Posted by: John Gilmore | September 16, 2006

Europe Basks as U.S. Style Capitalism Draws Fire

I’ll translate what a “kinder, gentler version of capitalism” means in the article below – socialism. Do we really want to move toward the “European model” where we have “universal health care, a more generous system of social security and a general principle of almost free university education”? Who will pay for all of this? You and I will eventually pay for this in the form of increased taxes – just like the Europeans. The governments of Europe do not give these services away for free – there is a price. Take a look at European tax rates if you want to see our future. Along with higher taxes comes loss of freedoms – governments don’t just provide healthcare – they control it. Do you want to wait weeks or months for healthcare and then see the physician that the ‘State’ tells you to see?

Can everyone attend a university for free? Of course not. Who gets to go to college? The government will decide for you. Take a look at the current system in Germany and you’ll get a glimpse into our future. You must take tests that determine whether or not you can attend college, technical school – etc. You might want to work a little harder and attend a university – but I’m afraid that will not be your decision. All of the rhetoric in the article below sounds good – but we’re not told the whole story – we never are. Does a system that takes from those who earn a living and then disperses your money as it chooses sound like an economic system that is good for you (I won’t go into a discussion here on our current tax system in America)? Does this sound like a system that rewards hard work and entrepreneurship? Would you be willing to take a few risks and work hard to start a business or develop a product if you knew that the government would take most of your profits from you? Does this sound like a free economic system? It’s not even close. I don’t know about you – but I don’t feel like our current leaders (government) have any clue how to manage our nation’s finances, our nation’s military, our nation’s problems – our nation’s future. We are being led by people who are only concerned about their own welfare – mere puppets in this game. Why would I feel better about giving these same people – more power and authority?

If you stop and think about it – higher taxes and loss of freedoms are the end result of the “European Model”? Do we really want government controlling everything? You and I don’t – but somebody obviously does and they’re making it happen very deceptively. If you remember – Hillary Clinton tried to implement ‘universal healthcare’ in America during the late 1990’s. The American people rejected her proposal – so what’s happening now? If you’ve really been paying attention, you’ll notice that someone is re-packaging socialism in the form of economic ‘stimulus’ packages and is trying to sell it to us as the only way to overcome the global economic recession. Governments around the world are nationalizing banks, buying assets – basically getting their tentacles into everything – all under the guise of ‘bailing out’ the financial system. If you think this doesn’t come with a loss of freedom, I’ve attached a 2nd article below relating to government ‘restrictions’ for companies who take bailout money. As I’ve mentioned before – the global elite behind all of this are very intelligent and very patient. They’ve waited hundreds of years to get to this point – they have no problem waiting a little longer until we all finally buy into the socialism plan.

Barack Obama’s task in this grand game is to move us closer to the European model – which will eventually morph into full blown socialism the world over. Don’t believe it? Get ready to see what all of the economic ‘stimulus’ packages will get us – more government ownership of assets, nationalization of industries – and all of the ‘stimulus’ in the world will not prevent our financial collapse. Imagine what’s going to happen when the next domino falls – when governments around the world finally go bankrupt. Once the people behind this system bankrupt the world – we’ll then see the true face of the beast.

I recommend you read ‘Atlas Shrugged’ (a novel by Ayn Rand) if you want to know what socialism does to a society. You might get ‘universal healthcare’ – but it will come at a very steep price.

jg – February 2, 2009
_________________________
JANUARY 30, 2009

Europe Basks as U.S. Style Capitalism Draws Fire
By JOELLEN PERRY

Wall St. Journal

DAVOS, Switzerland — A day after Chinese and Russian leaders blamed a free-wheeling U.S. financial system as the source of the global economic crisis, Europeans here are taking comfort in what they see as their kinder, gentler version of capitalism.

José Manuel Barroso, opening European markets remotely on Thursday from Davos, said the U.S. is looking to the European model of capitalism.

“In Europe, we have a social-market economy,” European Commission President José Manuel Barroso said in an interview. “We have universal health care, a more generous system of social security, a general principle of almost free university education. And we want to keep that.”

For years, Europe’s more-regulated model of capitalism has been maligned by many economists as a study in second-rate market economics. Now, as world leaders seek a way out of the crisis — and aim to avoid repeating it — U.S.-style capitalism is under siege and the European model is getting another look.

America may be stealing a glance across the Atlantic. In Washington, the Senate is gearing up for a debate next week on its version of the $819 billion economic stimulus package the House passed Wednesday.

“President Obama,” Mr. Barroso said, “is moving toward a European-style model.” Mr. Barroso, who runs the executive arm of the 27-nation European Union, cited the new administration’s aim to boost health-care coverage, access to student loans and public-infrastructure spending as examples of the U.S’s emerging European tilt.

After Wednesday’s suggestions by Chinese and Russian leaders that the world might benefit from less reliance on the dollar, many here at the World Economic Forum said the crisis had dented the U.S.’s reputation. But few predicted the crisis would cost the greenback its status as the world’s haven and reserve currency of choice — largely because neither the euro nor the yen is seen as a viable alternative.

Others at the gathering spread the blame beyond U.S. borders. “Mistakes were made on both sides of the Atlantic. It’s true, the crisis originated in the U.S. But it’s also true that European financial markets had major exposure,” Mr. Barroso said. “I don’t want to get into a blame game.”

