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Paul Volcker was the last great Chairman of the Federal Reserve.  He was presented with a terrible situation -- stagflation, or weak growth and high inflation.  He could only tackle one problem.  He chose inflation.  To combat the problem he increased interest rates to levels that caused a recession.  In fact -- there were two recessions.  However, 25 years later, we still have low inflation largely thanks to Volckers efforts.  He deserves far more accolades than he receives.

In today's WSJ he offers something that is dearly lacking right now: hope that this situation will end.  What has been dearly lacking from anybody (and I mean anybody in any party in any position anywhere) is leadership.  Bush is a lame duck watching is legacy (what little is left) circle the bowl.  Congress has lacked any dynamic leaders who inspire calm.  Paulson attempted one of the largest power grabs in political economic history several weeks ago lowering his public perception.  In short, there haven't been many adults anywhere to be found.

However, Volcker is an adult.  His editorial is clear and decisive.

First of all, there is now clear recognition that the problem is international, and international coordination and cooperation is both necessary and underway. The days of finger pointing and schadenfreude are over. The concerted reduction in central bank interest rates is one concrete manifestation of that fact.

While there is concern on my part that Bush will do everything he can to prevent international coordination from occurring, the bottom line is circumstances may overpower him.  Simply put -- he really doesn't have much choice right now.

In the U.S., with higher limits of deposit insurance in place, the FDIC has demonstrated its ability to protect depositors, to arrange mergers, and to provide capital for troubled banks. Most other countries now have a comparable capacity.

Recent U.S. legislation has provided authority for large-scale direct intervention by the Treasury in the mortgage and other troubled markets. Along with increased purchases by Fannie Mae and Freddie Mac, now under government control, means of restoring needed liquidity are at hand.

Other key sectors of financial markets are now protected or supported by either the Treasury or Federal Reserve, specifically by temporary insurance of money-market funds and by direct purchase of commercial paper.

The FDIC has been working overtime over the last year.  Behind the scenes they have helped to arrange important mergers that kept deposit access seamless while preventing more hits to their capital.  They deserve far more credit then they are getting.

There is now authority for the Treasury to take unprecedented moves in the markets.  While some may not like this -- those arguing "socialism" etc -- they should simply be ignored.  The bottom line is we are far past the point of ideology.  We need solutions.  What has been proposed so far is clearly insufficient to solve the task.  We need far more direct intervention and participation.  

In addition, there are other regulatory pieces in place.  SIPC will help to prevent losses at brokerage firms should there be any problems.  There is talk of insuring all bank deposits and debts.  In other words -- we're moving in the right direction.

But we need leadership:

None of that is easy. Some of it poses risks for the taxpayer. All of it is decidedly unattractive in the sense of large official intervention in what should be private markets able to stand on their own feet. Unattractive or not in normal circumstances, the point is the needed tools to restore and maintain functioning markets are there. Now is the time to use them. To that end, the immediate and critical need is determined, forceful and persistent leadership -- extending across administrations and Congresses. Both the public and private sectors must be involved

Originally posted to bonddad on Fri Oct 10, 2008 at 05:29 AM PDT.

