Banks & car companies -- Economic smash & grab (and the dinosaurs!)

For over two centuries America has flourished as the worlds epicenter of capitalism. Through hard work and ambition capitalism had fostered the development of electricity throughout our great country, running water and sewage systems, all of the industries required for us to have the wonderful homes we live in, a road system that's the envy of the world, and comforts such as refrigerators, phones, (wonderful chocolate bars), and many other things which give us one of the most lavish lifestyles in the world.

But capitalism, Darwinian by nature, has not simply delivered us all of our benefits on a proverbial "silver platter". In the background, often unnoticed, it has also brutally crushed our bad ideas and inefficiencies.

And it is this dual effect of our capitalism, both nurturing the good and destroying the bad, that has helped shape our country into the great nation that it is.

But all of that is changing, and in just a few short years. There's a new economic theory in play. It's called "The Smash and Grab", and it's coming to a business near you.

Consider recent events;

Banks and insurance companies: in 2008 the federal government interceded in the "banking crisis" precipitated by.... regulations mandated by the federal government. Government regulations for all FDIC insured institutions created a substantial "sub-prime" mortgage market, in turn creating a "housing bubble" which ultimately burst in the summer of 2008. The Federal government rushed in, declaring the banking system broken and injected hundreds of billions of dollars into dozens of banks and insurance companies while taking massive equity stakes (ownership) in them. They precipitated the collapse, then they declared it smashed, then they grabbed.

Car Companies: As the banking crisis unfolded people stopped buying cars (and high ticket items in general). The US automakers found their revenue declining sharply, and two were on the verge of bankruptcy. Echoing their argument in the bank takeover, the government also declared the automakers "too big to fail", and again pumped in billions of dollars and took huge equity stakes in them. And again, the government precipitated the collapse (by sinking the banks and the overall economy), and again they declared it (the automakers) smashed, and again they grabbed.

So the question is, are these government takeovers of troubled industries and companies an anomaly, or is this our new economic model? In the past, during capitalistic times, companies employing bad strategies died. Companies employing good strategies survived. After economic challenges such as this are over and the damage is complete, the business community becomes stronger - with the best ideas and companies still alive, and the dinosaurs extinct.

But what we have today is quite different - today we are keeping the dinosaurs alive - on incredibly expensive government life support. And it's being done by smashing capitalism, and grabbing all the loot they can.

So are these takeovers just anomalies, just a couple of special cases?

Now they say our health care system is broken - it needs "reform". As I write this our congress is debating "fixing" our "broken" health care system by pumping a trillion dollars of US taxpayers money into it. Some of the options they're discussing sound like they'll put hundreds of US taxpayers companies out of business, while at the same time creating thousands of government jobs. Is the health care industry next? (It's already been declared broken...)

And now it seems our energy infrastructure is climbing up higher on the governments radar screen. Our congress is currently busy crafting "Cap and Trade" regulations to limit our "catastrophic" carbon emissions. They've already funded some "smart grid" initiatives to "upgrade" our electric system to enable it to shut off our stoves and air conditioners remotely. Time will tell if our energy infrastructure is declared completely broken (and then taken over).

In all of these cases capitalism would cause the bad entities to die off, like dinosaurs that can't adapt to radical changes in the temperature or weather. Importantly, in the place of extinct dinosaurs a vacuum appears. It's natures most important vacuum, the one in which others, perhaps better suited to the conditions of the time, begin to thrive.

And so in these turbulent economic times I submit to you; the United States would be stronger if the dinosaurs are kept off this unsustainable life support, and nature is left to take its own course.