Monday, September 15, 2008

From Black Monday to Black Autumn:
The New Great Depression Arrives

Lehman Brothers, the straw that broke our economy's back

Even though I wrote about the impending new Great Depression this past summer, I am still mentally unprepared for Black Monday. Unless I'm wrong, it will occur later this morning after the markets open, and be our new history by the close of business today.

Like recent protests at the RNC or the next peoples revolution, it may not be widely televised.

Black Monday is what they called that last pivotal day in 1929 when the stock market crashed so hard that it sent the economy into a downward spiral that lasted for years.

Alan Greenspan has already given this one a different, gentler name. He's calling it "A Once In A Century Event".

He said, "This is a once in a half century, probably once in a century type of event. We shouldn't try to protect every single institution. The ordinary cost of financial change has winners and losers."

Fuck you, Alan. You were warned years ago of the likely consequences of your decisions, a furthermore, a rose is still a rose by any other name, and so is a turd.

And here's the finger to all the incompetent, the greedy, the white collar criminals and predatory home lenders who ran our economy into the ground but will never see a day of jail time.

If I wasn't so damn financially vulnerable, I'd be laughing my azz off at how the Wall Street Sharks were running around this weekend, sweatin' bullets and trying not to scream like a bunch a lil' girls over how they fucked up.

The bodies of Fannie Mae and Freddie Mac, dead only a week and not even warm, and now we have all these other cornerstones of comfy living going belly-up bankrupt or begging for multi-billion dollar welfare bailouts.

The more I think about it, Black Autumn may be a more fitting description of the dawn of the new Great Depression.

Too much other shit can go wrong for this to be only a Black Monday:

Hurricane season ain't over. Ike sucker punched Galveston and parts of Houston, but the latest news is that oil refineries were spared major damage.

Election Day, if it takes place, will be followed by the looniest racist white folks going beserk in the weeks following if Barack wins.

Black folks have mixed feelings about 'hood niggas, but we should be grateful for their presence in our 'hoods. If all of us were seen as 'nice' (non-threatening), those Confederate flag-waving hoodlums wouldn't think twice about riding into black neighborhoods, burning crosses, shooting up the place and starting shit in general.

Bush & Pirates are sneaky, too. I wouldn't put it past them to stage a mini-terrorist event and/or start another war before November 4th under some bogus pretext to declare Martial Law, which would would cancel out elections and suspend our Constitution if an act of terrorism takes place. This falls under his 2001 Continuation Of Government (COG) rules.

Yeah, it's a dumb idea for them to try any of that, but look at all the other dumb ideas they executed the past nearly eight years, i.e., invading Iraq based on lies stemming from 9/11.

Bush extended these COG rules only last month, on August 28th. Did the media report it? Hell no.

Then there's the possibility of the election being stolen again, if you believe it was the last time too.

In some states, racists in charge are already planning to cheat black folks out of voting if their homes are in foreclosure and their address doesn't match where they currently live, or if the name on your driver's license doesn't exactly match with your voter ID registration, i.e., your middle initial is on one but not the other.

The Shit That Could Happen list is disturbingly long with all the crap that can go wrong this fall, that will be the Fall of the American Empire.

God I'll miss the perks that came with it.

Some of you have only a vague idea what I'm ranting about. You get a pass because the broadcast mainstream media planned it this way.

In a nutshell, the major financial institutions Lehman Brothers, Merrill Lynch, and AIG are bankrupt. Bank of America bought Merrill Lynch late Sunday for a mere $50 billion, but Wall Street nor the government can bail out or save the others. Over 150 banks are also expected to fail soon. The Big Three U.S. automakers are likewise in deep do-do.

When banks fail, the FDIC insures each account holder up to $100,000. No problem, you think; you ain't got that much. But what about your employer who looses everything over that and can't make payroll? Pensions? Or your car insurance company? Or perhaps, your city or county government whose bank has failed? What then of city services? Schools? Roads?

The FDIC can only afford to bail out so many banks. Then they go broke, the Treasury has to bail them out. That's what is coming to.

