Posts Tagged ‘Hr 3997’

Doctor, the patient is failing…

October 1, 2008 Leave a comment

There has been much talk of our financial system being a patient under extreme duress, after suffering severly blocked arteries – verging on a heart attack.

The problem with this analogy is obvious:

You are the patient.

The financial system is the disease.

The Senate appears ready to kill you in order to save the disease.

I think you need a second opinion.

What just happened… (2)

September 30, 2008 Leave a comment

The financial crisis which has roiled world financial markets since last year, has now boiled over into a political crisis. The revolt of the extremes against the middle consensus, we have asserted, is the opening salvo of an authentic 21st Century revolution against the existing order.

And, we are not alone in this view. According to one observer we found today:

[L]ast night’s vote was a Fort Sumter-esque shot in a modern class war. Macro Man has long thought the the negative aspects of globalization would eventually manifest themselves; however, he suspected that the primary mechanism would be protectionism. While there’s nothing to say that that still won’t be the case, he nevertheless views last night’s failed vote through the prism of Joe Sixpack desiring to claw back some living standard away from modern plutocrats.

Million of ordinary American families, suffering miserably under stagnant wages and income (as Wall Street and Washington gorged themselves on a rich diet of international credit inflows from China, Japan, Russia and the oil dependencies) have finally sunk beneath the waters of consumer debt.

It is important to remember this crisis is being driven by the saturation of the consumer market for debt – given their stagnant wages, working families cannot absorb more debt no matter how lavishly the credit markets of Wall Street are provisioned with cash by Washington bailouts.

Of course, we don’t have to tell you this if you are a typical working family carrying the average $9000 of credit card debt – on top of your home mortgage, and auto loan(s).

Only to Washington and Wall Street does this have to be explained.

Even for CNBC talking heads, who have shilled this bailout for about 15 hours a day, every day, this past week, the calamitous logic of onrushing events is finally seeping into their lizard consciousness:

Mark Haines: Ken (Goldstein, Senior Economist, The Conference Board), how can the consumer keep going? [They have] been financed by debt for years now, and you’re just not going to be able to do that anymore.

Ken Goldstein: Well, that’s a longer term situation, but right now that credit situation, especially with those credit spreads so wide, there is even the possibility companies won’t be able to get the money to make their payroll. That is how dire this [financial crisis] is.

MH: So, the consumer gets caught both ways? They’re not going to able to borrow, and they’re not going to get paid? This is really bad.

KG: This is about as bad as it gets.

Working families have seen their wages stagnate, and, their home equity shrink, or even go negative, as economic conditions worsen – leading to rising rates of home mortgage defaults and foreclosures.

The Washington ponzi scheme built on this shifting sand of class civil warfare – the likes of which has not been seen in modern American history – so clearly represents the unquestioned dominance of Wall Street over Main Street, that were it not for the glaring contradiction of its very constitution all would be lost.

The writer continues:

If the rationale for the TARP’s failure could be distilled in one chart, it would be the one below, which shows a surge in corporate profits (at the apparent expense of wages) as a share of national income. It is the divergent fortunes of these two series that has fueled Main Street anger and turned “no” voting Congressmen into class warriors.

Here above, in graphic form, is the engine of this particular revolution: the growing desperation of millions of working families who have watch their share of national income decline to dangerous and unsustainably low levels.

Equally to be noted, the slide of these same families into their present status as post-industrial era sharecroppers who find at the end of their day’s labor that they are deeper in debt than at the beginning:

The US savings rate [shown below] has been steadily declining since long before the invention of CDOs, SIVs, and subprime.

States the writer, this fall has to be reversed:

A large part of the rationale for government intervention in the current crisis is to ensure that this occurs in a gradual, orderly fashion, rather than abruptly via the wholesale withdrawal of credit throughout the economy.

Why suddenly the country is threatened with the “wholesale withdrawal of credit,” and, what that withdrawal means to you is the topic of our next section.

What just happened…

September 30, 2008 Leave a comment

The world has yet to comprehend the significance of the events that unfolded today in Washington as a section of the Washington elite broke off from the Party of Washington, and the Party of Wall Street, and deserted to the side of working people.

We have just lived through the opening salvos of the first authentic revolution of the 21st Century.

It was indeed an odd mixture of political forces, representing the extreme right wing of the Republican Party, and the extreme left of the Democratic Party. One observer said it was as if the political spectrum bent back on itself, closing the gulf between the polar extremes of political life.

We, however, have been considering just this likelihood for about a year: that the rigid ideological strains of libertarian thought and the faded confused strains of 19th Century socialist thought had a natural affinity for each the other in their deep suspicion and hatred of the Washington establishment.

On the surface there is nothing of the two in common – the first, with its fetish for property, the second with it fetish for state management of economic life, appear as nothing if not completely incompatible.

Yet, in the era of the rule of the Moron, both have instinctively engaged in a common action opposing the lies, malfeasance, and war crimes of the Washington-Wall Street axis – especially as it has come to be expressed in this evil war – despite the gulf between them.

Clearly, such a common rejection as exploded in Congress today could not have happened without the utter lack of confidence of working Americans in the handling of this despicable adventure in Iraq by the Moron and Congress.

Moreover, these events would not have happened absent the complete rejection of Washington and Wall Street boiling up from Main Street, borne of the cruel tortures imposed on the latter in peace and in war and expressed in such daily indignities as simple as removing ones shoes to enter an airport, and as grave as burying loved ones under Defense Department imposed press blackouts.

The constant and insufferable invasion, humiliation, and harrassment of private individuals, combined with shameless military incompetence, profiteering and avarice in Iraq – both public and private – and topped by the administrative incompetence of Washington officials in the face of the destruction of the Gulf Coast, while the Moron partied with John McCain in Arizona, were dried tender set ablaze by the audacity of an president so without any sense of empathy as to ask the very individuals who had lost most under his rule to provide charity to those who had gorged themselves on his watch at public expense.

To ask the debtor to bail out his creditor – the perversity, the unvarnished gall, the very insanity implied by such a request is unequaled in modern political-economic history!!! It is, unquestioned, a breathtaking example of the sheer magnitude of the madness which has gripped Washington, and all who occupy it!

To be continued.