Greed, stupidity and taxes

David Brooks writes there are two overlapping narratives that explain the implosion of the global economy  Greed and Stupidity

There's Greed
The U.S. economy got finance-heavy and finance-mad, and finally collapsed. When it did, the elites did what all elites do. They took care of their own: “Money was used to recapitalize banks, buying shares in them on terms that were grossly favorable to the banks themselves,” Johnson writes.

An oligarchy takes control of the nation. The oligarchs get carried away and build an empire on mountains of debt. The whole thing comes crashing down. Johnson’s remedy is clear. Smash the oligarchy. Nationalize the banks. Sell them off in medium-size pieces. Revise antitrust laws so they can’t get back together. Find ways to limit executive compensation. Permanently reduce the size and power of Wall Street.

Or does Stupidity explain it better?

Overconfident bankers didn’t know what they were doing. They thought they had these sophisticated tools to reduce risk.But when big events — like the rise of China — fundamentally altered the world economy, their tools were worse than useless.
--
Banks got too big to manage. Instruments got too complex to understand. Too many people were good at math but ignorant of history.

The greed narrative leads to the conclusion that government should aggressively restructure the financial sector. The stupidity narrative is suspicious of that sort of radicalism. We’d just be trading the hubris of Wall Street for the hubris of Washington. The stupidity narrative suggests we should preserve the essential market structures, but make them more transparent, straightforward and comprehensible. Instead of rushing off to nationalize the banks, we should nurture and recapitalize what’s left of functioning markets.

Either way or both, we're in for crushing amounts of taxation.

Michael Boskin calculates that Obama's borrowing and spending adds $6.5 trillion to the national debt which will have to be paid back.

If distributed among those who pay taxes, only about 50% of the US population, every family will have to pay an additional $163,000.

These deficits are so large for a prosperous nation in peacetime -- three times safe levels -- that they would cause the debt burden to soar toward banana republic levels. That's a recipe for a permanent drag on growth and serious pressure on the Federal Reserve to inflate, not the new era of rising prosperity that Mr. Obama and his advisers foresee.

Charles Krauthammer on Obama's Ultimate Agenda

we are now so deep into government intervention that constitutional objections are summarily swept aside. The last Treasury secretary brought the nine largest banks into his office and informed them that henceforth he was their partner. His successor is seeking the power to seize any financial institution at his own discretion.
--
Obama has far different ambitions. His goal is to rewrite the American social compact, to recast the relationship between government and citizen. He wants government to narrow the nation's income and anxiety gaps. Soak the rich for reasons of revenue and justice. Nationalize health care and federalize education to grant all citizens of all classes the freedom from anxiety about health care and college that the rich enjoy. And fund this vast new social safety net through the cash cow of a disguised carbon tax.

Obama is a leveler. He has come to narrow the divide between rich and poor. For him the ultimate social value is fairness. Imposing it upon the American social order is his mission.
--
If Obama has his way, the change that is coming is a new America: "fair," leveled and social democratic. Obama didn't get elected to warranty your muffler. He's here to warranty your life.

"Congress and the White House are as prudent as a family that greets a huge, emergency roof-repair bill by visiting gourmet bistros, booking Caribbean cruises, and buying Maseratis for the teenagers." - Deroy Murdock

Look across the pond to see what crushing debt foretells about our future.  The Spectator tells us just what will be needed to bring the U.K.'s budget into balance. via Tim Montgomery

To comprehend the scale of the sickening task awaiting George Osborne if he becomes chancellor, consider the following. If he were to raise VAT to 25 per cent, double corporation tax, close the Foreign Office, cancel all international aid, disband the army and the police, release all prisoners, close every school and abolish unemployment benefit he would still be unable to close the gulf between what the UK government spends and what it raises in taxes.