A Mortgage in Every Pot

Olbermann talks to Chris Hayes of The Nation about the latest round of bailouts and the now familiar scenario of privatized profit and socialized loss that’s come to characterize he so-called “free market economy” as it’s been crafted by the imagineers of Bushworld over the past eight years, that yesterday resulted in the biggest government intervention in financial markets since the 1930s.

Appearing on CNBC yesterday, Sen. Charles Schumer described the doomsday scenario delivered by Treasury Secretary Henry Paulson and Federal Reserve Chair Ben Bernanke during their meeting Thursday night with members of Congress.

Well, if the credit markets remain frozen and no one can get loans and banks can’t transfer, then the whole economy basically comes to a halt. There is no — there’s no lending. No one buys cars, because you can’t get a car loan. People don’t go to stores, because you can’t get a credit card loan. Small businesses don’t grow and even some of them don’t continue, because they can’t get a line of credit.

The picture that was painted was not that just Wall Street firms were having trouble, but all of our financial markets, and the potential of a long freeze in the veins of our system as — could kill the patient.

Yikes! Kill the patient… pretty grim stuff. Meanwhile, John McCain indicated on Friday that he doesn’t know the first thing about the role of the Fed, stating at a rally in Green Bay, Wisconsin that “the Federal Reserve should get back to its core business of responsibly managing our money supply and inflation. It needs to get out of the business of bailouts.” McCain it seems doesn’t understand that the prevention of large-scale bank failures (aka “bailouts”) is an essential part of responsibly managing the money supply. Oy. Did I mention that he was a POW?

18 Replies to “A Mortgage in Every Pot”

  1. Re “Well, if the credit markets remain frozen and no one can get loans and banks can’t transfer, then the whole economy basically comes to a halt. There is no — there’s no lending.” (from referenced article)

    Social ouch and hurt may finally translate into the bursting of some bubbles…much like privatized profit and socialized loss is becoming more clear.

    A nation’s monetary system, ours inclusive, is virtually dependent on money creation through the making of loans, i.e. nearly all the “money” in existence represents debt. Money is but a fictitious series of equations created out of nothing by bankers in order to facilitiate the keeping of accounts.

    Simplified and generalized, but that’s how she works. If we can’t go or be herded into debt (what a concept!) then things go into gridlock, failure, meltdown, etc.

  2. Hey, I didn’t want to use such an elitist modifier as “fiat.” =;-D Wouldn’t want to confuse things on such a lovely Saturday morning, i.e. Now why in hell’s name is he talking about a little Eye-talion car?

  3. And we have energy prices looming in the background.

    Nonetheless, while the financial market turmoil will work itself out over time as home prices begin to regain lost ground, there are other spectres on the horizon as the global economy begins to revive, said [CIBC’s] Rubin.

    “By the first quarter of next year the word’s really going to change, because instead of deflation and Wall Street we’re going to be talking about inflation and energy,” Rubin said.

    He predicts the world oil price will hit $200 in four or five years, but that will just be a signpost marking a longer ascent.

    Other analysts and experts at the Banff event warned the global economy is about to slip into as long as three years of recession.

    “We’re taking the froth off, but it’s going to hurt,” U.K.-based Institute of Directors chief economist Graeme Leach said, referring to a downturn in the wake of credit tightening worldwide.

    “You ain’t seen nothing yet. The economy is going to get significantly worse before it gets better. (We’re going to have) much weaker economic growth, much weaker employment growth,” he said.

    “The bigger the party, the worse the hangover,” noted James Bond, chief operating officer at World Bank Multilateral Investment Guarantee Agency. “I think we’re in the hangover phase right now. This may be Wall Street, but Main Street is going to hurt.”

    Rubin argued oil supply has effectively not risen over the past three years and existing, low-cost conventional supply is being replaced with uncertain, high-cost non-conventional supply — either deepwater or oilsands. Deepwater sources, such as the Gulf of Mexico, face dramatic and substantial rates of decline.

    “Every year the marginal cost of the new barrel of oil goes higher and higher,” Rubin said. “The U.S. is going to be facing an enormous oil crunch.”

    From the Calgary Herald

  4. I say it should have failed. Forget the loans and bailouts, and let every single one fail. That would be the only way this would not repeat itself.

