With the news of Lehman’s frenzied courting of Barclay’s for a shotgun marriage, and the elopement of Merrill and Bank of America, everyone is nervous. On the Twitter stream, the buzz is that the end of America is nigh, that maybe even the end of the world is upon us.
This was not entirely unexpected. The ball was put in motion at the end of March when the subprime crisis finally burst into the public consciousness in a big way, Bear Stearns failed, and Lehman teetered on the edge.
Last week’s bailout of FreddieMac and FannieMae simply brought the next round of illiquid financial institutions to the fore.
Hear this: We have a situation, brought on by a national addiction to credit on an individual, corporate and governmental level. It’s not going to go away anytime soon. It’s not going to get easier.
As long as our government continues to finance the Iraq War with abandon, credit will be tighter, financial institutions will be as squeezed as the individual, and our nation will leverage the future of our children in the name of “national security”. Just as a reminder, the architect of the blueprint for the failure of these financial institutions can be laid directly at the feet of Phil Gramm, John McCain’s chief economic adviser. McCain continues to try to tell Americans he will not raise taxes and will extend the Bush tax cuts, but he does not admit that what he proposes is impossible.
This is important, because it goes straight to the heart of our faltering economy. There is no question that the debt we’re racking up in Iraq (last tally it was 3 TRILLION). Despite the Bush Administration promise that Iraqis would help foot the bill, the facts say otherwise. They have not contributed one penny to the debt the US has accumulated during our occupation of their country. Why should they? It’s not as if we were invited in, and asked to stay.
The continued shakiness of our financial institutions and Federal bailout responses are cause for concern, but not cause for panic. It is not time to make a run on the bank. It IS time to be smart about how your money is banked. Make sure you’ve got cash in FDIC-backed institutions, be prudent and get rid of as much personal debt as possible. (I have more suggestions here).
As a third-party pension administrator, I admit to having concern about how 401(k) investors are going to react to today’s news. As the single largest cash investor in US markets, it’s really important that participants in 401(k) plans react with caution, rather than on impulse. Retirement plans are long-term investments, and investors have an opportunity to buy at bargain-basement prices while the markets react to the Lehman/Merrill news. This is not a time to pull funds out of the market; it’s an opportunity to leverage the state of the market for future growth.
But on a higher level, all of us need to ask how much bleaker this economy will get before we’re staring down a full-fledged depression. While McCain and Bush try to tell us it’s in our heads, facts remain facts.
To understand the problem, you need to know that the old world of banking, in which institutions housed in big marble buildings accepted deposits and lent the money out to long-term clients, has largely vanished, replaced by what is widely called the “shadow banking system.” Depository banks, the guys in the marble buildings, now play only a minor role in channeling funds from savers to borrowers; most of the business of finance is carried out through complex deals arranged by “nondepository” institutions, institutions like the late lamented Bear Stearns — and Lehman.
The new system was supposed to do a better job of spreading and reducing risk. But in the aftermath of the housing bust and the resulting mortgage crisis, it seems apparent that risk wasn’t so much reduced as hidden: all too many investors had no idea how exposed they were.
This is the problem in a nutshell. The twisty passages of current banking and securities law have done a wildly effective job of hiding vulnerabilities until it’s far too late to correct without drastic measures. The best solution is going to be a steady diet of transparency, mandatory disclosures, belt-tightening, and putting an end to the bleeding of our resources into Iraq.
Areas to watch: Insurance companies, who typically invest heavily in the mortgage markets but usually have lower liquidity needs than brokerage houses and banks, and the larger institutions like Bank of America and Citibank. As they consolidate and bring the troubled securities children under their corporate umbrella, there should be concern that they are not putting us at greater risk by concentrating exposure in one place.
Oh, and listen carefully to what John McCain has to say about this latest shakeout. My guess is that he will try to brush it off as less than it is or write it off to market adjustment. Don’t believe him. I cannot say this loudly enough. Attention should and must be paid to this. That doesn’t mean panic, it means heads-up, stay alert, and watch your back.
Someone should ask Sarah Palin how she’d handle this too. I’d love to hear her very detailed and experienced answer.
Keith Olbermann’s special comment last night echoed everything I’ve been saying whenever I hear John McCain pronounce that a) He knows how to win wars; and b) he will bring our troops home from Iraq after we ‘win’ and with honor.
Let me just say this here and now: I believe that our troops have honor just by virtue of the fact that they are serving, have served, have placed their lives at risk and have obeyed orders that they perhaps didn’t even agree with. Every day that they get up and put their boots on and go back out there, they serve with honor. There is absolutely nothing in the outcome to Iraq that will change the fact that these are honorable men and women serving their country with, yes, honor.
