Friday, October 10, 2008

Yet another day of atonement.

Duh economy
Well its getting pretty bad here folks. Not sure where to draw the line between buying opportunities and bear traps...$4 GM shares anyone?...the company's liabilities exceed its assets just now according to MarketWatch data. The amount that has evaporated out of retirement accounts in the last year is headed toward 10 trillion dollars: that is about $33000 for each person in the USA which would be enough to pay off the national debt. My consolation at having so shriveled a nest egg will have to be that I have lived to see a Republican administration complete the nationalization of the banking system, which actually began in the FDR administration's attempt to cure the depression's collapsed banks. That Republican administration swore its true belief in the gospel of free and unregulated markets.

I was raised in a home where Republican was the only choice and my dad cursed Democrats and FDR in particular...though I could never get a clear explanation of that stance. FDR-hatred must have been a common ailment among the reactionary patchwork of constituencies that neoconservatism pulled together for Reagan. The end result is that these assholes have made capitalism look like more of a failure than even I believe it to be. And yet, my sense of revenge is sweet.

In its effort to trace the roots of the rot that grips our markets, New York Times casts a critical eye on the wonk-hero of the economy for the previous decade: Alan Greenspan. Genteel enough to grace Time magazine covers 20 years ago and work amiably enough with a Clinton administration as well as a Bush Administration, he even had a grudging fan in Brad DeLong...until recently. But do not be fooled. The guy liked Ayan Rand's writing - a lot - so why do you think his policies would care about YOU? The Times and plenty of other sources cite deregulation of financial markets as the cause of present grief. That deregulation went on since Reagan Administration let the Savings and Loan industry crater while its magnates wined and dined John McCain and then got bailed out with your tax money. When congress was Newtered in the mid 90's systematic removal of oversight went on apace until 2004, when SEC basically said to the investment bankers "y'all can just police yourselves". I understood none of this as it was happening. But I had the queasiest discomfort at 2% prime interest rates making houses seem affordable to people who were in fact NOT getting raises under the bush administration ... which was simultaneously spending ever increasing levels of borrowed money itself. I could not understand why inflation was not worse [that may have been dampened by the shift to foreign labor that went on concurrently]. It just felt like Greenspan was faking a I moved investments I control [much of my retirement money is managed and out of my hands] into cash. As of today, those investments are in tact and my tax-free municipals have made a tiny 3% a year since 2003. I admit I felt a bit foolish at first when the market continued up to 14000 but now I lick my chops and smile at all the bargains I can buy into!

Was/is the problem really deregulation? When asked if the complex derivitives contracts that imaginative bankers cooked up to hide the risk in bundles of bad housing loans had been a bad idea, Greenspan said no:
The problem is not that the contracts failed, he says. Rather, the people using them got greedy. A lack of integrity spawned the crisis, he argued

But if you ask me, Greenspan is actually conceding his error by blaming the problem on mere human nature, common old greed: that is EXACTLY why we ever institute regulation. Some check on human failings is vital where our lives and fortunes basically rest on our trust of one person or a small group of people.

But in the end, only a few of the greedy CEO's got what they had coming for not treating deregulation as both a gift to act freely and a burden to act responsibly with everyone else's money.

Desperation of the ignorant becomes a danger to the republic
With so much expert opinion now arrayed on Obama's side of the arguments about what government failures led us to this mess and what steps may rescue the economy, I don't blame the McCain campaign for trying to divert attention to other concerns. I hope McCain's deplorable decision to just go all out negative backfires and disgusts any undecided voters. To those who are paying any attention, the shift of tactics certainly makes a bald lie out of his claim that he would run a civil and respectful campaign.

Who are these rabid McCain supporters that Palin attracts? You might want to dismiss this very unpleasant kind of campaign and the ugly natures it appeals to as fringe politics and desperation on McCain's part. Don't. That was just the attitude of many when the German fascists began to draw crowds in the 30's. Don't go thinking Germans of that era were somehow a different kind of human than Americans of the 2000's...we are all just people and quite subject to fear and manipulation. Have you seen the footage from McCain rallies, that even MSM stations are playing, of extremely agitated ignoramuses venting anger at strawmen and completly misidentified policies and threats they label as Obama's? I predict, or at least hope, that in the not too distant future and for long thereafter, videos of McCain's performances at these rallies will become synonymous with the small minded and the fear-driven themes of American voting patterns...and understood to show empty conservative jingoism in its flop sweat moment of collapse. All of the forgetting that it takes for a nation to retread the worst impulses and mobs of political history may, I pray, be vanquished by YouTube.

The end game for the campaign is at hand. Edsell, insightful as ever, points to the choices Obama now faces. The quandry Edsell raises is, with victory nearly assured by Obama's margin in the polls, will a switch to more realistic speaches about the sacrifices our foxed up economy demands help set expectations or hurt his vote tally?

1 comment:

cul said...

Deliciously cogent piece. I think there's a paradigm shift going on even beyond the socialist trends as well.