Dystopian Paradox

While we’ve got problems, we’re not alone. Last week the Dutch government partially nationalized Fortis, a top twenty Euro financial with a market cap of what was $40 billion. Yesterday, the Dutch helped bailout another financial.

The Euro stock indices have dropped 40 percent in the last year while the S&P 500 is down a mere 25 percent. I guess it makes me feel a little better to know that all Western democracies are experiencing severe financial challenges. The blame doesn’t reside solely with Wall Street. Nobody forced the rest of the world to buy derivatives. My guess is the Europeans have created some of their own.

The Senate takes up the bailout bill today. That should be fun. Bush is still haranguing Congress to vote for the bailout, but what he says gets trapped in everybody’s noise filters.

The Dow is up a couple hundred points. The House Republicans can use that as evidence that their libertarian ideology makes sense in a complex global economy.

Greed makes a home in all markets. Unregulated greed results in what we’re presently experiencing.

The problem with idealogues is that compromise is not in their vocabulary. It’s my way or the highway. Bush was that way until the last couple of days when he found out he’s politically illiquid. Now he needs an infusion of political capital, but since he is now a lame duck, not just a lame president, no one will lend him any.

So we’re stuck with the right wing doing what all idealogues do. Do bad things in the name of what they see as good. So I guess they’ll take everyone down including themselves rather than compromising and being a part of the solution.

The neocons turned Bush after 9/11. He bought in to their ideology of killing people to spread democracy. Look where that got us and him. The neocons are suppose to be intellectuals. I doubt the House Republicans are intellectuals. But they are idealogues and will probably fight new legislation regulating the financial industry. They don’t want government interefering in the free market. You can see where that got us.

But guess who pulled the plug on the banking rules put in place in the ’30s. Bill Clinton. He did that in 1999. Clinton wasn’t and idealogue like the neocons or the right wing Congressional Republicans. Maybe he got a little on the side for his signature. Clinton was always trying to get some on the side. Still is.

It’s easy to become cynical about the quality or lack thereof of our elected lawmakers and executives and in Texas judges. However, we put them there. So we are the enemy. Not they.

I find it very easy to be cynical about the state of our society because the quality of our elected lawmakers and executives and in Texas judges are a reflection of our values. Our predominant values spring from ideologies. I’m right and your wrong and I’ll prove it to you even if I kill both of us doing it. Games of mentally ill children.

I hit goldbug Jim Sinclair’s blog this morning and he had some YouTube video posted along with a comment from the person who sent it to him.

There are lots of people who should be prosecuted for fraud. I can’t wait to get hold of the text of the bill if the House passes it and see if it let those at fault off the hook. There are texts of the discussion draft on the web. The bill is 110 pages long. I searched a pdf draft for “criminal” and “prosecution” and “penal” and got no hits.

If you want to look at the YouTube videos on Sinclair’s site, you’ll have to scroll down a ways on his homepage because he has subsequent posts.

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Sunday, September 28, 2008

Protests on Wall Street - what the news media isn’t showing you

Protests took place on Wall St. to protest the bail out plan - and the mainstream news media didn’t even mention it

Anyway, in case you haven’t seen it, I have collected a bunch of video from the protests on Wall Street (Sept. 25) and posted them below. Have a look at what the news media DIDN’T show you! Warning: some of the protest videos . . . (More)

Bailouts don’t plug leaks. They just empty the boat of water. So we need a plumber to stop the leaks. The plumber is Congress and the plumbing will be sensible banking regulations. Reagan style Republican idealogues, with Clinton’s approval in 1999, ripped-out the old plumbing put in place in the 1930s.

However, a new fix is only prospective. There’s derivatives sitting on the books around the world with a notational value of $1 quadrillion. These derivatives are contractual in nature and don’t trade on any exchange and therefor are inherently illiquid at their notational values. More implosions to come.

An article at Telegraph.co.uk sets out a realistic assessment of what we’re in for. The bailout will not save the world from the severest economic recession (depression?) since the 1930s. With luck, the economy will recover in a decade.

Because of all the US currency being created in the bailouts (EuroUnion rules prohibit bailouts) and the deficits that will continue if for no other reason than tax breaks to the wealthy and funding two wars, we most likely will see significant increases in costs for necessities while incomes of middle income families continue to stagnate. Who knows what the unemployement rate will go to.