In the Great Depression, at least there were lots of family farms. It was much more of an agricultural society and oil was cheap. Now we have neither. Between
higher priced oil and bank and financial institution failures, producing and transporting food to markets will be a nightmare.

Food is pretty fundamental to survival. If "they" don't figure out something quick, we may be seeing food prices double, or maybe even food rationing by early next year.

Speaking of stores, they're having a harder time paying for all that stuff they import from other countries because of gas prices.

Look around at where you sit now, and unless you're blogging in your birthday suit, check out the tags. Think of your car parked outside. Chances are, most of the stuff you own was produced far from the USA.

Big box stores like Walmart, Target, IKEA, etc., are also taking hard hits because of the cost of transporting stuff from sweat factories abroad to here. IKEA, the Swedish furniture store, set up a factory in Virginia recently in a city suffering from high unemployment because shipping became too expensive due to increased gas and oil prices.

We haven't produced much of anything in decades. Our American dream was based on our being a Consumer Society that shuffles paper and makes fast food. You may love your office job if you have one, but at the end of the day, what's to show for it that you can hold in your hand besides paperwork and an empty paper lunch bag from your favorite deli?

Word: we're going on a national diet. Expect to consume a lot less of everything and to repair what you have. Check the news often to see if your bank is on the hit list to go down. Whether you only have $500, $5,000, or $50,000 there, you don't want to lose it.

There's talk that Treasury will bail out the broke-azz FDIC by printing more money when things get this bad. Notice that I said 'when', not 'if'. This strategy, however, will increase inflation IF what I've read is correct. Prices will go up as the value of money will go down.

I frankly don't trust any of the banks anymore. Today, I'm paying up my rent and bills for October and locking up the rest of most of my lil' stash in my safety deposit box at the bank, and hope that I can get to it when I need it. I don't dig the mattress solution because if the place burns down, I'll be up shit's creek without a paddle.

That small herd of Wall Street swine, along with billionaire foreign investors ready to buy up America, are the winners that Greenspan spoke of. The game was stacked against the middle and working class average folks, thanks to all the loopholes he and Congress gave a nod to years ago.

All of those rich as fuck folks ain't got jack to worry about. The Blue Blood Crew will ride through this with relative ease while the rest of us will be smack dab the middle of an economic Hurricane 5 combined with an 8.0 earthquake.

A bunch of Americans will be living in cardboard boxes by a polluted river and eating mudpies to keep the hunger pangs away like dirt poor Haitians, while they will still be fat.
That's how we'll know for certain that we're the latest Third World Nation.

Fuck it. Maybe the poor will eat the rich if shit gets worse than the last Great Depression.

Yep, the chickens have come home to roost. Rev. Wright was right after all, and although I respect his foresight, I feel no happiness about it. There does seem to be a curse on America for the treachery it's done since our country was founded and funded on genocide, slavery, dropping nukes on Japan, Jim Crow laws,
exploitation of women, the underclass and working class whites and minorities, etc. ad nauseum, right up to all the racist bullshit in this election and Russia daring us to even think about starting shit with them.

Those GOP bitches bettah blink and think if they get in office or we can add getting nuked to our painfully long list of problems.

Perhaps finally, the globalists and the racist elements of the GOP can kiss their imperialistic, take over the world ambitions goodbye. As it sinks into their minds by the end of Black Autumn that this is just the beginning, their pain will be more like the psychological disappointment of a spoiled brat who can't get his way, than any real suffering.

For the rest of us, it will be hello to economic hard times, which may surpass that of our grandparents or great grandparents.

We get no bailout.


  1. My friend told me my bank WAMU was failing. Her best friend's father withdrew all his money last Friday. I figured that if an adult with actual money got that scared, I prolly should go withdraw my meager amount. I broke my Sabbath last Saturday and withdrew all my money minus $10 for recent debit card swipes. When I got to the bank, I saw the longest line of my life. Last time I checked, ppl get paid Fridays. Scary thing was, lots of ppl were depositing checks. When I asked my teller if WAMU was doing badly. he said it was business as usual. I told him that I knew he was supposed to lie and he laughed.

