Never been a huge fan of the man from Alabama. But he had some great words of wisdom at today’s Bailout of the Century hearing:
“I understand the situation is dire. But so is the condition of the taxpayer… yes, the market is overwhelmed by greed, a lack of oversight… and the bottom line, as I see it, is that you’re [sticking] the taxpayer with it. I think that’s shameful myself. I know there are better ways – would it be without pain? Oh no… but the best – and Chairman Bernanke, I’ve heard you say this – the best disciplinary mechanism we have is the marketplace. The marketplace will discipline all of us with pain. But we learn. I’m not sure people will learn if this goes through.”
Too little, way too late, sir. Before my analysis, a short reminder: I hate sounding like a doomsayer. I love my country and don’t want this to be true, but it is true; we are in some deep shit. And we did ask for it.
What kind of fucking country do we live in if the way out of economic trouble is to spend money? That’s been our problem in the first place. Also, $100 billion is spitting in the ocean considering the size and scope of this problem. The financial fauxconomy I’ve been grousing about is finally coming apart – and that’s going to be incredibly unpleasant for lots of people. The financial fauxconomy alone is measured in the hundreds of trillions.
Bernanke is going to keep the printing presses humming – lowering rates (when he shouldn’t) and further inflating our currency. This will turn America into a bargain basement for the world and drive the price of most of our imports up drastically. Conversely, foreign investors will scoop up these bargains and become majority shareholders in what we used to call America. The dollar is extremely unlikely to be the “world’s currency” ever again. Aside from some vague notion that there’s something weird in the real estate market, I suspect most Americans have no clue how putrid things are (after all, the new season of American Idol is on.)
Many “too big to fail” institutions will fail. State and municipal budgets will fall deeply into the red as revenues dry up, thus endangering the state investment pools that pay for things like police officers, firefighters, teachers, snow plows and traffic lights. There is a dreadful feedback loop emerging in the real estate market presently, and the upper middle class and “wealthy” will soon face the same problems that are supposedly “contained” to the sub-prime market. The “second mortgages” will blow apart as well, and with it all will go the mortgage and bond insurers. Despite the economic slowdown, energy prices will continue to climb. Our imperial adventures in the Middle East will need to be brought to an awkward and humiliating end. And who will be left to clean this mess up? The citizens, the cities and even the states who will have been bankrupted by it.
My fellow Americans are in for some nasty surprises, and, in our blame-someone-else culture, I wonder whose heads they will demand?