Something about this picture shows Bush as a rumpled little boy, hands caught in the cookie jar, and not having the vaguest idea how to cope with it, and there behind him the assembled dignitaries of the G7, likewise caught by events they don’t understand or control, pretending “authority.” Good luck!
Now hooked on this drama, last night I looked at the NYSE when it opened, up a tad. Then before going to bed I checked and it had bumped up a bit and then begun a swoon to minus 127 and then a stukka dive during my sleep to – 680. Seized by panic, or something, Mr Bush announced he’ll address the nation, as if there’s anyone left listening. I guess they’ll listen when he declares a national emergency, declares martial law, deploys troops – not national guard but remnants of whoever is hanging around from the US Army, and will cancel the election given that his party is clearly looking at a major loss next month. So go the internet rumors, which seem to have some justification.
Again before my bedtime, I check the NYT as the market opens, following a day of deep drops in Europe and Asia, and as word comes that the G7 and all the honchos of the business world will huddle to, to…. uh, well, to fess up that their vast Ponzi scheme of derivatives and leveraged this and that, and other financial world mumbo-jumbo was a fraud? That debt does not equal value/asset? I doubt it. Instead they’ll work to coordinate a global run of the presses, cranking out more paper backed with, well, uh, the reputations of the printers. That the reputations are below the zero line won’t do much to impress them since they don’t have a clue what else to do. So the DOW crashed 600+ in the first hour and now has bounced back like a super-ball to minus 200, and as the financial system throw a rod, I am sure we’re in for a few more wild gyrations before the thing is smoking in a pool of oil. Meantime behind the Oz curtain one feels the presence of levers being pushed, a con game being carried out, nevermind the logic has long ago slipped the gears of those who think they know what they are doing.
Morning, 11th. After a day of wild oscillations, up 300, down 600, the DOW closed down a mere 128, a drop in the bucket of the flood of losses (40% since last year) of late. In my book of metaphorical tools this is called “throwing a rod” – the last violent rhythmic movements before a car throws a rod and comes smoking to a halt in a pool of oil. And so our mechanics somehow conveniently pre-scheduled to meet on this date, will conclave this weekend to sort out a solution:
Standing in the center of this is Mr Paulson, former CEO of JPMorgan, “investment bank” who made a mere 700 million thereat, has 500 million in shares thereof in a “hidden trust”, and from which he received an 18 million bye-bye as he went through the revolving door to become US Secretary of the Treasury, in which role he is cast as a wizard of finances. This same wizard has been wrong in his role as public oracle for the last year, always softening the story, murmuring consistently “it’s all OK” again and again. Until a few weeks ago when he stiffed the Congress with dire “sky is falling” shrieks while asking for dictatorial control over the dispersal of a piddling 700 billion in public funds, exempt from legal or other oversight. Now this is the same wizard who was instrumental in provoking this crisis with his voice lent to the many others demanding a loosening of the rules of banking and investment, so they could leverage and leverage, and run out on a limb of extreme debt which in their mystical language was converted into asset/profit. I.e., yet another Ponzi scheme. So the most respected Mr Paulson meets with other G7 fiscal magicians to try to figure out how to dig out of the deep hole of debt which in selling enriched them and their pals, but has left the economic system high and dry, one more time. Of course it makes eminent sense that we should entrust the solution-making to those who just pulled off the heist. You betcha..
So the weekend will be filled with further drama as those who engineered this financial Rube Goldberg device (the IMF, World Bank, and the lobbyists and politicians in the pay of Wall Street who loosened the Depression era controls, commencing under Clinton), will try to patch it together. One prognosticator, Nouriel Roubini, who unlike most the others, was right in calling this over 2 years ago, proposes a drastic, dare we say, quasi-socialist, solution as spelled out in detail here. Whether the rabid champions of “the free market” will suddenly don these pink clothes remains to be seen, but desperate days can make for desperate changes, so perhaps they’ll do so. Whichever name it is given it will amount to governments revving up the printing presses and throwing lots of newly minted money at the rabbit hole of unpaid and unpayable debt, papering over the follies of the fiscal giants, thus, naturally, devaluing the money. Shambling out of this will be new mumbo-jumbo to impose external regulation on the greedy behavior of humans, particularly those who are attracted to the financial world precises because they smell blood. Dollars to the sharks ! Of course, over time none of the culprits will go to jail, more likely they’ll be handsomely rewarded with seats in “think tanks” and the like, or shuffled off to new banks and corporations to pad out their life-style needs.
If over the weekend they succeed in pulling this rabbit out of the top hat, there might be a little respite before the piper comes for his payment (again), and it all shudders once again to a halt.
The silver lining in these clouds:
If indeed the system grinds to a near standstill, it may for a decade or two, slow down carbon emissions, and perhaps in the hiatus of crazed consumerism and the capitalist mantra of growth growth GROWTH, there will be a philosophical shift in which the foundations of our poorly built society are questioned, and perhaps other values become ascendant and the industrial era is derailed for “good.” It will take quite a halt to do this, a minimum of a few decades, but just maybe it will occur. Wait and see. Meantime this weekend promises lots of secret blather among the nervous G7 souls, and nail-chewing from the not-so-innocent observers who wait to see how far their 401(k)’s and other paper “worth” has been or will be devalued.
A glance at the papers indicates that McCain, rabidly foaming as his chances to prove himself to dead dad go down the tubes, huffs and puffs about “the socialists taking over.” Yep, Henry Paulson, socialist….
The Treasury secretary, Henry M. Paulson Jr., said the government would move ahead with taking ownership stakes in financial institutions as it tries to restore confidence.
And meantime out in the real world there’s “peaceful” post-surge Iraq:
And somewhere in a field in Germany