Trickle down economics (which means the guys above you get to take a leak on your head any time they want to) perpetuated by Bush and combined with revoking regulations that had prevented greed from taking control of the financial markets, put us where we are.

The bad guys in Congress are those who want to continue deregulation. No interference in commerce is an ideal, a fantasy that when put in place results in catastrophes like the one we’re presently experiencing.

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US Economy: Even Hank Paulson’s bail-out plan
cannot detox global banking

Can the rescue package really halt our slide into a new Depression?

By Ambrose Evans-Pritchard
Last Updated: 3:30AM BST 27 Sep 2008

Even if Congress backs the Paulson bail-out, the $700 billion blast cannot save the US, Britain or the world from the deepest economic slump since the Thirties. If Congress balks, God help us. The credit system is suffering a heart attack. Inter-bank lending is paralysed. Funds are accepting zero interest on US Treasury notes for the first time since Pearl Harbour, because no bank account is safe.

Wherever you look – dollar, euro, sterling Libor (the rate at which banks lend to each other), or spreads on credit derivatives – the stress has reached breaking point. If borrowers cannot roll over the three-month loans that are the lifeblood . . . (more)

The national polls through yesterday show Obama ahead which is some indication that Obama won the debate. Also, CNN’s viewer’s poll put Obama as the clear winner.

Maybe Obama’s bounce comes from Couric’s interview of Palin last week. Most all the press, including blog posts and comments, pretty much trashed Palin’s performance.

Could be that McCain’s grandstanding hurt him.

It’s unbelievable how many significant events in the last seven days could have gone one way or the other for McCain, except for Palin’s gig with Couric.

One thing that may help Obama was his answer to the first question of the debate. That question was his position on the Bailout. Obama responded that it should be conditioned on protecting the taxpayers, no excessive executive compensation, bipartisan oversight and helping homeowners. The agreement outlined this morning contain those conditions.

The Thursday debate between Palin and Biden should be fun. One commentator I read noted that Biden’s style tends to be condescending. Biden’s implementing that style against a younger woman won’t go over well with viewers. Sexism continues to support double standards, some of which favor women.

But if she comes at Biden like a bulldog wearing lipstick and a lady librarian’s glasses, then she’ll be fair game. Biden’s a moose that will shoot back.

Last night’s debate may go down as one of the defining moments in presidential politics.  Two smart guys. Different styles.  Different views.

McCain is tough.  I’d like him in my corner in a fight.  However I wouldn’t want him choosing the fight to get into.

Obama’s style is diplomatic.  I want him choosing the fight.  He’s not going to back down.  But he’s not going to start a war, except as a last resort.

As to who connected better with the audience last night, that goes to McCain.  As to who addressed major challenges this country is faced with and offered solutions, Obama wins.

McCain really came to life when Iraq came up. What neither mentioned is that the surge is the first stage in the execution of a U.S. commitment to stay in Iraq for 50 years or longer. This commitment isn’t to Iraq. It’s to a policy that Bush hopes to make irreversible by knocking-up everybody’s darling David Petraeus from commander in Iraq to the central command of the Mideast. The Bush administration’s thinking is that the world strategic center of gravity has relocated from Europe to the Mideast. Petraeus wanted to command NATO but agreed to take the Mideast job.

McCain did say in so me words that our winning in Iraq is essential to our national security. That statement isn’t true just because McCain said it. What is true is that we have to stay there or Iraq will likely come under the control of the Shi’ite which is the predominant brand of Islam in Iran. Nobody in the Mideast wants to see a stronger Iran, which it would be if it controlled Iraq.

My view is that if the Mideast doesn’t want to see Iran go nuclear or to control Iraq, let the Mideast countries deal with it. We can’t even take care of our own business at home. We are killing our society with a commitment to conventional military solutions to unconventional strategies of our adversaries.

We continue to delude ourselves in thinking that we are the only world superpower. We’ve abdicated that financially. We’re not the only guys on the block with nukes. We are not the world hegemon.

McCain didn’t do any sword-rattling about attacking Iran, just imposition of sanctions by democratic powers. That won’t work. Expect to see China come in and take over Iran in the next few years.

Our interests in the region mostly have to do with oil. We are at or near world wide peak oil, so we either wean ourselves off the stuff immediately, or we are looking at a dystopian society very soon if the financial crash doesn’t get us there first.