    Its cruel, yes and some innocent people will get hurt, but so will the guilty. As of today, the guilty are getting bailed out and the innocent are still being punished for something they didn’t do.

  5. McCain was tooting the Bush privatization of social security thing while the market was tanking.

    I can’t see how McCain could relate – he was born into money (his mother an oil heiress) and he married money. Ya, he had a hard time in Viet Nam but has had a very cushy life.

  6. Mike — I’m debating whether to rush in here and make a pre-emptive strike to head off Ti-Guy making the usual observations about libertarians, but I have to say that’s a rather flippant attitude.

    Having the entire economy seize up to prove a point may bring you some mordant satisfaction but more than just “a few innocents” would have been caused incalculable harm (and not just monetary) had not the Fed and the government intervened to stabilize the current crisis (for once, an instance where the word is entirely appropriate).

  7. toujoursdan re “And we have energy prices looming in the background.”

    Indeed. Something that we likely agree on is that the collateral that has allowed international finance to always re-kickstart in the past, i.e. the energy in the ground, is now half gone, ergo more expensive. Factor that in with the financial meltdown and it ain’t purty. For same reason, the much-heralded “Green economy” if anything, will be a bubble economy to make the dot.com bubble look tame. A last desparate lunge. We can’t get there from here, is what Greens and their ilk don’t seem to get.

    Mike re “I say it should have failed.”

    Agreed…but for that to have been allowed would imply living in another world, i.e. not the world of finance capital with relative power/political sturctures and institutions.

    It’s okay. The deck chairs can only be re-arranged so many times. Even with that drawn out, shuffling process there are diminishing returns.

  8. State welfare needed to be applied. Too many people would suffer and go hungry, which leads to violence otherwise.

    The problem is, as per usual, the US applies the welfare in the wrong place. Rather than spend the 85 billion bailing out AIG, spend it creating a welfare fund to go to those people who would suffer. Their purchasing decisions will then cause the economy to focus around the areas that the bulk of the people want, instead of the areas that the bulk of the money wants.

  9. Both Sebastian and Mike (both utopian ideologues) think the “teachable moment” here involves their satisfaction at the prospect seeing things come crashing down. I don’t say I blame them, but at this point, I consider it a huge distraction.

  10. I can’t speak on Mike’s behalf, but I certainly don’t consider my outlook on what lurks around the corner to be “utopian.” Quite grissly and wretched, actually. As for being an “ideologue” we are ALL ideologues at some level. =;-D

    Re “distraction” the glass is either half empty or half full (excuse the trite, new age metaphor). To draw attention to the condition, to focus on the condition, hardly strikes me as being a distraction.

    By virtue of the picture that is now being served up by the mainstream media, should give one an idea of just how really fucked things are.

    How we perceive this world is how we conduct ourselves in it, yes?

  11. As for being an “ideologue” we are ALL ideologues at some level. =;-D

    I’m really not. I struggled with ideology in my early twenties and ended up concluding that ideology is a central problem for human civilisation. Now I don’t even care to entertain what philosophers have to say or have said anymore. I think it’s all rubbish and that life is best lived by acting with regard to what evidence you have that informs your decisions.

  12. Re “I think it’s all rubbish and that life is best lived by acting with regard to what evidence you have that informs your decisions.”

    So where exactly is it that we differ? Sure, there is day-to-day life wherein my “ideology” (and motives, actions, consequences, etc.) ends at my fingertips. Then, as example, there is my advocacy for the recognition of PO. I happen to believe certain sources, i.e. evidence, that form my opinions and decisions. Your mileage may differ. I believe that Matt Simmons is sincere, as further example, that he is not a shill for the oil industry. Do I know this to be the case? No. But I believe it. This “evidence” is part of my “truth” as yours is likewise.

  13. I only put stock in peak oil because the eventual depletion a finite resource is unavoidable. Everything else is up for grabs.

  14. “the ‘teachable moment’ here involves their satisfaction at the prospect seeing things come crashing down.”

    ah, the “tyler durden” approach. try to get some rest, people.

    KEvron

  15. from a current issue of a US magazine….
    “Opening up the health insurance market to more vigorous nationwide competition, as we have done over the last decade in banking, would provide more choices of innovative products less burdened by the worst excesses of state-based regulation.”
    John McCain

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