That damn bailout...

The Bush-Paulson bailout, even after being rejected on Monday, successfully went through the House of Representatives on Friday, meaning that American taxpayers will now be an extra US$700,000,000,000 out of pocket (and now have over $10,000,000,000,000 of debt to pay off). The money will be going to try to prop up a flawed financial system, and to delay and magnify further economic collapse.

Over the past few weeks, you undoubtedly would have been hearing, from all political groups and figures, from Sarah Palin to Winston Peters that this collapse has been caused by "greed", capitalism and spectators. Similarly, no one actually tackles the proper root of the problem (artificial credit expansion) and instead advertise great new systems of regulation and government interference. In other words, more power to politicians.

However, in a free market, banks only have so much money to lend out (and if bank prints their own money such as in America pre-civil war, it can quickly become worthless), and are accountable to the people who deposit their money in the bank. Low interest rates signal that people are more willing to take risks for business expansion and economic growth, and that the bank has a lot of money to lend out. High interest rates mean that people want to be more conservative with their money.

Under a free market, interest rates set by banks go up with inflation (as the money gets devalued with time). However, in today's mixed economy, governments set official interest rates. And as thus, they also set inflation at a steady pace, to ensure there's always money on hand to lend out, to ensure economic growth (which is what we've seen during these two decades, with the dot-com bust as an interval).

Unfortunately, this artificial economic growth does not encourage proper, responsible investment, and this can be seen in middle-class America -and New Zealand- with the rise of the McMansion (although many regulatory policies are involved there). The building and buying of McMansions is generally hard work, but, from hearing stories about loans worth hundreds of thousands of dollars with 0% deposits, it's happening alright.

The inevitable result of stupid business decisions is business failures, job losses, and share market crashes, such as we've seen with Lehman Brothers, AIG, Fannie Mae & Freddie Mac, and many New Zealand finance companies. What this current collapse signals is a market correction, caused by governmental inflation. Also to consider, is the fact that money gets devalued by inflation, which is a double-whammy for everybody.

North Korea's way of getting what they want

The North Korean government has a special way of getting whatever they want, whenever they want from the West. From the International Herald-Tribune:

"Under a Feb. 13 agreement reached at six-nation talks in Beijing, North Korea must shut down its main nuclear reactor and allow U.N. inspectors back into the country within 60 days. In return, the North would receive aid equal to 50,000 tons of heavy fuel oil from the other countries in the six-party talks on its nuclear program — the United States, South Korea, Russia, China and Japan."

I don't know why the West is engaging in this bribery with Kim-Jong Il, especially since the West has nuclear weapons of it's own, in a far greater amount than North Korea. The West is funding this crazy government, and it's crazy nuclear weapons program.

Also from the International Herald-Tribune:

"The Feb. 13 timetable is the first step toward implementing a September 2005 agreement in which North Korea agreed to abandon its nuclear programs in exchange for energy aid and security guarantees.
[U.S. Assistant Secretary of State] Hill said he was encouraged by Kim's willingness to look ahead to the more difficult next stage, which calls for the country's plutonium-producing reactor to be disabled and then dismantled — and for North Korea to make a full disclosure of its entire nuclear program."

Really? Perhaps Dubya and some of his collegues need to remember that North Korea is a COMMUNIST country, not at all unlike the USSR. And we should remember what the USSR brought us all to the brink of:

Aid time again!

World Vision has launched their annual 40-hour famine again, and the money is (supposedly) going to help people in the third world.

Although World Vision is a charity and the 40-hour famine is a voluntary inititive, so I have no moral objection to it (unless the money goes to fund some tyrannical government's regime), the money actually does very little to actually help people in the third world. The reason being that, although the money provides for basic needs in the short term, it doesn't teach self-dependence for a higher quality-of-life in the long term. An advertisement for Oxfam here in New Zealand a few months ago said "give a man a fish, feed him for a day. But give him the means to catch his own fish [where the saying would be different from what it'd be in the first world] and feed him for a lifetime". The saying is absolutely correct. After all, why don't we hear about the fantastic sucesses of nations in the third world who developed off aid money?

Governmental-provided aid is simply welfare for entire nations. Like welfare in the first world, it does nothing to get people out of poverty, and never will-by teaching the recipients dependence on other people. To get those people out of poverty, we need to teach them to be dependent on themselves. Only then, and it has been proven countless times, will the poverty cycle be broken, and people prosper.