23 September 2008

It's the Economy, and I still feel stupid.

Had enough of cute little bunnies and weird French rugby stars? This should bring you back to earth: our economic crisis. Which is either really really bad, an absolute disaster, or the end of life as we know it, depending on who you last talked to.

Jack makes a stab at it and wonders if "we didn't just see the big banks [pull] an old-time holdup on the Fed." He has much more to say in his comment which you should read. I read one relatively conservative economist who called it a coup-d'etat by the Finance Minister.


Jack goes on to mention this, a factor that I have heard mentioned, but don't see how it would be a big enough factor to cause the massive amounts of bad debt we have piled up. Aside from that, I am always willing to blame the greed and foolishness of those with big bucks (e.g. bankers and others Masters of the Universe). But here's Jack:
Even if it was a conscious conspiracy by the bankers (unlikely) I find it hard to blame them. I've read increasingly that many of the bankers were complicit in such loans because Congress was pressuring them to do it. Listening to the administration the last few years, I suspect they were pressuring the bankers, too. Remember all the boasting a few years ago about how home ownership was higher than it had ever been?

I don't think Jack is indulging in the blame some McCain spokespeople are casting on the Carter and Clinton administrations (how did it skip over the Reagan years?) nor the finger pointing at minority homeowners (they would be a subset of a subset). Here is a little video from Talking Points Memo with some examples.

I also find David Brooks' view very interesting. If you read his column carefully you will see that he has written McCain/Palin right out of the equation (in fact Brooks seems to be turning against the McCain campaign much against his will). This seems to be the core of his take:
The Paulson rescue plan is one chapter. But there will be others. Over the next few years, the U.S. will have to climb out from under mountainous piles of debt. Many predict a long, gray recession. The country will not turn to free-market supply-siders. Nor will it turn to left-wing populists. It will turn to the safe heads from the investment banks. For Republicans, people like Paulson. For Democrats, the guiding lights will be those establishment figures who advised Barack Obama last week — including Volcker, Robert Rubin and Warren Buffett.

As for me, I have a sore throat and thinking about numbers, especially one with 11 zeros behind it, makes my head hurt. I think it is time for ....

.... VIKING KITTENS!

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4 Comments:

At 23 September, 2008 21:09, Anonymous Anonymous said...

There's never a bad time for Viking kittens.

 
At 23 September, 2008 21:25, Blogger jack perry said...

You're right. I don't mean to blame Carter and Clinton, nor an emphasis on increasing minority homeowners regardless of their ability to pay a loan. That's a big part of the problem, yes, but the persons I remember boasting most about home ownership levels were the current President and certain right-wing economists, who were poo-pooing the concerns of people who thought that an average credit card debt of $20,000 per household was a matter of concern. Now they're all talking about climbing out from under mountains of debt. Sheesh.
David Brooks may not be responsible for that particular burst of illogic, but one remark that he does make astounds me. "It will takes years to climb out." No, try decades, or even centuries, not years.

There's a reason governments should not maintain a policy of running large deficits, and this $700 billion bailout is exhibit A. Even if it were necessary, the deficits our government incurred this decade—along with the so-called economic stimulus package—have made it that much harder to fix the economy.

I hope I'm wrong. I really, really hope I'm wrong.

 
At 24 September, 2008 03:52, Blogger jack perry said...

Here, I tried to write something substantial on the topic for a change. I tried not to blame anyone, but I was a bit sarcastic about some of the supposedly brilliant ideas coming out of Freddie Mac.

 
At 24 September, 2008 15:01, Blogger Clemens said...

Thanks Jack. I too am worried about what this will do to the future. So far neither candidate seems interested in coming up with a viable plan, though at the moment that wouldn't do much good anyway. And the way Paulson and some of the others have been talking something has to be done by next January.

We live in interesting times.

 

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