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Comment Preferences

  •  I am so glad that Volcker is willing (198+ / 0-)
    Recommended by:
    skybluewater, GainesT1958, gpclay, trillian, Bear, moon in the house of moe, demnomore, Rolfyboy6, Tuffy, ScientistMom in NY, mattman, newjeffct, DebtorsPrison, Southern Hope, Shockwave, hyperstation, cookiesandmilk, Midwest Meg, akeitz, celdd, SallyCat, Bob Friend, Matilda, mataliandy, Dumbo, mmacdDE, javelina, Ignacio Magaloni, thingamabob, marysz, dmsilev, wader, jdmorg, SneakySnu, casablanca, oldjohnbrown, Chicago Lulu, peregrina, snakelass, The Zipper, dnn, grrr, alizard, barbwires, One bite at a time, WV Democrat, eztempo, TexMex, sawgrass727, kscatlvr2001, Big Tex, historys mysteries, 3goldens, escapee, franziskaner, Mad Mom, mjd in florida, catleigh, Brooke In Seattle, EJP in Maine, John H, Blissing, mojo workin, snootless, ladybug53, Ice Blue, Phil S 33, paxpdx, The Raven, Rosemary, sodalis, playtonjr, dave3172, CCSDem, RiaD, Sanuk, BachFan, myboo, FishGuyDave, InsultComicDog, watch out for snakes, urbannie, kck, greenearth, ginja, sullynyc, Lashe, Libby Shaw, real world chick, Dauphin, boatsie, feduphoosier, Turbonerd, Clive all hat no horse Rodeo, means are the ends, RantNRaven, revgerry, kurious, CharlieHipHop, Picot verde, Friend of the court, Temmoku, Cliss, seabos84, One Pissed Off Liberal, gwriter, zipn, ibonewits, Cronesense, Mom to Miss M, Cat Whisperer, Loudoun County Dem, california keefer, NDakotaDem, moodyinsavannah, yoduuuh do or do not, LillithMc, Nespolo, Blue Waters Run Deep, kath25, Ticonderoga, Jimdotz, terabytes, Steve In DC, Tenn Wisc Dem, ballerina X, Unbozo, malharden, tcdup, BaritoneWoman, SeaTurtle, jnhobbs, Moderation, Captain Nimrod, feelingsickinMN, sable, Empower Ink, ratador, WahooMatt, marmar, Involuntary Exile, binkaroni, lineatus, Akonitum, beltane, LucyMO, Happy Days, TomFromNJ, CenFlaDem, TH Seed, Jake Williams, Ming Vase, Quicksilver2723, tamasher, mofembot, temptxan, luckylizard, DixieDishrag, bitchinabluestreak, armenia, ryangoesboom, Pris from LA, Discipline28, jaf49, eco d, pvlb, spookthesunset, John Shade, dcprof, bfitzinAR, Shelley99, synductive99, Losty, SnowItch, RadioGirl, sumo, acromagic, Wings Like Eagles, Wisteacher, jwcisneros, BasketCase, kcandm, Vacationland, TheWesternSun, El Ochito, yesivotedforbush, icelady, creamer, NY brit expat, Orbital Mind Control Lasers, Kristina40, addisnana, farbuska, Floande, CathodeRay, ladona, GreenSpear, The Bluest Sky

    to act as the adult in the room. the sad thing about this whole financial crisis has been the stunning lack of leadership. so much for our MBA president. he has been the deer in the headlights, and McSame has been just erratic.

  •  Bondad thank you for your insights (36+ / 0-)

    I think it is over for trickle down economics. I wish it didn't take a calamity for people to wake up. I really believe President Obama will give us much more of an FDR, Keynesian bottom-up approach.

    Things go in cycles - the Keynesian approach was dominant from the 1930's until the late 1970's. Trickle down economics came back with Reagan.

  •  rec'd for optimism (19+ / 0-)

    It's cyclical, yadda yadda, but it sure is a scary to live through.  At least a President Obama will appoint competent people to these positions.

    •  ditto on the optimism (7+ / 0-)

      it's a relief to read that cooler heads will prevail and that the need for a global solution is being addressed.

      It should be encouraging to the rest of the world that we are getting ready to kick the republicans and the miserable bush/cheney administration to the curb.  At least come January we will have a competent team in charge.

    •  The optimism seems forced. (15+ / 0-)

      I know the Responsible Serious Adults like Volker must try to calm the proles' fears to avoid bank runs and riots, but the truth seems to be pointing in another direction.

      International trade is grinding to a halt as banks refuse to honor letters of credit from other banks.  Take a look around your world.  How much of what you eat, wear and put in your gas tank relies on letters of credit in order to make it to the U.S.A.?

      Globalism is dying along with capitalism.  Last weekend, Icelanders were rushing to the store to buy the last packages of pasta and bottles of olive oil because their supermarkets could no longer import it because their money wasn't being honored abroad.

      On Wednesday, German and Polish ATMs would no longer honor British credit and debit cards.

      And now, goods, including wheat, are piling up on docks because of the breakdown in the system of letters of credit.

      It's nice to tell everyone to clap louder, but it's beginning to look like Tinkerbell has had it.

      Heard one person starve, I heard many people laughin',
      And it's a hard rain's a-gonna fall

      by goinsouth on Fri Oct 10, 2008 at 05:55:44 AM PDT

      [ Parent ]

      •  Yup. 3 month LIBOR is spiking... (4+ / 0-)
        And all the Icelandic banks - who made the mistake of actually loading out their depositors' money - have just gone under.

        Global governments can coordinate and rant and rail as much as they like about the need to increase liquidity, drop their central bank rates to nil, and hand out giant sackfulls of Goddamn magic pixie gold, but the (smart) clearing banks are all going to take whatever's offered then just sit tight on their funds and hope the other banks are stupid enough to start lending first.  Last one to lend ends up owning the rest of them.

        We're nowhere near the bottom yet, and the measures put in place are just prolonging the inevitable.

        At this point, we're looking at massive synchronized global nationalization (complete or majority, not minority states) in order to force liquidity back into the market.  Just buying the toxic sludge and giving clearing banks more sweetheart loans isn't going to cut it.