On the peak oil deal, our only chance is to develop here in the US of A alternative sources of energy and very quickly. Tune in to the PBS Frontline two-hour episode “Heat” on October 21. If we follow through with Barack’s proposal to be energy independent in 10 years, the human species may survive if the remaining major energy users follow our lead.

On substantive issues, Obama wins at least 90 percent. Problem is, most people aren’t willing to face reality until there’s no more gasoline or the oceans start to boil.

I happen to be one of more than just a few who think that a severe economic setback is the best thing that could happen to this country. It would force us to get realistic about using militarism as our primary policy of international relations. It won’t work. We would come to realize that no higher power has imbued us with divine dispensation. It would provide us with the opportunity to come to know peace within ourselves.

Al Jazeera’s senior Washington correspondent Rob Reynolds posted an article today that does a good job of explaining the events that led to the financial meltdown. It began with the 1980 Reagan ideology that the less government regulation the better. That culminated in 1999 when Clinton signed law that removed much of the rules and regulations put in place in the ’30s after the banks went under in the Great Depression.

Now, the House Republicans are pushing for even less regulation as a part of their won’t-work plan of Wall Street paying for mortgage insurance and cutting corporate income and capital gains taxes. The tax side of this proposal is against the best interests of main street America. Tax cuts a la Bush that favor the wealthy with phony trickle-down economics. Ideology and deceit are again rearing the two of the many ugly heads attached to the greed destroyer.

Wall Street guaranteeing the mortgages doesn’t make sense. Where’s the money going to come from to pay the claims as all these home and commercial loans continue to go into default?

* * *
Article by Rob Reynolds, Al Jazeera’s senior Washington correspondent

The roots of the panic in financial markets around the world are deep and complex but they lie in the convergence of three factors.

Millions of people pursuing the “American dream” of home ownership, politicians and regulators who dismantled a system of financial safeguards and then ignored warnings of impending disaster, and financial markets and institutions disregarding risk in their headlong pursuit of profit.

Let’s go back to the beginning - or at least to the year 2000 - when the ‘Dotcom’ boom went bust.

That drove down stocks and sparked a recession and then came the attacks of September 11, 2001 - a body blow . . . more

McCain has decided to debate.

After talking to Paulson etc this morning, Barack told reporters:

“My strong sense is that the best thing that I can do, rather than to inject presidential politics into some delicate negotiations, is to go down to Mississippi and explain to the American people what is going on and my vision for leading the country over the next four years,” Mr. Obama told reporters aboard his plane. “I’m looking forward to the debate and look forward after the debate to coming back to Washington and hopefully getting a package done.” Mr. Obama said he was encouraged.

I posted a comment to a New York Times artcle a few minutes ago that read essentially as follows:

“Congress should adopt the Swedish plan and also place compensation restrictions on executives of institutions benefitted. Paulson should be fired immediately because he reeks of conflict of interest. He resigned as CEO of Goldman Sachs in contemplation of taking the treasury secretary job. Moreover, he spared Goldman Sachs, his alma mater, but not Lehman. The collapsed of Lehman has exacerbated the crisis.

“The congressional finance and banking committees must preclude the influence of special interests and house Republicans, and must not participate in partisan politics in the presidential election or otherwise, in arriving at a plan to present to Congress for vote.

“No plan will be perfect or guarantee success, but I’m proposing a process that has a chance of producing a sensible plan.”

I’m going to email my federal congresspeople with the same message.  They already know how mad taxpayers are at the Paulson proposal and a bailout in general.  My son Chip suggested I come up with a solution rather than just ranting.  The above is the best I can come up with at this time.

BTW, the Swedish plan in the early 90s included the government taking back warrants in the entities that were bailed out.  Net result was that the government and therefore taxpayers lost little and maybe had a zero loss on the deal.

After the big pow wow in Washington today, Republican Senator Richard Shelby from Alabama who’s on the banking committee and strong critic of Paulson’s plan, announced that he didn’t believe that they had an agreement on the plan. He waived five pages of letters from what he said were from leading economists at Harvard, Yale, MIT and the U of Chicago that said they viewed Paulson’s plan as bad and would create more problems than it would solve.

As to tomorrow night’s debate, indications from MaCain’s campaign a couple hours ago were that he would show up. 

My kids are now witnessing the drama and fear my generation experienced in 1962 and 1963 with the Cuban missile crisis and JFK’s assassination followed by Jack Ruby killing Oswald. Wish they weren’t.