Sheesh. I take a break from blogging to go camping in the desert and what happens? Financial collapse! Hurricanes! Chaos in Pakistan! Even... Sarah Palin? I had no idea my humble blog was holding the world together, and I promise to never take a break again (ok, my fingers are crossed).
I know the details of the Wall Street Welfare Package are confusing. Think of it as a rope thrown to a drowning man. Problem is, no one knows if the rope is actually tied to anything at the other end. And the rope is going to cost about a trillion dollars. If it turns out to be untethered, it will just float downstream with the dead man. But if it turns out to be anchored to a rock, when the man climbs out of the water, he is going to spit in your eye and walk away with the trillion dollar rope. Joke's on you.
And it is a man, by the way. Think of those Wall Street tycoons as the new Welfare Dads. Their upkeep is much more expensive that the Welfare Moms of the Reagan days.
Seriously, no one, not Bernanke, not Paulson, not anybody, knows if the bailout will work. It isn't that the details of the plan are wrong. there are no details. No one knows if any plan would work. The defining feature of capitalist crisis is unpredictability. And this crisis is a whopper. We don't know just how big, and we may yet be in the dark for some time. But its front side is impressive. And highly unpredictable.
Did you see Barack Obama's two-minute ad on the economy? I thought it was spot-on. You have to give Obama credit for sticking to his guns. The McPain camp just dives right into the gutter of 30-second sound bites and lies, and Obama responds with a 2-minute ad that features nothing but the candidate, alone in a hotel room, addressing the economic crisis in a very plain spoken way, asking us to read his entire economic plan. I sent him another hundred bucks.
But the voice I really miss is John Edwards and his articulate and thoughtful economic populism. Wonder what would have happened if the financial meltdown had happened during the primaries. But today Edwards is missing in action: apparently he had the good sense to crawl under a rock when his marital infidelity was exposed. A big loss.
In his absence, Barney Frank stepped up to the plate. The House Financial Services Committee Chairman announced he was going to introduce a resolution declaring September 15 "Free Market Day." September 14 was the day the government let Lehman crash and burn, proclaiming that the bail-outs were over and the state would stand down and let the invisible hand of the market work its magic. September 16 was the day the government bailed out AIG for $85 billion. "The national commitment to the free market lasted one day," Frank said. "It was Monday."
And by the way, there is a blatant lie being repeated endlessly by journalists, politicians, and economists alike, that goes like this: the reason America's titans of finance are up to their ears in bad debt is because so many Americans cannot afford to pay their mortgages. The truth is, most of those Americans could afford their mortgages until their interest rates suddenly jumped from the reasonable to the usurious. This is where the idea that greed is at the bottom of this mess takes on real meaning. The whole idea of subprime mortgages was that they were a tool for powerful institutions to suck in the little guys and then really put the screws to them. The simple solution would be to just forgo the onerous rates the mortgages jump to, and maintain the initial reasonable rates that the borrowers could pay. Alas, this is not so simple to do, as these loans have been sliced and diced, repackaged into exotic financial instruments, and resold to who knows who. The current owners bought their shiny new paper at a price that only makes sense if the little guys at the bottom of the pyramid are bled to death. But you gotta sympathize with the bankers: they were under enormous pressure to find ways to pay for their 7-digit bonuses.
Meanwhile, Vice President Cheney has been in Georgia rattling the saber and threatening Russia with... what? What on earth did he think he was going to scare Russia with? US commanders in Afghanistan are already desperate for more troops that this country simply doesn't have. Maybe we could bomb Russia with bad loans. Take all that worthless paper and push it out an airplane over the Kremlin. That'll show them!
The collapse of US world power is something to see. The war in Afghanistan is being lost. Lost is a big word. Losing means something different than a shaky and distasteful status quo that limps along for year after ugly year with an effectual residual "peacekeeping" force. Remember the images of the US helicopters flying away leaving desperate Vietnamese frantically grasping for the chopper's struts on the roof of the American Embassy in Saigon? That is what losing looks like.
In a long-shot attempt to turn the tide, we are taking the war across the border into Pakistan. Well, "we" is not entirely accurate here. Not "we" as in real American soldiers, human beings, but "we" as in flying robots that sail across the border and fire missiles worth thousands of dollars into "tribal areas." Really. I am not making this up. If you think this is going to work, then I have a trillion dollars of real estate loans you might be interested in.
After the AIG bailout, the New York Times' headline on the financial crisis read "Dazed Capital Takes On Feel of Wartime." Apparently no one at the Times thought this was offensive to the thousands of Americans who have served in Iraq and Afghanistan over the past few years. The Bush administration has us mired down in two wars for years, is opening a new one in Pakistan and is threatening to bomb Iran, but it took a pile of red ink on Wall Street for anyone in Washington to feel like they were in a war.
The scale of the catastrophe the Bushites have created is so vast one can almost forget the global warming nightmare on the Gulf Coast. It was easy, for example, to miss the new research, published just prior to Hurricane Ike, that showed that while global warming will not necessarily lead to more hurricanes, it will make the most destructive hurricanes far worse.
I know sometimes I must sound like a broken record on this, but in the long run the environmental crisis will dwarf all the bad debt -- and yes, even the disastrous Bush wars -- in shaping the world we leave for our children. Even in a world of robot planes firing missiles at farming villages and entire American neighborhoods of boarded up homes with no owners, the most terrifying images are those of people in Galveston hospitalized with over a thousand bug bites from giant freak mosquitos emerging from a toxic sludge of sewage, asbestos, and what-all left behind by Ike. Or even more frightening, thousands of invasive Asian Carp leaping from the Illinois river, knocking the teeth out of fishermen. But surely we have dealt with enough for today.
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