    I get my paycheck direct deposited on Tues. I'm taking that out too. My family got hit by the Hurricane and I haven't been able to reach them since Friday. And my whole family is WAMU. We are all up shit creek indeed. Last I heard from my sis, the house flooded. I don't even know what to do.

    This ish is crazy. I am not ready for this.

  2. i forgot to ask Kit, since WAMU is null and void and I still need to pay for school (my school deposits our housing money and we pay) which banks aren't failing that I can switch to.

    I was trying to decide bet Wells Fargo and Bank of America.

  3. Wow, we're on the same wavelength!

    First, I spotted a few obscenities in your post. As a veteran candidate for public office (six attempts) who is sick of the civility police here in Seattle, I appreciate frank talk. See my campaign website for an example of my rhetoric.

    You also mentioned that the U.S. was a more agricultural nation during the original Great Depression. That's a major theme of an article about the second Great Depression I've been thinking of writing.

    I'm from rural South Dakota. My parents, aunts and uncles all lived on farms during the latter years of the Great Depression. Today, there are more than 300 million of us crowded into cities.

    I think you said something about gloating over our coming troubles if you were in better financial shape yourself. Ditto. Frankly, I think the people in this once great nation deserve to be punished for their extraordinary greed, apathy and stupidity. Maybe this is payback for all the people we murdered in Vietnam, Iraq and Afghanistan.

    Unfortunately, I won't get a free pass. I spent sixteen years as a public school teacher, at a time when our schools were being taken over by corporations. After transforming into a political activist, I was laid off. Go figure.

    Anyway, I've been contemplating launching a website or blog focusing on the Great Depression II. I'm not certain that it will happen, but I do think it's absolutely possible that we could experience something far worse than the original Great Depression.

    Our government is simply too corrupt, and the people are too stupid to revolt or otherwise reform it. I hate John McCain, but I think Obama is a corporate operative, too. (Remember the lessons of Al Gore, John Kerry and all the other Democratic traitors.)

    My hunch is that we're going to get hammered hard, and all the right-wing religious kooks and spineless liberals will just blame each other.

    I just pray that people scrape their mashed-potato brains together and declare war against the real enemy - George W. Bush, the Clintons, Bill Gates and all the other traitors that constitute Corporate America.

    David Blomstrom

  4. Great post! This is truth nobody wants to talk about. Among other things, this should be a referendum on the Bush economy, which is nothing less than more of the same Reaganomics, which has failed big time. Bottomline: Republicans and their crappy concept of voo doo economics has failed us. Everything else is distraction and hype.

  5. I'm going to let people know about your post. Much love.

  6. Another great post. I was just listening to NPR this morning and heard the particulars about the Lehman and Merrill. I find it interesting that our economic infrastructure seems to implode on weekends when the average joe is plugged into his plasma or fancy tv watching mindless crap and sipping brews.

    Its like its designed that way to keep the masses from thinking about what's really going on.

    Like you I think we are about to see some catastrophic mess going down. How many more banks can collaspse before we have a serious problem?

    Anyway much food for thought that you have provided, thanks.

  7. K.I.T.: I guess we're ALL on the same wavelength on this albeit from different perspectives. In tone, style and philosophy, I'd say I'm a lot closer to your point of view than I am to Mr Blomstrom's. That's to be expected, I guess, given the environment I grew up in. On Jeremiah Wright we are 100% in accord. The "most shocking" parts of the Fox tapeloop were music to my ears.

    @ DAVID BLOMSTROM: I get the sense reading your comments that while we agree about the problem and agree about the identities of some of the culprits, we would probably see each other as more ENEMY than FRIEND.

    That's natural. I'm a 100% downtown city boy, from a Russian immigrant family and I grew up speaking both Spanish and English (very long boring story) at home. My grandfather died in a US prison and my father was ACP until he switched to the Democratic Party. I grew up marinating in both European left-wing politics and New York City Democratic machine politics. My exposure to communist philosophy merely gave me a good sense of dialectical materialism and made me a better capitalist.