With that said, every single time McCain makes the broad claims about victory and honor, I find myself screaming the words “Define victory!” at my television set. Or my car radio. Or even my iPod, on occasion.
The fact is, victory in Iraq is undefined now, and will forever be undefined. This is largely because there was no clearly-stated objective beyond getting rid of Saddam Hussein, and that objective was completed 5 or so years ago.
Q: Do you think you will ever use the word “victory”?
Petraeus: I don’t know that I will. I think that all of us at different times have recognized the need for real restraint in our assessments, in our pronouncements, if you will. And we have tried to be very brutally honest and forthright in what we have provided to Congress, to the press, and to ourselves.
“This is not the sort of struggle where you take a hill, plant the flag and go home to a victory parade…it’s not war with a simple slogan.
Once again, McCain lies and distorts for political gain. Oh, don’t we all want to puff out our chests and proclaim ‘victory’. And of course, McCain has to take that tack in order to lie about Barack Obama as being a ‘quitter’ who wants to ‘give up’ in Iraq, with quips and sound bites like this one:
“This is a man who can give an entire speech about the wars America is fighting, and never use the word `victory’ except when he’s talking about his own campaign.”
Now you hear Petraeus echoing more or less what Barack Obama has said throughout the campaign — that withdrawal from Iraq must be done with caution, but that it must be done, particularly with Afghanistan at grave risk.
Make no mistake about this: John McCain’s idea of honor IS victory — HIS. And he will lie and sell out to the highest bidder to be victorious.
This week’s top fear flavor: Iran. Fear that Iran will attack us if Barack Obama is elected. And fear that if Iran doesn’t attack us, Israel will attack Iran after Obama is elected but before he is inagurated. (Okay, the second one is really not tied to Obama being elected, just saying that between election day and Inaugural Day Iran will attack, but somehow John McCain is strong enough to deal with it. HUH?) And if Iran doesn’t attack us and Israel doesn’t attack Iran, then we’re screwed anyway because…oh NO!…European officials are afraid that if Obama engages Iran via direct diplomacy, he will somehow undercut progress with Iran.
Yes, it’s the newest flavor of FUD, custom designed to make voters be afraid…very afraid. Everyone get your worry beads out and start using them, religiously. Tonight is Uncle John and Mr. Bill’s story hour. Scoot up and let me tell you what they’re talkin’ about.
Uncle John Bolton thinks Israel will attack Iran after November 4th and before January 20th. Uncle John thinks that Big Daddy McCain is stronger than the Bush administration about handling the Iranian nuclear program.
Big Daddy Bill Kristol says that Bush might bomb Iran if he ‘thinks Senator Obama’s Going to win‘.
Waaaaait a minute. You mean Bush THINKS? I thought he just cowered in the corner while Big Dick (Cheney) hands him his latest talking points along with a stiff…something.
Comedy aside, let’s take a walk down memory lane and see what happened in 2002, before we sent our young men and women into Iraq to invade and occupy a country which, it turns out, hadn’t given us reason. Turn the time machine on, folks…moving back in time now…
August 16, 2002, George W. Bush in Crawford, TX
First of all, I am aware that some very intelligent people are expressing their opinions about Saddam Hussein and Iraq. I listen carefully to what they have to say.
There should be no doubt in anybody’s mind this man is thumbing his nose at the world, that he has gassed his own people, that he is trouble in his neighborhood, that he desires weapons of mass destruction. I will use all the latest intelligence to make informed decisions about how best to keep the world at peace, how best to defend freedom for the long run.
We’ll continue to consult. Listen, it’s a healthy debate for people to express their opinion. People should be allowed to express their opinion. But America needs to know, I’ll be making up my mind based upon the latest intelligence and how best to protect our own country plus our friends and allies.
October 7, 2002: George Bush, speaking at the Cincinnati Museum Center –
The threat comes from Iraq. It arises directly from the Iraqi regime’s own actions — its history of aggression, and its drive toward an arsenal of terror.
September 14, 2002 (coincidentally timed around the first anniversary of the 9/11 attacks):
Today this regime likely maintains stockpiles of chemical and biological agents, and is improving and expanding facilities capable of producing chemical and biological weapons. Today Saddam Hussein has the scientists and infrastructure for a nuclear weapons program, and has illicitly sought to purchase the equipment needed to enrich uranium for a nuclear weapon. Should his regime acquire fissile material, it would be able to build a nuclear weapon within a year.
And so it goes, on and on. Does any of it SOUND FAMILIAR? It’s a broken record, same song, different verse, substitute a different country this year but the timing and the message is the same.