        --
        But seriously, CNP, when McSame keels over during his inauguration, who are you really going to let run out his term?

        by DemCurious on Fri Oct 10, 2008 at 06:19:20 AM PDT

        [ Parent ]

    •  This is a bit more than a cyclical crisis. (2+ / 0-)
      Recommended by:
      conchita, Randtntx

      If it was only cyclical, I would be far less concerned and the situation would be more in hand than it is. The interconnectedness of the economy has ensured the spread from a mortgage and banking crisis, combined it with a financial crisis and this is rebounding throughout the economy as industrial sectors are now in deeper crisis than before (e.g., ford and gm).
      This will require far more than the monetary policies we have been seeing in the states and europe. We will need fiscal policies to stimulate the economy and try to ameliorate the situation. We need emergency action. Specifically, for emergency action, we need to increase the period for the availability of unemployment benefit (and in Britain, it needs to be pegged to previous income which it is not), minimum wages need to be raised to be commensurate with cost of living, medicare and medicaid need to be increased to cover all costs of health-care and a universal health care package needs to be passed (this will put money back in people's pockets rather than in health insurers), progressive taxation needs to be implemented (with increases in capital gains taxes and inheritance taxes), government direct investment in industry and in research and development is needed for job creation and job retention.

      All of this needs to be done with the understanding that due to globalisation the impact of Keynesian policies will be limited and will require a lot of money.

      Cuts need to be made in military expenditures for economic and political reasons to free up some revenue. Somehow, they will need to get out of contracts with Blackwater (etc) and corporations like Halliburton. The US needs to get out of Iraq and Afghanistan.

      These things need to be done asap. Government investment needs to be sustained, not short-term in nature.

  •  This economy will be volatile until 1/20/09 (13+ / 0-)

    then watch us shine.

    I wish Bush would just give the reins over on November 5th but that would be wishful thinking.

    Republicans are not a national party anymore. Read My Lips: One Spouse, One House.

    by jalapeno on Fri Oct 10, 2008 at 05:35:24 AM PDT

    •  10/29/08 (18+ / 0-)

      I think Obama's talk to the nation that evening will settle things down ...

      You kids behave or I'm turning this universe around RIGHT NOW! - god

      by Clem Yeobright on Fri Oct 10, 2008 at 05:37:31 AM PDT

      [ Parent ]

      •  This is an interesting question... (8+ / 0-)

        And I wonder if Bonddad and/or JeromeAParis would tackle it.

        We have heard so much about investor (commercial banker) confidence being so crucial to all this interbank credit.

        Apparently the $700billion did not move confidence levels back to where they need to be.

        Would a speech by Obama do it?

        Why/Why not?

        Remember he doesn't have to install confidence in us, the citizenry.

        He needs to install it in the bankers, according to CW.

        "Watch what you watchin'. Fox keeps feeding us toxins. Stop sleeping, start thinking outside of the box and unplug from The Matrix doctrine." -Nas

        by malharden on Fri Oct 10, 2008 at 05:41:27 AM PDT

        [ Parent ]

        •  I think there are two parts (1+ / 0-)
          Recommended by:
          Newton Snookers
          1. If I have no cash to lend you, who cares about my confidence in you?
          1. But if I get the cash, why would I lend it to you?

          Obama can promise 1 and guarantee - as Paulson did not - that 2 will follow favorably.

          Greed on Wall Street is good! It's the basis of capitalism!

          Obama will use rational pursuit of selfish desires to restore us. I truly believe that.

          You kids behave or I'm turning this universe around RIGHT NOW! - god

          by Clem Yeobright on Fri Oct 10, 2008 at 05:45:53 AM PDT

          [ Parent ]

          •  Are you serious? (28+ / 0-)

            Is this snark?  I can't tell.

            "Greed is good" is a meme that's going bye-bye. "Greed" is not the basis of capitalism.  Competition is the basis of capitalism -- providing the best product or the lowest price.  Competition has been replaced by greed.  The way to get ahead now is to offer the crappiest product at the highest possible price, or, in the case of the financial world, smoke and mirrors at the highest possible price.  That's the problem.

            The way capitalism is supposed to work is that if you get too greedy (i.e., start offering crap at high prices), I will take advantage of that by offering better products at lower prices.  Greed has nothing to do with success in capitalism.  Carnegie didn't make it because he was greedy -- he made it because he had a better way to do things.  

            "Rational pursuit of selfish desires," is childish Randian nonsense.  What about rational pursuit of social harmony?  That's what I want my government to do, to keep the selfish children in their little sandbox where they can't hurt the rest of us.

