Monday, September 29, 2008
The Bailout has a Blowout
For a week or so, we have heard Paulson and Bernanke blasting air raid sirens to announce what sober economists of both liberal and conservative stripe have been telling us for a year: the financial infrastructure of our nation, and given our size, that of the world to a lesser extent, is being sailed into the rocks by captains of our financial industry in their heedless pursuit of short term profit. And lately SEC chairman Cox admitted maybe he should not have let those captains off the regulatory leash. OK, we little people had our own ways of knowing that already...the economy is busted. Did we bust it? Consumers beside yours truly certainly did their share of the borrowing. I intend by that graphic to illustrate that not just "wealthy people" but about half of America's work force have seen their paper wealth mushroom and then evaporate. And many of the little players can't get out from under a bad investment that is locked up in a retirement plan...unless they swallow the penalties. Given how things are going, that option may not be so dumb after all. One of my 401K's is in Wachovia...its too late for me to crack open that rotten nest egg.
It is supposedly so busted that there isn't time to sort out exactly where the money went and get it all back from whoever took it. But I think we have now seen that something equally important has been broken. And that something is important because it provides the wherewithal to solve the big problems like war mongering enemies and harmful shifts in natural resources and business climate: it is the workings of our democracy. The level of trust in our government has been so damaged by the last 7 years that the administration can neither lead nor command its own political party. How screwed is that? And as Forbes' Joshua Zumbrun and Brian Wingfield write Now What? The Democrats demanded taxpayer equity and assurances in the bill and then reluctantly got behind it. The presidential candidates at least tepidly said they would support it. The preznit has addressed congress and country saying we need to act soon. ....but his own party will not play with him on this one. Could that lost confidence in government and respectful check and balance of congressional interests and administration be resurrected? More likely in an Obama adminstration.
Either those who have belatedly sounded the sirens are wrong and we won't have a collapse, or they have some idea, not understood by the House Republican caucus, that in fact the monetary equivalent of a large hole in a space ship is about to rapidly depressurize the capital flow and credit machinery on which we allegedly depend. Don't ask me which is more correct! The thing is, people with money being almost the same a humans, when there is uncertainty and a threat or rumor of danger, it is their nature to hide the goodies for safe keeping. Banks, bankers have shown us, are NOT safe places to keep money. Much of what is screwed about our economy is the dirty little secret of how it depends on psychology more than on math.
Is your bicycle in good repair? Have you laid in enough root vegetables and canned goods for a long spell? Is your heating oil tank filled up for the season?
Posted by GreenSmile at 9/29/2008 03:25:00 PM