Only, this time it’s a blatant effort on the part of the neocons to reframe the 2008 election inside everyone’s fear buttons.
If it weren’t so desperate, it might be funny. The sending of three separate surrogates out to writhe and moan over Iran’s clear intent to go on the attack is ridiculous. It doesn’t even pass the smell test.
It also defies logic. To believe what these neo-yoyos are saying, you have to believe that diplomacy is a threat to world peace.
Tragically, it seems that free and fair elections in Zimbabwe are pure fantasy. But reading the insane remarks of the “neo-fights” today makes me wonder whether we can reasonably count on the Bush/Cheney regime to: a) allow free and fair elections in our own country; and b) surrender power peacefully to the rightfully elected President on January 20, 2009. It’s clear to me from reviewing the recycled warmongering with respect to Iran and our election cycle that if the Bush regime could force an outcome to their liking, or manipulate voters into believing the reconstituted bullshit they’re serving, they would gladly do it no matter what price our democracy paid.
The horsemen of the apocalypse are on the hunt. Here’s the latest news on the pale horses of death: ExxonMobil, Total, Chevron, Shell, et al who have been given preferential treatment and no-bid contract opportunities to service Iraq’s oil fields. (Remember this?)
The NY Times reports:
The deals, expected to be announced on June 30, will lay the foundation for the first commercial work for the major companies in Iraq since the American invasion, and open a new and potentially lucrative country for their operations.
The no-bid contracts are unusual for the industry, and the offers prevailed over others by more than 40 companies, including companies in Russia, China and India. The contracts, which would run for one to two years and are relatively small by industry standards, would nonetheless give the companies an advantage in bidding on future contracts in a country that many experts consider to be the best hope for a large-scale increase in oil production.
By now there’s probably very little doubt in anyone’s mind about the evil living in the White House. But this should make us all choke on our $4.50/gallon gas.
And the Bush/McCain diversion? Offshore domestic drilling, endorsed by flip-floppers Bush and McCain.
Here’s a rhetorical question. After George W. Bush and his merry band of neocons have raped us all for the last 8 years and now do it again without the benefit of even a kiss, do you think it wise to allow them to rape our natural resources here in the US for…oh…another 50 years or so? 100 years? 1,000 years? 10,000 years?
Just like McCain’s fake gas tax holiday, the call for domestic offshore drilling is just another invitation for the American people to bend over and take it quietly.
Seriously, there is much more to say about this, but for now, just let the brazen, wanton greed of our current Administration and their chosen successor to sink in. Breathe the stench. Be as disgusted as you want, and then feel free to copy this and email it to your friends with the title “Bush/Cheney into rape and incest. Will McCain follow suit?”
Let it go viral.
$275 per person. That’s $1,100 per family. As of today.
(h/t Jack & Jill Politics)
I will have much, much more to say about this. But for now, I just want to give high praise to Rep. Dennis Kucinich for having the integrity to press ahead with the impeachment of George W. Bush. During yesterday’s House session he spent four hours and forty minutes reading 35 articles of impeachment into the record.
Will this go forward? No. Not with the time he has left. But for history and posterity, the record will show a detailed account of the accusations put forward against President Bush.
Will he also read the accusations against Dick Cheney into the record?
One other thing: Scott McClellan will testify before the House in the Valerie Plame outing case.
Oh, and what should comprise the centerpiece of impeachment: The Senate Report issued last week, which concludes:
The “Phase II” report states — in terms clearer than any previous government publication — that there was no operational relationship between Al Qaeda and Saddam Hussein, that Bush officials were not truthful about the difficulties the United States would face in post-war Iraq and that their public statements did not reflect intelligence they had at the time, and, specifically, that the intelligence community would not confirm any meeting between Iraqi officials and Mohamed Atta — a claim that was nevertheless publicly repeated.
Before taking the country to war, this Administration owed it to the American people to give them a 100 percent accurate picture of the threat we faced. Unfortunately, our Committee has concluded that the Administration made significant claims that were not supported by the intelligence,” Rockefeller said in a statement provided to The Huffington Post.
“In making the case for war, the Administration repeatedly presented intelligence as fact when in reality it was unsubstantiated, contradicted, or even non-existent. As a result, the American people were led to believe that the threat from Iraq was much greater than actually existed. … There is no question we all relied on flawed intelligence. But, there is a fundamental difference between relying on incorrect intelligence and deliberately painting a picture to the American people that you know is not fully accurate.”
And in other Bush egregiousness, parts of Iowa and Wisconsin are under water partly because levees failed.