America, Where It Pays to Fail
By Gabor Steingart in Washington
In the current financial crisis, the model of US capitalism has imploded with a big bang. But the Bush administration is trying to douse the flames with yet more fuel instead of water, and it wants to see Wall Street's gamblers rewarded for failure.
Among the money worshippers, there are at least three faiths. First there are the Puritans, who patiently carry their money to the new churches, hoping that it will multiply. The average Chinese, for example, deposits 40 percent of his income in banks. What laudable discipline! Then there are the Pragmatists. They save and lend, but only in that order; their savings limit their boldness. This persuasion is especially prevalent in the Germanic countries, where the savings bank is the shrine.
Finally, we have the religious community of the Uninhibited, which is especially popular in the United States. Its adherents readily admit to intentional recklessness, wanton waste and omnipresent greed.
They call it "the American way of life." Its members live in the here and now, without asking questions about tomorrow. One lends money to another, even though it's not his money. Instead, he has borrowed it from a third person, who has promised to procure it from a fourth person -- and so on.
...In the Midtown high-rise housing the offices of Lehman Brothers, which is in the process of bringing its own history to a close, there is more to be discovered about the sequence of events. Billions of dollars were lent to people who were not creditworthy for condominiums and houses that were not valuable. In the cheerfully cynical jargon of bankers, these types of loans were dubbed "NINA," short for "No Income, No Asset."
...Paulson took a hands-off approach to the banks, and he now plans to take on their losses. He has become something similar to reinsurance for high finance. His goal is to eliminate the gallows -- but not the greed.
Contrary to what has been widely reported, Paulson does not intend to use tax revenues to finance the bailout. Instead, he plans to take up billions in new loans on behalf of the US Treasury. "I hate the fact that we have to do it, but its better than the alternative," he said last week.
...The same short-term way of thinking that triggered the disaster in the first place is now supposed to bring it to an end. The government is attempting to put out the fire with fuel, not water. In fact, it is precisely the same fuel that sparked the flames on Wall Street in the first place: borrowed money.
A Future Sold
Anyone who hopes to get an early warning should simply expand his or her range of vision for as long as the lights are on. America's credit card companies are not in a significantly better position than the banks. They too have sold the future and even a piece of the period after that.
The American auto industry is also seriously stricken and is having trouble extending its credit lines on the open market. The industry has lost more than 300,000 jobs since 1999. But what good does that do if the managers -- and not the workers -- are to blame for the crisis? America's enormous oil bill -- about $500 billion (345 billion) -- is currently being paid for with money borrowed from China. Every business day, America's foreign debt grows by close to $1 billion (690 million).
Ford advertised a new super efficient car, but does not plan to sell it in the US.
The long-overdue conversation between the government and the governed has yet to materialize. It would have to be a conversation about the relationship between the economy and values, about regaining what has been lost instead of expanding. The word frugality -- which disappeared from the vocabulary of the Uninhibited -- should be reintroduced.
But there is no sign of any of this happening. Today's America is too American to survive in its current form. But today's America is also too proud to realize it. The faithful will hardly allow themselves to be converted.
And so our understanding of the events continues to get less and less clear. A dangerous game with time has begun.
"The ping of two bullets shattered the complacency of the room. Suddenly the game was no longer a game. Somebody screamed... 'Lights.' 'Can't you find the switch?' 'Who's got a lighter?'
'Oh, Archie, I want to get out of here.'"
Translated from the German by Christopher Sultan
read the rest here -
http://www.spiegel.de/international/business/0,1518,581517,00.htmlLet's embark on an orgy of spending with the next administration.