    My politics are not classifiable. My family never saw a conflict between getting over for yourself and a traditional left-wing orientation. Call me a civil libertarian if you want. I'm not an American anymore, though. I'm a Panamanian now. Politics is way, way different in Latin America. Far, far ahead of America in social policy and economic sophistication. Social policy in South America is more or less resolved the way it is in Europe. Abortion. Gay marriage. No death penalty. Single-payer health care. Plus, more or less the debate is between a center-left and a center-right and is all about very specific, arcane and instrumental economic issues. Every party everywhere (including Chavez's, Correa's and Morales's) can be considered pro-business.

    Funnily enough, the way Catholicism is practiced in South America and the relationship of the church to any of the governments make it far more "liberal" than any organized religion an American can conceive of. And 1/3 of the population down here self identifies as "atheist" or "secular."

    How funny is that? Argentina, for example, had a "dirty war" against Jews and leftists not all that long ago and the current president Cristina Fernandez de Kirchner, an ordinary center-left pro-business pol, would be considered like a Kucinich or Barbara Lee by American standards! The thought of life sentences, let alone the death penalty, is considered beyond barbaric throughout South America.

    I agree wholeheartedly, though, with what you wrote about Obama. Like everyone in the rest of the developed world, I favor Obama strongly over McCain. I recognize, however, that he could never be president of Panama because his social views are way too harsh, punitive, and indifferent to peoples' needs. For heavens' sakes he's too right-wing to be president of Colombia or Israel!

    It's a clear choice, but I never forget that Obama is fully pro-death penalty, against gay-marriage, very shaky on gay issues in general to the point that he wouldn't have his picture taken with Gavin Newsome because Newsome had signed a gay marriage law into effect in SF, overly Fundamentalist, super shaky on a woman's right to choose, kind of prudish about sex and contraception in general, completely positively pro-GITMO and anti-single payer, more hawkish than Uribe, Garcia, Harper, Sarkozy, and Merkel and probably more hawkish than Olmert. [A random selection of Western right-wing leaders.]

    The tragic fact about American politics today is that admirable as Obama is, the platform he's running on would give Americans fewer rights, fewer liberties, fewer privileges, and less back for their taxes than Palestinians in the Occupied Territories get. And it's no damned fun to be a Palestinian in the Occupied Territories.

    Maybe because I move money for a living I don't get your antipathy towards the Clintons. I certainly liked Clinton's willigness to face reality and adopt a tight fiscal and monetary policy in his first two years to restore faith in the US dollar. If that's evil to you, I'd say you define the term quite broadly.

    It's hard to fault Bill Clinton for his reflexive attitude toward finding diplomatic solutions and helping peace processes in his foreign policy. Again, you'd have to be a pretty hard core Marxist to object to Clinton's notable efforts in Northern Ireland, South Africa, and Panama. I ultimately agreed with liberating Kosovo but you could argue it both ways and as a child of Russian immigrants it was very hard for me to face reality about Serbia. Ultimately, I did.

    I can tell you a zillion things I disliked about Bill Clinton but the good overcame the bad by far, in my opinion. Which did you hate more, the peace or the prosperity?

    HRC has her faults, too, to be sure. I preferred Kucinich, Paul and Dodd to Clinton and Obama, but I do give her credit for bringing up economic issues in a very specific way from the earliest part of the campaign. Like it or hate it, at least she was willing to put a plan on the table to compromise on the mortgage crisis: partial Brady-izing of the CDOs in exchange for a long payment holiday and workout period.

    Not that Obama's bad on economics, but conditions are such that he can't be specific because it makes him seem "elitist" and "too smart" in that absurd way Americans have of viewing their representatives.

    Certainly, as someone who's worked at the exotic edges of finance and the gambling world, if I still lived in the US, I'd probably be as afraid of your prairie populism as I was of Bush. The way you assign blame, I can only guess you'd put me in prison as quickly as Bill Frist would have.

    At the same time, I'm sure I take a far more supportive view of Hugo Chavez, Rafael Correa and Evo Morales than most Americans, probably including yourself, do.

