Posted by Peter Lawler
Bill Kristol says the experts really fear it’s possible, unless we take measures nobody much is considering right now. I tend to agree we’re very vulnerable to a mega-ripple effect, and I’m not at all sure anyone with power really knows what to do.
Larry Kudlow a former Reagan economic advisor making sense of the "bailout".
This weeks Barrons puts a little more meat on the bones.
I think Kristol is suffering from pessimistic exuberance. Dow 9,000 is possible, Dow 6,000 as some of the bigger bears argue is going a bit far. I predict a loss of jobs in the pin factory, as everyone who has bought nice pins discovers that that there aren't enough bubbles to go around poking. Of course if the pin yielding pundits and speculators go out of businesss and the pin factory does shut down well the ripple effects could be tremendous. All that money you thought you had? Well it was invested in shorts that didn't pan out.
You did not have the money, anyway. You invested it in something and most of the "somethings" are just fine. Even AIG really only needs enough money to get by for the next couple of weeks to get past a crisis in SOME of its divisions. The corporation as a whole is very profitable and sound.
This is the link to the Kudlow piece, which is quite good and would be a comfort except for problem of party politics and the gimme's Democrats want for key political supporters.
There ARE people in power who know what to do, but grasping for more power who do not care about what is right, except in terms of what is right for themselves. Since when has this not been an American, a democratic, a governmental problem?
Katie--thanks, that makes good sense.
As I remember by history of the Depression, the three main causes were:
1. Failure to backstop a cascading run on banks.
2. Tax hikes in a mistaken effort to keep the budget balanced in bad times.
3. A large tariff hike.
Absent those, it probably would simply have been a recession. Why don't our pundits and pols note these facts repeatedly in order to justify the current plan.
P.S. The fear is that, if the run goes beyond real estate, to credit card payments (which are starting to go into default at higher rates) and other debt instruments, the current plan may be too little, too late. Correct? Few, if any, know. That's what worries people.
Part of the problem is that fear Richard mentions. This is what makes the media such a key part of what happens next. Your pundits make money by selling their time and people are more likely to watch if there is something upsetting and exciting going on - so their incentive is to add fuel to the fire, which is exactly what is NOT needed. Obama running around talking about a failing economy, "We're ALL gonna die! Elect me!" is also useful to him, but not to the rest of us. Still, the public likes drama, so that plays well.
Crisis of confidence - that's why the government stepping in immediately is the way. Waiting is a waste of time. Yes, history will tell if this is just the right plan. It looks good to me and to guys I respect. Politicians playing around, saying they are sagacious, but really just trying to gain comparative advantage with the public are what worries me. At the moment,in stemming the crisis of economic confidence, all we have to fear is fear itself.
The Bush presidency is the presidency of fear. Fear of terrorism spills over into economic fears. Of course capitalist expansion fuels and feeds off of this - that is the whole point of it, to a degree. America has transformed into 'immaterial' production. Environmental depletion will follow. And guys in suits huddling in DC will not be able to solve that crisis over the weekend.
What you say, Kate, and what Richard says are exactly what motivated me in saying that it would be better to do something sooner rather than later . . . even if that something was highly imperfect (as it surely will be no matter when it is done).
I'm glad you found the Kudlow link.
Does any one remember Osama bin Laden. I wonder what his thoughts are on our current financial crisis?
Here is what he said after 9/11. "If their economy is destroyed, they will be busy with their own affairs rather than enslaving the weak peoples. It is very important to concentrate on hitting the U.S. economy through all possible means." And here is what al Qaeda second-in-command Ayman al-Zawahiri said in September 2002: "We will also aim to continue, by the permission of Allah, the destruction of the American economy."
I wonder if Congress will consider this while they deliberate?
AJ, the Kudlow article is a good one. Thank you for suggesting it. He is not the only person saying that this deal could be a money-maker and not a loss.
As to your other point, yes.
ren, don't be silly. If people had not been over-confident about the economy and economic expansion (as if it were eternal or a natural right) we would not be in this mess. No one, especially not the government, can go playing with our financial institutions and pretending that they can accomplish social goals and become moral entities without distorting said institutions into financial disasters. Congress cannot fiat or dictate risk out of the economy.
Mabye bin laden and al CIA'da was more knowedgeable than government or wallstreet on economics. While we were discussing all this they passed a trillion and half defense budget and allowed around 800 billion to be looted. Now we have the bankers out there shorting the real economy. However, we are calling this a democrats problem because of the social engineering of sub prime morgages...I think they were always meant to fail. The total of those assets is only like 200 billion. This whole thing is so contrived its not even funny. The 800 pound gorilla is going to be dividens. Arrest greenspan, paulson, bernaki, bush, pelosi, ect. Nationalize the federal reserve and start putting money into infastructure. I don't want socialism like this but I don't see another way out. Nationalizing the federal reserve would be the best start to digging out. If more people understood the central banking scheme and that it is run by ten or so families who get a percentage of every dollar in play for doing nothing mabye we could get moving.
"The fundamentals of our economy are strong.”
Sound judgement a few days ago from John McCain.
It's interesting that the people screaming "The sky is falling" are the so-called "elites", while the average American seems quite indifferent to this nonsense.
Wall Street may be sick, but Main Street is doing just fine.
Don't think they can't bring the problem home to us if they don't get what they want. However, I say bring on the depression when faced with the alternative of ecconomic dictatorship.
Congresswoman Marcy Kaptur boldly slammed the bailout bill this past weekend as the work of criminal insiders who have shut down the normal legislative process to commit “high financial crimes” and defraud the American people, while Rep. Michael Burgess warns that “martial law” has been declared.
The two Congress members are part of a growing minority of representatives sounding the alarm about the dictatorial nature of the bailout bill, which is expected to be up for a vote in the House today, with most in Congress having not had the opportunity to even read the legislation.
The bill is expected to reach the Senate on Wednesday as a raft of outraged politicians cry foul about being strong-armed and accused of being unpatriotic for opposing the carte-blanche passage of a piece of legislation that fundamentally centralizes control of the financial infrastructure of the country into the hands of the government and the Federal Reserve.
“We are Constitutionally sworn to protect and defend this Republic against all enemies foreign and domestic. And my friends there are enemies,” Kaptur told the House floor.
“The people pushing this deal are the very ones who are responsible for the implosion on Wall Street. They were fraudulent then and they are fraudulent now.”
“My message to the American people don’t let Congress seal this deal. High financial crimes have been committed,” added the Democrat from Ohio.
“The normal legislative process has been shelved. Only a few insiders are doing the dealing, sounds like insider trading to me. These criminals have so much political power than can shut down the normal legislative process of the highest law making body of this land,” Kaptur concluded.
Elsewhere, Rep. Michael Burgess (R-TX) said that the only information he had received about the bailout was what talking points to use on the American people and that he had been thrown out of meetings for not blindly supporting the bill.
Ominously, Burgess also comments, “Mr. Speaker I understand we are under Martial Law as declared by the speaker last night.”
Absent any proper hearings concerning the legislation, Burgess called for the legislation to at least be posted on the Internet for 24 hours so that the American people could “see what we have done in the dark of night.”
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