The New Deal All Over Again

Forgotten Lessons Of History

Those, who do not learn from history are doomed to repeat it. In times of crisis humans often resort to desparate, but foolish measures. Since the beginning of this millenium we are witnessing a repeat of the horrible New Deal. History does not repeat itself, but similar patterns do thanks to human nature. The ability of humans to learn from their mistakes is still very limited and very slow.

Political Power Excelled In Ignorance And Arrogance

We experienced two severe recessions within about a decade, the last one is called the Great Recession. Our elected political leadership turned out again to be quite inept and clueless about economics. Not only that, our political leadership became so arrogant and foolish as to attempt to subjugate free markets. This is sometimes referred to as primacy of politics. However, free markets are an expression of the free will of the people.

Awful Legislation, Bailouts, And Breaches

What our elected political leaders have come up with since the beginning of this millenium is a long list of awful deeds:

·         International contracts were severely breached (European Monetary Union)

·         Bailouts for so called too big too fail companies instead of bankruptcy and bailouts for profligate governments

·        Monstrous legislation like Sarbanes-Oxley Act, Dodd-Frank Act and Consumer Protection Act, or Obamacare was passed

·         And much more

Primacy Of Politics Over The Markets

The Great Recession Is A Product Of This Midunderstanding

Such a claim to primacy is utter foolishness! Were it not for simple-minded politicians who constantly try to assert such a primacy we would not have to suffer through the Great Recession of our time.

The German Chancellor Is An Advocat

German Chancellor Angela Merkel in May 2010 is quoted as saying “in a way, it is a struggle between politics and the markets. We must re-establish the primacy of politics over the markets.” Unfortunately, I could not immediately find a German language source for this quote.

Where Does This Misunderstanding Lead To

With elected leaders like this in the Euro zone or in the USA, no wonder!

The willingnes of domestic and international investors to buy government bonds for so many years at artificially low interest rates has finally come to a reckoning. Whoever invented this convenient nonsense of secure sovereign debt?