    A lot of illusions go away when you spend a lifetime in the financial world. It's pretty easy to see what a strong economic mind Hugo Chavez has given that the Bolivar is the world's most valuable currency. Moreover, Venezuela is awash in trillions of USD it doesn't need! His Red Pajama Suit does not disguise his economic acuity. You could say the same about Correa and Morales to a lesser extent.

    I would say that I agree with you that Bush's America has gone from a garden-variety capitalist self-government into an extreme Corporatist state, kind of a hybrid of Mussolini's Italy and Stalin's USSR.

    On the other hand, you are not able to blog ipso facto and QED without the existence of the Joint Stock Company and the Limited Liability Corporation as concepts given form in a modern, self-governing "West."

    I can assure you that if your solution to America's economic woes is to outlaw the Joint Stock Company and Limited Liability Corporation, you'd hate the result.

    And anybody on the Venezuelan, Ecuadorean or Bolivian left would find that posture cute, quaint, idealistic, and heart-warming, but ultimately ridiculous in that American "innocents abroad" kind of way. Jeez, Noam Chomsky and Ed Herman were never categorically against the JSC or the LLC.

    Sorry to be the ant at the picnic, but that's what I do best!

  8. yeah blackgirlinmaine, i heard it on NPR too, which I'm stuck listening to while I get breakfast together cuz everyone else talking on the radio here is even less worth listening to. I actually hate National Propaganda Radio, and this morn was no exception. I think they're told to keep it all light and jolly--don't want to scare people! that might help start another bank run, or push investors to sell off their stocks!

    Thanks for another bracing post, Kit. I hope you're wrong, but you always bring into focus important things that I'm led by our culture away from thinking about.

  9. Emeritus, Since Bank of America is in good enough shape to buy Merrill Lynch, they should be okay for now. I haven't forgotten the hard lesson I learned when I bought stock, I think in the late 90s or just after, in Kit n' Kaboodle Toy Store. Loved the place; educational toys and always packed. But then they bought some failing large toy store which dragged them down and put them out of business in less than a year.

    David Blomstrom, yeah, like the late George Carlin, naughty words don't bother me. The real bad words are the coded language that deceives people. Check out his wisdom on Soft Language on You Tube.

    As for gloating, nah, it would be more like serves 'em right for dishing out so much pain and misery, except that once again, it's the average citizens who will have eat their toxic meals of mistakes. Glad you mentioned Vietnam and wish I had thought of it when I wrote this.

    I've been to the fairly new War Memorial in DC several times. It's a beautiful place, but what's striking it that it hits home the point that America is so wealthy because of all the wars we've been in. I too hope the men running this country have figured out that formula is obsolete and further wars will finish us off.

    As you put it, Obama is a 'corporate operative'. Yeah, he is waaay too cozy with Big Business, but still a far cry from McCain... or is that an illusion that will be revealed and hurt like hell one day? I hope not.

    MacDaddy, thank you. Making predictions is always a gamble even when the trends are clear. I could be wrong, but I really don't think so.

    Black Girl In Maine, the big stuff happens over weekends so the market won't go crazy and because there's less reporting then. This happened in the last Great Depression too.

    Kelso, you said we all have such different perspectives based on where and how and who we grew up with... So true, my cyber friend. Because of this, tolerance is needed with folks who are trying to understand and do the right thing. Hint, hint.

    Macon, man, I haven't heard NPR this morning and it sounds like I haven't missed a thing. CNN, Fox, and MSNBC and the non-cable networks are light too - any lighter and they'll float away. Thanks for the kudos, and que sera, sera.


  10. it was in the wind. i wrote about this last year and read my post today if u can Slacking on your Macking

  11. Dayum, Sista Kit, you're good. I read it before I left work but like others here didn't see much on the news. It's trickling in now but theyz still trying not to link it any big Big Crash.

    I read your comment to a reader about being wary of Bank of America buying Merrill Lynch. Well SHTF with them and I read they been downgraded for doing that stupid shit.

  12. Machete, I was just reading that too and shaking my head. Makes me wonder if they're F'ing up on purpose; it's not lost on me that this would help along the long-term plans of the NWO to move us toward the Amero currency and a North American union which I wrote about previously.

