Last time I looked, American Express was not a bank. They were a credit card company like VISA and MasterCard. However, unlike its revolving debt counterparts, when AMEX gave you plastic and you racked up debt, you had to pay-off each month. Because of this, American Express was a great card to give your college-bound teenager. It was a lesson in fiscal responsibility and living within your means.
Those days, like so many other fine things here in America, are gone. Now, AMEX is a bank.
The Bank of AMEX
The change is not precisely unexpected. We live in perilous times with the government pumping out money at an unprecedented rate to “bail out” Wall Street, AIG, banks, the automakers, the mortgage market, so on and so forth. They say the next wave in the money-tide will cover credit card debt gone bad. American Express couldn't wait for the next crap sandwich of economic largess to be pushed down the taxpayers' throats, they wanted a bite from that original $700 billion crap sandwich; so they changed who they are and got in line.
It seems to me that the transition from credit card company to bank holding company, accomplished so easily, so smoothly, is a fine indicator of the real problems that we, as a society, are facing. We, the taxpayers, are being told to pony-up this money or face dire consequences by the same congressional "leaders" who created the environment for the abuses and excesses of the financial sector in the first place; and we are being told to trust that money to the same people who's greed and vanity brought us to this point. The definition of insanity is doing the same things over and over and expecting different results. By that definition, all of this spending on bailouts is insane.
Failure of the First Bailout
Let's see, with the promise of taxpayer money backing up—well, almost everything—the stock market continues its drop, the economy continues to contract, banks are holding on to the money they have already received, venture capital is hard for new start-ups to find, employment is suffering at record levels. Honestly, the only good news for some time has been the price of oil. I wish I could say that oil's decline was due to some strong, pro-American domestic energy agenda, but the truth of the matter is that it has nothing to do with drilling here and drilling now and everything to do with the fact that once the American economic domino tipped over, it began to knock down all the others that were standing right behind it.
Maybe I am mistaken in that. Liberal policies of the last 30 years finally ruined the US economy, taking down the interconnected economies all over the world, which ironically strengthened the dollar while simultaneously throwing the planet into a recession, thereby lowering the global demand for oil, which, in turn, forced the price to drop leading to lower gas prices for American motorists. Chris, Barney, we owe you a vote of thanks, but did you have to kill the US economy to get lower gas prices? I digress.
The point is that aside from spurring some firms like American Express to change their business, funding some very nice vacations for AIG executives and paying for a number of bank buy-outs, what has been the practical consequence of all these bailouts except to demonstrate that these people will simply not act properly unless forced to do so?
The answer, of course, is “Nothing.” Not even the so-called economic stimulus package from the beginning of the year, with its vaunted tax rebates, had any real effect. People used the money for what they wanted, not what the government wanted. In like fashion, the banks have used their bailout money as they saw fit, not as the government saw fit, which has proven to be a embarrassing problem for the Bush Administration, which had to ask the banks to use the money to make loans. That, of course, brings us back to American Express. Why make the change from credit card company to bank? The only answer is that it wants a piece of the bank bailout, money that was to go to banks in trouble, not banks that have only just become banks to take advantage of the Federal handout.
The Bottom Line
Now we are being promised more goodness from the public dole; more bailouts, rebates, stimulus, programs, taxes, tax cuts, credits, reductions, deductions and whatever else the people running the show in Foggy Bottom can come up with to make all this spending seem worthwhile.
Like the stock bubble in 1929 and the tech bubble of the 1990s and the housing bubble of 2008, the plan that looks like being put to practice in the next months and years is not sustainable. The Soviets fell because they were pushed (by the US) to spend far more on the military than their economy could sustain. Now, we are going to be forced—by our own government, no less—to spend more on social and financial programs than our economy can sustain, and yet we have set upon that course with cheering in the streets.
How many times does history have to repeat herself before we learn her lessons?
