Monday, September 29, 2008

Burning Down the House?

Today is Monday, 29 September 2008.

It is amusing to watch Bush get a knee in the crotch from House Republicans.

It’s not amusing to watch House Republicans give a knee in the crotch to the American economy, by trying to sabotage the Paulson bailout.

It's difficult to discern how many of the HRs actually believe their spouting that the Bush bailout plan would be the “first step on the road to socialism”. Undoubtedly, some of them are so ill-informed and self-deluded that they confuse state capitalism with socialism. Hopefully, most of them are simply cynical and opportunistic jackals … wait, no need to insult animals … simply Repugnantcans trying to squeeze one more mile out of a re-tread Cold War hysteria.

HH, being a democratic socialist, knows socialism when he sees it, and the bailout ain’t it. Now, complete socialization of the Commanding Heights of the Economy would be a nice start, but, again, this ain’t it.

If the bailout goes through as currently structured, the odds are that, over time, the taxpayer investment in preventing a major global recession will, at worst, break even for taxpayers, and could well turn a small profit. And make no mistake, my friends: the worst global economic downturn since the Great Depression is where we’re headed to in a handbasket, if sane regulation, the beginnings of which the Democratic Party forced into the Paulson Plan, isn’t swiftly implemented to rein in lawless predatory capitalism.

The foundation of any economic system beyond the crudest barter is credit: my promise to you that, in return for something you give me today, I will give you something tomorrow. (It’s no coincidence that the words of Daniel Webster are inscribed over the front door at Dow Jones’ headquarters in New York City: “Credit is man’s confidence in man”.)

If you don’t believe this, then you should cut up your credit cards and return everything not yet paid-in-full, pay off your home mortgage or sell and move into your car … oops, you probably owe money on the car, so move the family into a local alley.

Already, world credit markets are nearly frozen: without some guarantees and regulation, banks are becoming too fearful to lend to one another, let alone to consumers (the latter is a technical term for “those of us who like sufficient nutrition on a regular basis”).

Here’s a paragraph from Saturday past’s The New York Times:

“For nonfinancial firms during the first three months of the year, the outstanding balance of so-called commercial paper — short-term IOUs that businesses rely upon to finance their daily operations — was growing by more than 10 percent from a year earlier, according to an analysis of Federal Reserve data by Moody’s Economy.com. From April to June, the balance plunged by more than 9 percent compared with the previous year.”

[http://dealbook.blogs.nytimes.com/2008/09/26/credit-enters-a-lockdown/?scp=3&sq=Peter%20Goodman&st=cse]

As I write at 5.50am CDT, what looked when I retired last night to be a promising opening in the Asian stock markets has turned sour, and the same is happening in Europe. American stock futures indicate a sharply lower opening.

More to come on the subject as the day grinds on.

1 Comments:

Anonymous interested reader said...

Thanks for your perceptive commentary and good review of the situation. I will look for your additional thoughts as this unfolds.

Right now I may look for information on how my representative voted, but I can already predict I won't like it. It becomes disheartening to send another e-mail, make another phone call, write another letter to my elected officials. Living in the most "red" state in the union can be frightening and frustrating.

2:55 PM  

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