Suffice it to say that the Bush administration may seem incompetent, but they are fundraisers par excellence. It's certainly no mistake that the Fed lowered their funds rate to practically nothing under Bush and Greenspan, paving the way for the Great Hedge Funds Fuckover of the New Millennium, which I covered in depth for AlterNet here and here. And now that Greenspan's successor Ben Bernanke has come out and cut another quarter-point off, expect the trend to continue. The Fed's action and Bush's recent plan to bail out subprimers share something significant in common: They will have zero effect of the problems the American economy faces hurtling into 2008. Just in time for the election!
Of course, I could give a long, Thillian (new word!) spiel on why Bush's subprime plans sucks ass, but why? I've got a stone-cold economist and a brainiac doom prophet to handle that for me. And you. Thank the Big Bang for the internet:
Spirit of the Season [Jim Kunstler, Clusterfuck Nation]
The Hope Now Alliance is just a political sham. The purpose of it is not to save the hapless occupants of over-leveraged houses, but first to buy a little more time so that the worker bees in the financial industry can justify awarding each other multi-million-dollar Christmas bonus packages, and second, to postpone the 'workout' of all this bad investment as far into the future as possible...Maybe all the players really know that keeping the ship afloat until Christmas is really the best they can hope for. Christmas means a lot in this country. It represents all Americans' old hope that miracles can happen. Bums turn out to be Santa Claus. Old curmudgeons are transformed overnight into loving uncles. Angels save us when we jump despairingly into icey torrents. And Goldman Sachs executives pass out multi-million-dollar checks to the wizards who 'innovated' an ingenious way for the rest of their country to commit financial suicide.MORE
Henry Paulson's Priorities [Paul Krugman, Common Dreams]
Mr. Paulson's attempt to help investors, while doing little or nothing for distressed and defrauded borrowers, might make sense if his plan would reduce investor losses enough to seriously improve the overall financial situation. But only a small fraction of subprime borrowers will qualify for relief, and many of these borrowers will eventually face foreclosure anyway. So the plan is unlikely to reduce overall mortgage-related losses by more than a few percent, at most - not enough to make any real difference to financial stability. Indeed, interest-rate spreads that have been signaling a crisis of confidence in the financial system didn't narrow at all when the plan was announced. Still, you might say that the Paulson plan is better than nothing. But the relevant alternative isn't nothing; it's a plan that - like Barney Frank's proposal - would actually help working families. And that's what the administration is trying to avoid. MORE
As long-winded as I am, I am also in love with short answers. And they are always around, even in labyrinthine mechanisms like CDOs and SIVs and other acronyms for upper-class scams. So let's be frank about this: The subprime trend was built to sell heavily structured loans to suckers in order to skim bonuses off the top, buy mansions for the suits who retire comfortably while the rest of the economy, and its suckers, suffered the negative billions in blowback. That is it, that is all.
Bush's plan to fix the problem amounts to little more than dampening the impact for the suits, while screwing their victims. Why would he want to help people without any money to begin with, especially after he asked them to go back to shopping after they saw planes and bodies fall from the sky? He knew then, as many of us did, that the global economy had changed to the extreme, and that the attacks on 9/11 were vast evidence for that transformation.
But the lone gunman theory works nicely when people just want to cruise the mall, and pretend that oil (or ice, for that matter) will be around forever. That those who supply them with "the gas," as it was called in the great sci-fi dysoptia The Road Warrior, are not the same people that bankrolled their doom.
No, Bush and Paulson, once the head of Goldman Sachs -- who managed to escape the subprime collapse with nary a scrape -- are no good at fixing things. They are only good at fucking them up. For the suckers, that is. For everyone else? They're gold, baby. Black and otherwise.