Angel Gurría, secretary-general of the Organization for Economic Cooperation and Development, agreed. “There was massive regulatory failure, massive supervisory failure, and massive corporate governance failures,” he said.

The World Economic Forum in Davos was full of verbal tongue-lashings for the U.S. from countries such as Russia and China. The world is calling for the U.S. to get its act together. Video courtesy of Reuters.

Some economists here say Europe’s model means it will fare better than the U.S. amid the crisis. “I expect the U.S. slowdown to be longer and deeper,” said Kenneth Rogoff, a Harvard University economics professor and former chief economist of the International Monetary Fund. “Europe’s financial system is not as compromised and it already had heavy social insurance. So I think the U.S. has more and deeper structural adjustments to make.”

Some contend the Continent’s extra social padding hasn’t necessarily been a drag on growth. From 1998 to 2008, gross domestic product growth in the euro currency zone averaged 2.2% — less than the U.S.’s 2.6% and well above Japan’s anemic 1.1% showing, according to a recent Goldman Sachs report. When measured on a per-capita basis, euro-zone growth outstripped the U.S. over that period, coming in at 1.8% compared with the U.S.’s 1.6%.

“The U.S. has higher highs, but it also has lower lows,” said Erik Nielsen, Goldman Sachs’ chief European economist in London, noting that the ups and downs of the U.S. housing market over the decade damped America’s overall growth rate. “The euro zone still comes out ahead.”
But Thursday’s Davos discussions also brought reminders of the Continent’s structural vulnerabilities. “I don’t think everyone wants to take responsibility for everyone else’s problems,” Swedish Prime Minister Fredrik Reinfeldt said during a panel on European economic governance. “In that sense, we are still nation-states … and I think that will not change in the short term.”

—Daniel Hertzberg contributed to this article.
Write to Joellen Perry at joellen.perry@wsj.com
Printed in The Wall Street Journal, page A6
________________________________
FEBRUARY 2, 2009

Firms Receiving U.S. Aid Face Pay Curbs

By DEBORAH SOLOMON

WASHINGTON — The Obama administration, seeking to improve public perception of the $700 billion financial rescue, is expected to announce this week tougher executive-compensation restrictions for some firms that get government aid.

Officials also are considering splitting off the Troubled Asset Relief Program from the Treasury and creating an independent entity, according to government officials. Some within the department think such a move could help improve the perception of the bailout, which has come under heavy criticism for being too secretive and not imposing enough rules and conditions on banks that get government aid.

The administration is working on a broad plan to bolster the financial sector and is expected to soon detail its efforts to help weakened financial firms. Treasury Secretary Timothy Geithner, possibly later this week, is expected to give specifics of the administration’s plan, including an effort to help homeowners in danger of foreclosure.

Wall Street has been anticipating the new administration’s plans, including expecting President Barack Obama to ask Congress for more money. Many economists no longer expect the second half of the $700 billion, which Congress recently approved, to be enough to fix the ailing financial sector.

Before it announces those plans, the administration is trying to lay the groundwork with politicians and the public, who have grown weary of bailing out banks. The administration, realizing the public is expecting quick action, seems poised to announce some of its efforts in stages.

Its first move appears aimed at bolstering public support for the financial bailout by applying tougher rules to banks that get a substantial amount of money. Chief executives of firms that receive “exceptional” aid will be banned from receiving any severance payments and they, along with the top 50 executives, will see their bonus pools shrink by about 40% from 2007 levels.
It won’t be easy to upend a compensation system that is woven into the fabric of the U.S. financial system. Many Wall Street employees work under employment contracts that can’t be unwound.

Defenders of the old system said it still is useful despite blowups that have made Wall Street look disconnected from political and financial reality. If the government imposes caps or other limits on compensation, some bankers worry that the most talented people will flee to firms that are less regulated.

The Obama administration hasn’t detailed what qualifies as “exceptional” aid, but government officials say the rules will apply in cases in which the U.S. provides significant dollars, along the lines of what has been given to American International Group Inc., Citigroup Inc. and the Detroit auto makers.

Last week, Mr. Obama called it “shameful” that Wall Street firms awarded $20 billion of bonuses even as Washington was spending taxpayer dollars to help bail them out of trouble.

Still, the administration isn’t expected to attach any new pay curbs to healthy banks that get money through the $250 billion Capital Purchase Program. That program, which has invested nearly $200 billion in more than 300 financial institutions, imposes some modest pay restrictions, including a ban on so-called golden-parachute severance payments for top executives.

The administration hasn’t finalized its plans for the heart of the bank rescue. It is considering a series of steps that would inject money into financial firms while relieving them of their toxic assets. The administration is considering a two-pronged approach that would further help banks by having the government buy a portion of their bad assets while offering guarantees against future losses on some of the remainder.

The administration continues to wrestle with the details, including what the government should pay for the troubled assets that are hampering the balance sheets of financial institutions. Mr. Geithner has assigned teams of staff to explore alternatives and is expected to present a plan to Mr. Obama shortly.

—Aaron Lucchetti and Matthew Karnitschnig contributed to this article.
Write to Deborah Solomon at deborah.solomon@wsj.com

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