity and personal wealth. It means more taxes, more inflation, a drop in the dollar’s value and a drop in our standard of living. And, adding insult to injury, Barack Obama wants to add an astounding 600,000 new government employees to the federal payroll. That’s insane. With pensions and benefits, it instantly adds another trillion dollars to this year’s federal budget, which is already a trillion in the hole. And it adds another trillion every year going forward forever. At what point do the wheels come off this gravy train? It appears that the only thing that can stop our government from spending money it doesn’t have is for the rest of the world to push our government into bankruptcy. And even then, our politicians and bureaucrats won’t be suffering one bit. That will be left to the taxpayer.

Bernie Madoff exemplifies the prevailing ethic on Wall Street - investors are merely marks. It’s all about the transaction, protecting the transaction and making money from the transaction, investor be damned. Madoff went a bit further than the average broker or manager.  But, the losses that his investors bear are a trifling compared to the trillions eradicated in the mortgage-backed securities catastrophe engineered by so-called ‘legitimate’ players like Bear Stearns and Lehman Bros. Who’s the greater evil?

Bernie Madoff was well protected. No one, not even the SEC, could touch him. His clout with regulatory agencies was considerable and he worked his connections effectively. What brought the Madoff operation down wasn’t the investigatory zeal of any governmental agency, it was the collapsing stock market and the inevitable run to redemptions. But then, the big investment bankers, broker/dealers and bank holding companies were equally well protected and well connected. Madoff is a parasite. But that characterization can be applied to much of Wall Street and the banking industry given the awful mess they alone created and the way they’re now conducting themselves with taxpayers’ bailout money.

In that context, Bernie Madoff is not unusual in many respects. He is the logical extension of the largely unethical practices that make up too much of the day-to-day activities on Wall Street. What goes on has been dressed up in many guises, but it’s all the same. It’s the transaction - whether the investor makes money or loses money is immaterial. The broker-dealer, the underwriter, the investment banker or the adviser is focused only on the transaction itself. It’s the transaction that creates revenue. Everything else is eyewash.

Given the stupendous disaster created by mortgage-backed securities, no one seems to remember the mutual fund scandal and the hedge fund improprieties of just a few years ago. And before that, it was the derivatives scandal, preceded by the collapse of Long Term Capital Management. There has been an endless procession of financial chicanery stretching back 100-plus years. But, everyone does forget, and Wall Street counts on it. Eventually, the sheep forget about the wolves and go back to grazing. The hunt begins anew.

The size, scope and sheer audacity of the improprieties are expanding. There’s not even a pretense of transparency or accountability. Even pretending to be ethical and aboveboard has become inconvenient and boring for some of the players involved. To Wall Street, the rest of America are just marks, nothing more. Bernie Madoff just took it one step further.