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In its recent look back on the first ten years of
the century, Time Magazine proclaimed the period to be "the
decade from hell." The editors made their case based on what they saw as
the signature events of the last ten years, notably the ravages of terrorism,
failed wars, and a global financial crisis. Taken together, these factors
produced an era that Time is convinced will be remembered as one of
the low points in our history.
As the media hates to dwell on the negative, the commentary was rife with
notes of optimism about pending recovery. It could hardly be accidental that
in the very next issue, Fed Chairman Ben Bernanke was named "Man of the
Year" for his supposedly Herculean efforts to keep the economy afloat as
we departed the Naughty Aughties. Although Time takes
pains that to point out that the "Person of the Year" honor
reflects impact rather than adulation, its profile of the Chairman was
triumphant.
Even if you believe the "survived the worst/turned the corner"
narrative offered by Time, it still should strike anyone as ironic
that Chairman Bernanke, a chief architect of the economic problems that
surfaced in 2007, should be held in such high esteem.
Apart from its misplaced reverence for the Fed Chairman, I would take issue
with Time's entire characterization of what has now become history.
Under no circumstances could the past ten years be described as "the
decade from hell." In fact, in terms of economic good fortune, the
period shares parallels with the Roaring Twenties. I would describe this as a
decade of sin that paved the way to hell.
Yes, we had spectacular problems like September 11th and the invasion of Iraq
- which were horrific for those who were directly affected - but for most
Americans, it was a time of unexpected wealth and unearned prosperity. Up to
the days of the stock market crash, the economics of the decade will be
remembered for cash-out refinancing for millions of homeowners, no-doc liar
loans, no-money-down car purchases, eight-figure Wall Street bonuses, cheap
Chinese imports, and trample-to-death holiday sales. In other words, the decade
now closing gave us the biggest and most irresponsible spending orgy in U.S.
history. The past decade was the party; the one ahead will be the hangover.
The fact that Time completely ignored these issues shows how poorly
the mainstream media understands the forces bearing down on our economy. Yes,
they were able to identify some of the adverse consequences we experienced
this decade. That's the easy part. But as far as seeing the causes behind the
effects, they haven't a clue. As a result, Time has no ability to see
the underlying pattern and will happily encourage our leaders to repeat the
mistakes of the past on a grander scale.
For now, Congress and the President remain as clueless as Time. To
show its resolve to 'get to the bottom of things,' the Obama Administration
has impaneled a commission to investigate the causes of the financial crisis.
Do not expect the proceedings, which are just getting underway, to come up
with anything but the most politically useful explanations.
Blame will be laid at the feet of 'ineffective regulators' who failed to 'get
tough' with industry, banks, and corporate leaders who held the 'public good'
hostage to their 'personal greed.' There is no hope that anyone who actually
saw the crisis coming will actually be asked to testify. If they called me, I
would be happy to give them an earful. Unfortunately, the only way my views
will ever be heard by the powers-that-be is if I am elected to the Senate -
which is exactly what I plan to do next fall in my home state of Connecticut.
My sincere hope for the coming decade is that I can help our leaders see what
Time cannot: we need to stop committing the economic sins that are
leading us to hell, so that our stay down there will be as brief as possible.
We need everyone to stop spending more than they earn. That is true not just
for individuals, but for our government as well. Just this week, the Treasury
Department removed its internal caps on bailout funds to Fannie Mae and
Freddie Mac. Meanwhile, another bailout was proffered to ailing GMAC. If we
continue the same bad behavior, it might not just be one decade from hell,
but several.
However, if we can confess our sins, and vow to reform our ways, perhaps this
will merely be a decade in purgatory. Perhaps we can turn it into the decade
of hope, hard work, individual liberty, savings, production, investment,
sound money, de-regulation, exports, budget surpluses, capitalism, limited
government, and respect for the Constitution. These traits will harden us to
withstand the fallout from our reckless past.
As of yet, our troubles continue to snowball - and I don't like a snowball's
chances if we have a real decade from hell.
Peter D. Schiff
President/Chief Global Strategist
Euro Pacific Capital, Inc.
20271 Acacia Street, #200 Newport Beach,
CA 92660
Toll-free: 888-377-3722 / Direct:
203-972-9300 Fax: 949-863-7100
www.europac.net
pschiff@europac.net
Also
by Peter Schiff
For a more in
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and mortgage markets, and U.S. dollar denominated investments, read my new
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