How topical and appropriate is this. The first video below is an old cartoon that points out why capitalism is better than socialism or fascism and uses a an auto company theme. The next two videos have Peter Schiff arguing why the taxpayers should not bailout the auto companies but rather, let them reorganize via bankruptcy law. On the other side of the argument, we have Lansing Michigan Mayor, Virg Bernero, who, as a typical politician, is only concerned about his re-election and not doing what is right for the companies, their workers or the country. No one wants to swallow the hard pill. The companies, unions and local governments think they can continue business as usual without paying the consequences. There is pain and suffering on the horizon and its not going to get better until we all suffer through the recession.

Capitalism explained…

Part 1: Peter Schiff and Virg Bernero…

Part 2: Peter Schiff and Virg Bernero…

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I thought this article today by Peter Schiff, Author of Crash Proof fits well with the video’s I have inserted. Enjoy the collapse of the dollar. We’ll all be bbasking in tent cities before you know it…

Bailout-a-Go-Go

by Peter Schiff

Keeping track of the ever mutating bailout debate is becoming increasingly difficult. With the Federal money spigots now thrown wide open, and with no one of influence advising restraint, the only debate is where to direct the torrent.

During the past week, the talk began with Detroit and Citigroup, but by Friday had shifted to a massive “stimulus package” to bail out consumers. The early buzz includes some very large figures.

But first, a bit of a recap:

On Monday, the $300 billion Citigroup bailout took center stage. Once again Henry Paulson decided to throw taxpayer funds into a bottomless Wall Street money pit. Shockingly the Citigroup plan did not seem to demand any serious curtailment of lavish salaries and bonuses. Paulson’s shameless largesse to his Wall Street friends has elevated financial industry bonuses to entitlement status.

“Remember Lehman” now seems to be the rallying cry to justify any and all financial bailouts. But Lehman’s demise is in no way responsible for our current problems, and the decision to let them fail is the only bright spot in otherwise consistent record of policy mistakes. We bailed out Bear Sterns and AIG, and what did that get us?

The Citi bailout greatly increases the chances for a similarly misguided auto industry bailout. After all, if taxpayers ensure multi-million dollar bonuses for Citi executives, how can they refuse similar help for eight-figure auto executives and $70 per hour unionized auto workers?

It was inevitable that the size of these bailouts would up the ante for an economic stimulus package aimed at consumers. Not missing a beat, Barack Obama announced a $700 billion dollar fast-tracked package that will likely exceed $1 trillion before passage. (Trillions are the new billions.) The plan must be sending shivers down the spines of our foreign creditors who are expected to foot the bill. Add this cost to the hundreds of billions of prior stimulus and bailout packages, and the cost to our creditors is quickly heading into the multi-trillion dollar range. It can’t be long before they cry uncle and repeat the words of prizefighter Roberto Doran “No Mas.”

With so many familiar faces on his new economic team, Obama signaled his intention to “hit the ground running.” With the possible exception of Paul Volcker, all of his top appointees share the view of the Bush administration that the root causes of our economic problems lie in the reluctance of banks and other financial institutions to lend. As a result, we can expect a virtual continuance of current policy.

It is no surprise therefore that both Democrats and Republicans offered healthy “huzzahs” to Henry Paulson’s latest bazooka: $200 billion to purchase securities backed by auto, student, and credit card loans. It is hoped that with this transference of risk to taxpayers, lending institutions won’t be so cautious, and the credit-fueled American economy can thrive anew. This is unalloyed insanity that can only lead to total ruin.

Paulson stated clearly that he would print as much money as it takes to revive the economy. Unfortunately the only industry likely to be revived by such policies is printing itself. But even this will not help the United States as the majority of our printing equipment is imported from Switzerland.

But what if the root of our financial problem is that American consumers have already taken on too much debt? By trying to force feed even more credit down the throats of already overly indebted Americans, Paulson’s plan will only weaken the economy further.

Building on the groundwork laid by Paulson, the massive stimuli that will likely be pushed through by Obama and an overly eager Democratic Congress will further impede any real recovery. By swallowing up all available capital, spending to create government jobs will destroy far more private sector jobs. Rather than expanding government and increasing the national debt, policy makers should be thinking about doing the opposite.

The brutal truth that no one in Washington dares acknowledge is that our systemic economic problems can only be solved by a reduction in consumer borrowing and an increase in savings. We must repair our national balance sheet and a painful recession is the only path to achieve this. By interfering with the market’s attempts to bring this necessary change about, all the proposals currently coming from Washington or bubbling up from think tanks and Nobel prize-winning economists, will only exacerbate the imbalances and lay the foundation for even greater losses and a larger crisis.

A short-run reduction in GDP is a sacrifice we must be willing to accept. If we swallow this medicine now, in the long run we will have a sustainable rise in GDP as higher savings leads to increased capital investment, greater productivity, and eventually a lasting increase in consumption.

For a more in depth analysis of our financial problems and the inherent dangers they pose for the U.S. economy and U.S. dollar denominated investments, read my new book “Crash Proof: How to Profit from the Coming Economic Collapse.”

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I finished reading Peter Schiff’s first book Crash Proof about two weeks ago. I got it on a Friday and couldn’t put it down until I had finished it. I only wish I knew about it when it was first published in early 2007. Although it would have been hard to believe the predictions that Schiff makes and actually take action at that time, reading it with recent hind sight proved invaluable. I will definitely take action now and I will trust the government a whole lot less…

Peter Schiff’s Online Star Turn

by: Gregg Greenberg

More than a half a million people so far have tuned into a video montage called “Peter Schiff Was Right 2006-2007” on Google’s (GOOG Quote – Cramer on GOOG – Stock Picks) YouTube, turning Schiff, the president of Euro Pacific Capital, into something of a video celebrity.

The video traces a series of Schiff’s prescient calls on America’s economic woes, starting in August 2006, when Schiff told CNBC that the coming recession “is going to be pretty bad … and it’s going to last not just for quarters but for years.”

It also shows rosy forecasts, now proven incorrect, by economists and pundits including Ben Stein, Mike Norman and Arthur Laffer.

A week prior to the video’s Nov. 2 release, Schiff offered his views on the economy, gold and the tax plans of then Sen. Obama in a TheStreet.comTV video titled, “If Obama Wins, Economy’s Doomed.”

“They are trying to get Americans borrowing and spending even more money when what we need is the opposite of that,” Schiff said in the video. “We have no more savings left and I think the government can turn the next decade into something worse than the depression.”

Peter Schiff was on TheStreet.comTV promoting his book The Little Book of Bull Moves in Bear Markets. He originally called the economic collapse in his first book Crash Proof.

In a Nov. 1 video on TheStreet.comTV called, “Beat the Bear With Gold,” Schiff predicted the government’s response to the crisis would be to “print money” and socialize losses. As evidenced this week by Treasury Secretary Henry Paulson’s $200 billion plan to bail out student and credit card loans, Schiff is looking prophetic once again.

“The government is trying to solve all these economic problems or at least prevent the crisis through creating inflation by printing a lot of money. And ultimately that’s going to lead to a major collapse in the value of the dollar,” Schiff said. Check out this video…

Schiff advocates buying gold bullion to beat the bear market. Gold has pulled 20% off its highs to around $800 an ounce, but the money manager says the yellow metal has “held up a lot better than other assets” and ultimately thinks it’s the only “real store of value.”

Economic commentator and television personality Ben Stein attacks Schiff’s gloom and down scenario in the YouTube video, insisting that the subprime crisis is “a tiny problem.” Stein has since apologized to Schiff in a New York Times editorial.

To the victor, goes the spoils. Even in a downturn.

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