Tuesday, March 31, 2009

The American Dream

Parts of Maine had a foot of new snow last night. Hard to believe here in Southern Maine. The sun is out here now and our temperatures are expected to be in the fifties through the weekend.

What I great Senior Fitness session I had today! I increased the weights, resistance, and times on all my routines for the first time since last December when I was cut back by doctor’s orders. Although I have been increasing slightly with each session, today I exceeded all my previous “bests.” I was very tired but my heart felt normal and I felt great. I think I’m kind of proud of myself today. Perhaps all this effort is now taking shape once again.

The rest of this was written beginning at 5:30 this morning and it’s hard to keep organized at that time. But I’m leaving it as is because perhaps in its ramble, it best says what I want to say.

The more I think about President Obama’s car initiative, the more I believe it won’t be good for America. This nation has been built on capitalism, people investing in businesses and businesses producing the goods we need. As a business becomes more successful and the demand for those goods increases, people are put to work and the economy grows.

But we’ve run into some tough times and at the moment the auto industry is carrying the problem on its back. I’m not convinced the potentially impending demise of American automakers is wholly because of decisions it has made. Like the banking industry, like the finance industry, like the real estate industry, many of our economic woes lie squarely on the federal government.

The government has put its hand into each of these. International agreements have allowed many, most American industries to move to business friendlier environments leaving behind closed plants and many people out of work. Regulations requiring banks and financial institutions to grant mortgages to people who otherwise would not qualify. That may very well be the biggest contributor to our woes.

As more people were able to get mortgages, the housing industry built more and more houses. Even though Congress was warned at least eight years ago that the loosening of mortgage requirements was leading to disaster, Congress refused to recognize the problem and do anything about it. As was warned, people could not pay for their new homes. The “American Dream” began to crumble.

How did this all date back almost 75 years? It was then the “New Deal” created, among other things, Fannie Mae and later Freddie Mac, the two financial giants originally federal programs then quasi independent agencies. They were one who guaranteed most home mortgages. Now this is an over-simplification and an awful lot has been left out, but by now most of you already know the story.

As the dream of home ownership crumbled, so did banks and other financial institutions. As they crumbled, credit crumbled and people stopped buying cars. The dominoes continued to fall and today it’s the automakers turn to take the hit.

It’s not just the credit that’s hurting the auto industry. Part of the problem was a government requirement to build cars according to increasingly tightening standards, cars the American public simply did not want. There are thousands of new automobiles in storage on lots all over the country. I wish I had saved the pictures of many of those lots when I saw them not long ago.

Now the government appears to be in a very subtle takeover of the American auto industry. It is setting criteria for a bailout and it is letting the automakers know it will control the companies. We saw the first hit over the weekend when the government forced the resignation of the CEO of General Motors. That was the signal the takeover is beginning.

Ford Motor Company, which has not taken part in the bailout plan, may be spared for the time being; but GM and Chrysler Corporation may be in deep doo doo. Bankruptcy may be the only chance for restructuring for survival, but that restructuring will undoubtedly under the tight control of the government.

To get people to buy cars, the President has announced he will ask Congress for some financial considerations. He says that depending on your income bracket, you will be able to deduct a portion of the sales tax on a new car bought between now and the end of the year. Note that’s a portion of the tax, not the full tax. He also says the excise tax may be deducted, but it already can be.

He also will ask Congress for a financial incentive to buy the green, more fuel-efficient cars that people have already said they don’t want. An incentive, however, certainly could motivate a lot of people hungering for a new car.

There’s also a chance that people won’t buy cars because of the threat of bankruptcy, so the President is proposing the government establish a fund to guarantee the warranties on cars if the maker goes out of business. And so, like the banking and other financial industries, the government extends deeper and deeper into control of corporate America.

I hate to think that this might be the beginning of the end of our capitalistic society and the real beginning of a new socialism. Capitalism, whether we like it or not, has been the backbone of the greatness of America. How many of those other countries which have already embraced socialism can now claim greatness? The “real” American Dream is the ability of business to create jobs that people can use to work toward filling their own dream. That for which we work is far more valuable than that which we are handed. Socialism cannot fulfill The American Dream.

We have a relatively unstructured rambling rant today, and I probably should take the time to go back and make it more structured. I’m not going to do that as it is, after all, just a rambling rant. I’m not happy with where my thoughts have led me this Tuesday morning.


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