    Here's the article if anyone is interested:
    Bank of America Downgraded, Ratings Put On Watch Negative

    Torrance, True. Eyes open and trying to seeing what's in the distance helps us help others.

  13. Kit, I heard the news this morning and thought, "Kit's right. I always thought so and didn't want to believe it." I'm thanking God that if I need to, I can get to my parents' (and take my precious Ruppie with me) and we can be self-sufficient, after a fashion. I'll take my Foxfires and do the back-to-the-land thing. We'll have no choice. What scares me is that we can't all be. We're much too interdependent and dependent upon the system for basic necessities. I just finished reading Laura Ingalls Wilder's The Long Winter. Now I"m thinking that I may need to use some of the survival skills.

    Quite honestly, this scares the shit out of me. I'm going to start with a stash as well.

  14. Here's a question: do you think we'll be OK with small local banks? Or better with large ones?

  15. Man, I was hoping all your dire predictions could be wrong.

    Why couldn't you be wrong?

    Anway, I'm with Bank of America. I guess I'll stay with their dumbasses.

    Hopefully the don't go out like Al Copeland when he bought Churches chicken after he got all that Popeyes' money.

  16. We definitely believe our own hype - but then again, most people in the US can't count very well.

  17. I stopped depositing my money in bank on the advice of a fianacial advisor. I only deal in cash. No more direct deposit for me and I don't miss getting those bank statements with all those fees tacked on. Free at last!!!!!

  18. Anon9:57PM, Don't know anyone whose done that yet. Gee, what do you do if you're low on gas or have an accident and need your car towed but don't have cash and they don't take checks, just a credit card? I'm not quite ready to leap there yet...

    Brown Man, I don't know... Wall Street Sharks count the best and they're going down hard and taking a bunch of us with them.

    A dear friend of mine lost $20K today in the stock market. I spent an hour on the phone encouraging him to yank his remaining $200K out as soon as the bell rings in the morning. He's hoping it will bounce back up. I think the carnage has just begun. Tokyo stock market opened this evening and they're the lowest ever... not good, not good at all.

    Kelso, I'm deeply touched by your invitation to Panama, although I think this is something you should have emailed me about.

    Panama sounds wonderful and it's pretty. I'll be doing an open thread post soon so others can describe places they've been to and would consider relocating to, which is a recurring theme I hear about and read if McCain-Palin win.

    Big Man, you said, Why couldn't you be wrong? Yo, bro, you had me cracking up laughing. And re: Al Capone - wonder if any of those 5,000 laid off Lehman employees will go postal. That shit would be funny. The rest of y'all please 'scuse my black ethnic humor. *snicker*

    Mountain Laurel, You're soooo blessed to have nice parents who could take you in and have a garden to plant food. Your other idea of keeping a stash is on the mark. I mean, what if you're driving, need gas, and your dang bank or credit card company declared bankruptcy during the day? Heck, my Internet and cable TV has been out, off and on all evening. That never happened before in absence of a storm. Hope they don't go under.

    You asked me about the safety of small banks. At best I can refer you to here, bankrate.comwhich gives the star ratings of most banks.

    It's good, but none of these sites are 100% dependable, as this one and another hadn't known that Indymac was going under. Why? As my late father might say, "maybe the crooks cooked the books." I don't know.

  19. Sister,
    You speak truth to power.

    I am without adoubt nervous and I am trying to do what i need to do to secure as much of my wealth as I can.

    These are trying times and I get the sense that many folks are not grasping the full magnatude of what this mean and how far reaching the effects will be.

    And thank you for the time spent reading my archives. Your comments were kind and heartfelt.

    I am blogrolling you!

  20. All I know is I lost just about all my savings over this wall street mess. I've learned my leasson.

  21. Lovebabz, thanks. A lot of folk, as you say, aren't grasping it b/c the media still has been overly optimistic and light on the financial stories today. As I said in the beginning of this post, the New Great Depression, like the next revolution, may not televised.

