I can’t help but notice some chilling similarities between the Bush Administration’s approach on the financial crisis and the Iraqi War Resolution. I literally sat awake until almost 5:00 this morning fretting about this.
Let’s look at a few of them:
We were told that calamity was imminent, and a failure to act and do exactly what Bush asked of us would result in a disaster;
Congress was strongarmed into doing something big and something fast, without time for proper analysis;
We were conned into spending hundreds of billions of our hard-earned dollars (much for the benefit of corporate malfeasants) – only to take a giant step backward;
And eventually the majority came around to see it as a colossal blunder. So, I think Congress would serve itself and the People well if it took a much more measured approach to this, or even refused the bailout. I know, I’m asking for cajones of steel here, but I can dream.
I’ll close with a few words from President Franklin Delano Roosevelt:
“The liberty of a democracy is not safe if the people tolerate the growth of private power to a point where it becomes stronger than their democratic state itself. That is fascism; ownership of government by an individual, by a group, or by any other controlling private power.”
I’ve decided to start calling the troubled so-called “financial economy” the fauxconomy. There are large parts of the global economy that are sound and adding value to life and contributing to the advancement of a responsible, fair (and profitable) society. The problem is, a great deal of them are denominated by, traded and financed through a system of derived financial instruments that are so complex and abstract and removed from any actual value creation of that they are simply vapor – vapor that is starting to prove quite noxious.
So, while the world economy is full of value-producing activity, almost every corner of it is infected by this enormous financial fauxconomy that some estimates put at more than $350 trillion. That’s right – $350 trillion – around thirty times the entire US gross domestic product. How can this possibly be righted without us winning some kind of cosmic Powerball?
While I want it to, I just don’t think it’s going to be possible to disentangle this shit from actual value-producing activity without quite a bit of intermediary chaos. And most especially not with $100 a barrel oil, a plummeting US dollar, and an apocalyptic madman Commander-in-Chief seemingly poised to provoke a serious brawl with another apocalyptic madman Commander-in-Chief. [The latter, Mr. Ahmedijinad, being well-poised to make $100 a barrel seem cheap when he closes the Persian Gulf and then inquires as to who’s our daddy.]
But in regard to the fauxconomy, I was quite creeped out by this October 15 WSJ piece about the Big Bank micro-bailout fund they scrambled together with Treasury last weekend. A sampling:
“Ironically, by working with the U.S. Treasury Department to develop the plan, big banks such as Citigroup Inc. are admitting things are bad and that their options aren’t pleasant.”
Somethin’ to chew on, kids. I know I’m shrieking a lot about the markets these days, but things are exceedingly stonky and it’s on my mind and it’s making me nervous and I can’t help myself.