President Trump: The NEW one and only politics thread

He's right.

To borrow from Jim Grant, capitalism without failure isn't capitalism. This country refuses to accept reality. In this case, it amounts to socialism for the rich. All of those entities they are now talking about bailing out? Just like in 2008, they overlevered themselves. The official policy of the United States -- of the world -- has been for everyone and everything to overlever themselves with central banks monetizing all of the debt -- robbing savers to reward debtors and essentially forcing people into risky behavior that an actual free market would have regulated. But it has allowed governments to pile up well debt beyond where a free market would have cut them off. And it's allowed -- actually encouraged -- private businesses to pile up an insane amount of debt to do some very nonproductive things with.

The absurdity of it is that you had companies borrowing trillions of dollars to buy back their own stock for the last several years. Taking on massive debt. Today, many of those companies are being advised to sell their stock to meet their operating requirements -- they are soon going to be in trouble. All of the debt monetization drove up the price of US equities on the back of those buybacks -- it created artificial demand for equity in companies. Tthose companies buying their own stock were way overpaying for it, obviously. They were creating the bubble and setting themselves up to be victim of the bubble at the same time. Now if they sell their stock, they will take losses on it. And they will still be drowning in debt for the whole exercise.

Consider if the price of money was actually set by the market, rather than by a a price-fixing entity. Wasted capital that went into financial engineering and unprofitable ghost companies would have been left out there to find productive uses based on actual demand. We are worse off -- in terms of our standard of living -- because we do this to ourselves. And with all of that debt that is going to need to see a massive deleveraging, we now have to pay back the waste with future growth. The WORST thing to do is a 2008 reprise, where we bail out failure, and double down on trying to mask a debt problem with more debt creation on the back of financial repression. But that is what is going to happen. The question is whether they can get away with it again, because the measures necessary will destroy all vestiges of a free market economy that we have left.