    I'm so sorry to hear this, Kennonp. A close friend of mine lost $20,000 on Monday. Ouch. We had a long talk about it that evening; he has (or had) about $200K more still tied up in stocks.

    I'm no expert, but I suggested he get the rest out at opening bell on Tuesday morn. His financial adviser suggested 'he ride it out."

    It's after midnight now on Wednesday morning, and I'm breathing a short-term sigh of relief that "AIG avoided the worst financial collapse in history by accepting a rescue that provides an $85 billion loan from the federal government in return for a majority stake.

    They would have NEVER done this if they weren't certain of an immediate and total collapse of our economy. It was a smart move.

    However, we're not out of Black Autumn and may just be entering it: there are over 150 banks on the verge of bankruptcy, the three US auto makers are in trouble, gas is tied to the dollar so will go back up, and the country is flat broke, living on credit and loans.

  22. K.I.T.: I bring some good news about the election from the world of THE EVIL "WALL STREET SHARP" (of which I am a proud member in good standing).

    The financial news has kept the 24/7 MCCAIN/PALIN WORSHIP FEST off the news and the Wall Street Journal's SOCIALIST (!) Op-ed page has endorsed Obama's health plan over McCain's.

    In the cash and futures markets in the election there have been millions of pounds sterling for Obama and not 10 pence for McCain over these past couple of days. This money doesn't have an ideology or a party. I don't think Obama can be stopped now, because the WHITE CHRISTIAN PALIN LOVE FEST cannot resume once such serious and debatable matters as the MERRILL, LEHMAN, AIG, and WASHINGTON MUTUAL crises and their knock-on effects throughout the American economy and global markets have become news. White America may love Sarah Palin but they (rightly) love their own money more. The press will follow the advertisers wishes and the advertisers want eyeballs. The eyeballs want to see business, finance and economic news.

    Once economics gets into the political DEBATE itself, it's over for McCain because he cannot keep up with Obama on the subject. Obama was OFFERED officer-track jobs as house-counsel in the risk management departments of various investment banks when he decided not to clerk at the Supreme Court. Finally, the handcuffs are off him and he can speak his mind on a serious subject and be heard by everyone.

    These bailouts sure are puzzling, though. The same sensibility which makes me averse to utopianism, makes me want to see MerrillLynch PUNISHED for their mismanagement. Their willingess to bet the whole company by allowing a small proprietary mortgage desk take enormous naked leveraged positions in a security the people didn't UNDERSTAND is gross negligence if you're generous, criminal if you're not.

    As for AIG, wowee-zowee. There's risk-loving, there's aggressive, there's overly aggressive, and then there's AIG. Not a YEAR has gone by without at least one scandal at AIG. It is a lunatic asylum, not an "insurance company." That the DowJones corporation would include AIG in the 30 without having studied the portfolio of business and positions that company was in shows you how little supposed "experts" really know.

    This is another reason why criticisms of Obama's "elitism" won't play anymore. It was the financial scholars and more sophisticated hedge-fund managers who were warning the world about all of the minefields throughout AIG's balance sheet for years. All of a sudden, "education and intelligence" seem necessary, not UNAMERICAN! The poseurs and equity cheerleaders were the one telling the lies.

    Just as with every other economic crisis brought on by the fiscal looseness of the W years (read tax cuts for the rich, wars of choice, the creation of the Department Of Homeland Security, and the encouraged looting by GE, Halliburton, LockheedMartin via DoD allocations) and the monetary looseness of Alan Greenspan and Ben Bernanke, Barack Obama as President will have to walk a very fine line.

    Ideally, he'll get to the point maybe in his second term when he can begin to adopt the Brady and Rubin tight fiscal style and also "signal" his Fed Chair that he'd like some support for the US Dollar. [I know Nicholas Brady and Robert Rubin aren't exactly beloved, but class shows regardless of party, skin color or ethnicity]

    Bush's militarist spending sprees and Greenspan and Bernanke's cutting in a time of two wars and Kaiser Wilhelm as President were unconscionable. It's too bad for Obama that it fall in his lap. But it will. And he can't get to responsible fiscal and monetary policy immediately without risking a depression. I think his tax plan and health plan are a good start. He has to keep getting high velocity money into consumer hands while finding budget room elsewhere to stave off the inflationary effects of those moves. I think a commitment to END THE WARS is essential as is a commitment to slowly reduce DoD outlays and begin a discussion of dismantling the Dept of Homeland Security starting with the first budget.

