Ladies and Gentlemen. Our fellow Americans.
We live in challenging times. Financial markets in this country and around the world are significantly down, many people have lost money in bank failures, and people are forced to leave their homes because they can no longer afford their mortgage payments.
We have decided that, for once, we will be honest with you. Yeah, we are politicians but in these difficult times even politicians need to tell you the truth. And the truth is that we, all together and as a country, have been living beyond our means. For the last couple of decades, we have spent more than we were making. Too many people were taking the American Dream too literally. What were they thinking when they dreamt that they could afford a 400,000 dollar home with a 15,000 dollar salary? What were they thinking when they paid off their Mastercard with their Visa? What were they dreaming when they bought a car for every member of their household?
The problem was exacerbated by unscrupulous people in the banking industry. They initiated, organized, facilitated and managed the greatest transfer of wealth from the pockets of investors to the pockets of borrowers, and made sure they got a huge chunk of the pie. How, you may ask, did they do this?
The answer is marketing. There is one area in which even our foreign friends will admit that America is the best in the world: marketing. We Americans can sell the greatest crap. It doesn’t matter who we sell to: individuals, businesses, in the USA or abroad. We are the best in marketing. You want proof? Two words: McDonalds and Starbucks.
So the big marketing machine was used to tell investors, people who saved some money for a rainy day, that they shouldn’t be happy with a 3% return on a savings account or a certificate of deposit. You know, there is a bit of greed in every human being so if you are told you can make 10% or even 20% it is only human to accept the offer. The financial industry mafia, from the big guys in Wall Street all the way to the financial planners in Main Street, managed to convince ordinary investors to put their money in instruments that they didn’t understand. These investment vehicles were made complicated on purpose. It was basically one big scam.
The government made matters worse. Mr Greenspan kept interest rates too low, making it easier for people to borrow too much, making it easier for the financial mafia to sell fancy products. And then we lowered your taxes at the time we should have increased them. You know what, running two wars is not cheap.
For a long time the system worked like a pyramid scheme. It is called the “bigger fool theory”. As long as there are “bigger fools” who are willing to pay inflated prices for investment vehicles, all’s well. The financial industry found a lot of big fools. Ordinary investors here in the USA, pension funds at home and abroad, the Chinese government, Arab oil sheiks, German regional banks: we never knew there were so many fools.
However, it seems we can not find bigger fools anymore. The investment balloons are rapidly deflating.
Our fellow Americans: these are difficult times. We will need to increase your taxes. Your loans will get a lot more expensive, if you still can get a loan. Your pension fund may not be able to honor its obligations. In short, it is time to tighten our belts.