The end of the world as we know it
(posted by Libby Spencer)
My gut instinct on the bailout is that it’s a really bad idea. I’m not alone. The voters almost unanimously agree. The director of the Congressional Budget Office doesn’t like it either and says it could actually worsen the current financial crisis. He says it could expose the fraudulent bookkeeping of the financial giants who now appear solvent only because their liabilities are currently unknown. Not that it will have any impact on what happens inside the Beltway.
On the Hill, rumor has it a compromise deal is pending that will bail out the bankers and leave the homeowners twisting in the wind. I imagine that has something to do with the sharks of K Street, who are circling the corridors of power, looking for a return on their $2 billion investment in campaign donations over the last 15 years. I’m predicting that after the big summit at the White House, the Very Wise Elders of the political class, and Obama, will emerge to announce that they have saved the economy in the only way possible and we little people must buck up for the hard times ahead while the crisis works itself out.
The ‘rescue’ bill will be a sham. They’ll throw in the bone of limiting CEO compensation, in certain circumstances which will remain unnamed, but unfortunately they won’t be able to offer meaningful assistance to anyone other than the billionaires who made themselves somehow indispensable to our economic well-being by creating this mess in the first place.
What’s more difficult to predict is how the working class will react. Jobless claims continue to rise. Housing sales are down. Durable goods are down. There is no new industry that can create the next bubble. Even those who have secure employment will suffer economic anxiety and see their former comfortable lifestyles reduced to a hand to mouth existence. Whether they will revolt or simply hunker down and hope to wait it out, I don’t know. I think it depends on how long the downturn lasts and how deeply their security is threatened.
Clearly there is no easy fix. China won’t bail us out again. Germany predicts the end of US hegemony in the world’s financial markets and the rest of Europe joins in to criticize the failed experiment in US laissez-faire capitalism. The international community is pretty much united in their scorn and derision of our current status and most probably are enjoying some amount of schaenfreude over our diminished standing in the world.
We’ve managed to alienate Russia at a time when its cooperation is badly needed. We have few allies left in Latin America and Bush burned so many bridges on the road to Baghdad that our former alliances in other countries could crumble at any moment. It’s not surprising that under these circumstances the Pentagon is happily preparing for perpetual war. The military-industrial complex is the only sector likely to gain from our impending collapse as a super-power, assuming we don’t actually go completely bankrupt.
Meanwhile, the GOP appears to be setting a trap with the bailout that the Democratic party looks likely to step right into. Rather than forcing the Republicans to own this mess, the Democrats are poised to dutifully cave into the White House fearmongering and deliver the bill that Bush wants. The GOPers will vote against it and if it doesn’t work, the Dems will take the blame for passing the bill. It could very well become McCain’s ticket into the Oval Office and now that he’s sold his soul to the PNAC crowd, their lifelong mission of destroying the middle class will finally be accomplished.
I hope I’m wrong and just succumbing to bleakness in response to this cold and gloomy day in the south, but if I’m not — maybe it’s time to dust off my old escape plan. I’m free right now to gather my meager worldly assets and set up a hammock between a couple of palm trees in Mexico, living out my remaining years gazing at the sea and paying the local boys 25 cents to bring me avocados, rum and coconuts. At the moment, that sounds a whole lot more appealing than enduring the pending upheaval here in the US.
September 25th, 2008 at 1:08 pm
[...] China is no longer lending us money. Via Libby. [...]
September 25th, 2008 at 4:14 pm
Mistake after mistake after mistake tells me one thing: THIS WAS DONE ON PURPOSE!
September 25th, 2008 at 5:32 pm
That’s my take Robert. As they say, it’s a feature, not a bug. What’s really depressing is to watch how easily the Dems allowed themselves to be played. Makes me want to reach for the tinfoil.
September 26th, 2008 at 6:47 am
While I agree with most of what you wrote, I just want to point out that the China lending directive has been called into question. A few retractions have been published, but the retractions fall short of saying that the initial report was truly false.
Personally, I don’t think China is playing that card, yet. It’s still too early in the game. If the U.S. government comes in and puts the U.S. taxpayer on the hook for the Chinese loans, they’d be stupid to rock the boat right now. What this might be, given the situation, is the ChiCom government firing a shot across the bow. Putting this out there through unofficial sources, then denying it. Helps them put their two cents into the bailout deliberations without being officially involved.
September 26th, 2008 at 8:51 am
QuasiBill, I think you’re right about China. It’s subtle but I think it’s a very valid threat.
Meanwhile, let me apologize to the readers for this depressing post. I was having a very bad day and it’s hard to remain optimistic while watching idiot politicians run this country into the the ground.
September 26th, 2008 at 10:54 am
“Mistake after mistake after mistake tells me one thing: THIS WAS DONE ON PURPOSE!”
Possibly. All a ploy to transfer more money to the rich via the kleptocracy we call our government. The super rich benefit from the tax cuts when times are good DUE TO the bubble, and they benefit from the bailout when times are bad. And tax policy plus bailouts mark a very deliberate looking transfer of wealth. And even if the Dems change tax policy, this only affects income and not wealth that was PREVIOUSLY accumulated.
But I can’t prove conspiracy :D.
What I also suspect is that it is quite possible our economy HAD TO HAVE a bubble economy. Like nature abhorring a vacuum. That there just aren’t enough real productive jobs here left to go around.
September 26th, 2008 at 1:32 pm
The China report was probably spread by a bank trying to scare the US into giving them free money.
“CBRC Spokesperson’s Statement
The CBRC has never, by any means, ordered or told the Chinese commercial banks to stop lending to U.S. financial institutions. We strongly condemn the South China Morning Post for its irresponsible and groundless report, and we reserve the rights to take further actions including pursuing its legal responsibility if necessary.”
http://www.cbrc.gov.cn/english/home/jsp/docView.jsp?docID=20080925621D9A7D9BA9E246FFAD2688373C5F00
September 26th, 2008 at 1:38 pm
JS, I think you just nailed the big problem. It seems to me that our economy has been bubble driven for decades and there’s no new big thing to build a new one with at the moment.
I’m thinking alternate energy would be a possibility but no one is pumping enough money into it yet. Personally, I’d like to see them invest in hemp technology. There’s something like 300 products that can be made with it and of course, I’ve been a long time advocate of legalizing cannabis. I believe between the two, we could build a whole new economy that has the added advantage of being ecologically sound.
September 26th, 2008 at 8:49 pm
Hey, Libby, do you have any articles written that detail that plan? Any in the works?
September 26th, 2008 at 11:16 pm
Hey Alix, I don’t have any of my own that are easily retrievable but I’ve posted many times about the studies and articles that occassionally pop up. It could become a multi billion dollar industry. Cannabis is a hard sell, but hemp is already an established industry in many countries. There’s really no good reason not to allow it here.