    Obama, I hope, will be coming in with enough respect because of the economic crises and his ability to lead that he can abandon the hawkish posture he adopted over the summer to please the likes of Rick Warren and Pat Robertson. Obama is still more hawkish than I am but he's not as hawkish as his summer rhetoric has been and he can return to what he believed all along about the insanity of Bush's wars. He can commit to getting US forces home in three years and follow through. He has to anyway. At this level of fiscal fire, the Blue States will be forced to leave the US and join Newfoundland, New Brunswick, Quebec, Ontario, Manitoba and British Columbia (by geographical ease) just to survive at all given how MUCH OF A BURDEN THE WARRIOR RED STATES TAKE AWAY FROM BLUE STATE TAX PAYERS.

    Monetarily, his Fed Chair must start supporting the dollar. He or she can't do it all at once without risking depression. But 25pips every other quarter to start is essential.

    For this to work, EVERYBODY is going to have to set aside pet prejudices. There are some free-market answers which means letting some of these institutions fail and letting the winners and losers sort themselves out. There are some interventionist answers which means a dollar-for-dollar replacement of military spending for health care and perhaps a mortgage holiday or two.

    And the flip side, as well. Some homeowners who overspent their means will have to lose their homes. Some liquidity will have to go into the more essential of the failing banks.

    Religious people are going to have to chill out, shut up, and let America modernize socially such that it will be in a cultural position to trade with other nations. A woman's right to choose and the rights of two adults of the same gender to arrange their relationship and legal affairs however they see it are not WEIRD CONCEPTS. The other RICH NATIONS all take those rights as given and have long moved on to more practical matters.

    Organized religion is going to have to start paying taxes, also. That is the single most unfair element of American tax policy. All the capital gains tax cuts in the world are not as toxic, unfair and subject to chicanery as the Organized Religion Tax Dodge.

    The idea that peace is good for business has to take hold. Sure, it takes hold first with educated people. That doesn't make it bad. Obama is an excellent messenger for such a concept, which, at rock bottom, makes a lot of sound economic policies possible.

  23. Thanks Kelso. We're clear on some overlapping issues and I all I can say is I hope it works out too. Catch ya later.

  24. Really nice blog.
    Glad to visit it.
    Thx for your recent comment!

  25. The unmitigated gall of degregulatory-prone congressional and senatorial types helped get us here. How they ever thought that retail banks should have their hands in both the investment banking and debt banking business, I will surely never know. But that deregulation has helped spurn even larger retail banks with even larger hands in the cookie jar of investment banking.

    The unfettered market, as anyone who has ever taken an economics class knows, is in some ways inherently flawed. Without rules, there is mayhem--just like any other game.

    People I know in the game of finance--much higher up than me--as recently as 5 months ago predicted that this would happen. They projected that at least 8 of the biggest named players would falter (excluding the two GSE's) and or merge. Looks like we are right on target.

    I am not for unorganized, reactionary regulation. But, the rules need to be readdressed. I mean we have gotten so far to the left that for the last few years the FDIC has not been forcing banks to pay their premiums. There is a real danger--and a reason to meet me in the breadline if the FDIC can't make good on its insurance requirements.

  26. @ Trill and Emeritus

    BOA is probably the safest bank in America. One of the reasons a lot finance pundits have started saying they might literally be the Bank OF America, is because they have by far sustained the lease loses from sub-prime loan packaging and have the least liquidity problem. The other that might do okay is JP Morgan Chase. Now--the one I'm waiting to collapse is Citi.

  27. Yeah Jonzee, BoA is where I have my lil stash. You're not the only one who thinks they and Rockefeller- owned JP Stanley will be the only survivors left in the game. I did a new post on this earlier this morning titled The Spooks Who Sit Beside Everyone's Door.


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