            •  Well said. nt (8+ / 0-)

              As if things could get worse without getting better.

              by A Voice on Fri Oct 10, 2008 at 06:00:18 AM PDT

              [ Parent ]

            •  Randian nonsense? Try ADAM SMITH. (4+ / 0-)
              Recommended by:
              dnn, Superpole, farbuska, FeloniousMonk

              You say Carnegie was not 'greedy'? Greed has nothing to do with success in capitalism? Buffett is not maximizing returns for his investors?

              Yes, I too want government to implement and enforce the regulation of good capitalist greed into enlightened productive social good. But that's the government's business, and maximizing return is Wall Street's business.

              Do we really disagree?

              You kids behave or I'm turning this universe around RIGHT NOW! - god

              by Clem Yeobright on Fri Oct 10, 2008 at 06:07:17 AM PDT

              [ Parent ]

            •  A basic assumption of economics, (4+ / 0-)

              no matter who's economics you talk about, is that "more is better". The only exception is called a "Giffen Good", like garbage, where more is not better.

              The word "greed" carries negative connotations, but "more is better" does now, and has for all of recorded history, been an underlying motivation in every society.

              Trying to deny that is like pissing up a rope, you can try it, but you'll just make a nasty mess.

              I stopped counting angels on pinheads, so, obviously, it's a waste of time to discuss it with the pinhead.

              by FeloniousMonk on Fri Oct 10, 2008 at 06:23:13 AM PDT

              [ Parent ]

              •  You want to talk economic theory? (0+ / 0-)

                You've come to the right guy.  

                More is not always better in economics.  I don't know what moron right-wing teaching assistant at Bubblegum Community College taught you that, but there is this thing called the Law of Diminishing Returns (two branches of it) that says that at some point, enough is enough.  It is economics' way of saying greed is bad.

                •  Well, Mr. "Right Guy" (2+ / 0-)
                  Recommended by:
                  kalmoth, Clem Yeobright

                  It's called the "Law of Diminishing Returns" because there is an increased return, just a smaller one than when using other methods.

                  Since you want to be insulting, I'll feel comfortable doing likewise. You may have missed the part of economics 101 where they talk about "marginal propensity to consume". If you had listened in that section, you would know that diminished returns still increase your return, just not as much as it might if you pursued another strategy.

                  None of which changes the facts of human nature. For example, by becoming nasty in your reply to a non-threatening comment, you are engaging in the very behavior under discussion. You are either trying to increase your mojo or your own self-worth. That's an example of your pursuit of "more is better" which you equate (wrongly) to mean "greed".

                  It's just human nature and you can rail against it all you want. You'll still never change it. Sing, dance, insult people or punch 'em in the nose ... you'll still never change it. Sorry 'bout that.

                  This thread is now over. For the reason, refer to my sig-line.

                  I stopped counting angels on pinheads, so, obviously, it's a waste of time to discuss it with the pinhead.

                  by FeloniousMonk on Fri Oct 10, 2008 at 07:04:22 AM PDT

                  [ Parent ]

              •  Marginal Benefit vs Marginal Cost (1+ / 0-)
                Recommended by:
                FeloniousMonk

                More is not always better.

                When the benefits of additional consumption are outweighed by the costs, we should stop.

                In a 24 hour day, the costs of watching TV, sleeping, or working all day long exceed the benefits.  Excessive consumption is detrimental.

                •  That's why the term Giffen Good was coined. (1+ / 0-)
                  Recommended by:
                  Clem Yeobright

                  I stopped counting angels on pinheads, so, obviously, it's a waste of time to discuss it with the pinhead.

                  by FeloniousMonk on Fri Oct 10, 2008 at 08:22:31 AM PDT

                  [ Parent ]

                  •  No, more is not always better. (1+ / 0-)
                    Recommended by:
                    FeloniousMonk

                    Giffen goods aside.  And garbage isn't a giffen good, it is an externality or "bad" in simple language.  Some economists do not accept the idea of a Giffen good, and practical examples are hard to find.  This was coined after watching poor consume more bread (an inferior good) when the price for bread was higher.

                    Consumption should stop when MC exceeds MB - for any good.  

                    •  Odd, a Giffen Good seems to have (0+ / 0-)

                      acquired a different meaning than it had in my days at Stanford.

                      I see the wikipedia definition of the term and am not denying your use. I can only say that is not the definition I learned in the late sixties. Rather, the term meant a good with negative value (simply put).

                      I'm not sure the different definition makes a difference in the discussion, since goods with negative value remain unwanted, but, I suppose we must move on ...

                      I stopped counting angels on pinheads, so, obviously, it's a waste of time to discuss it with the pinhead.

                      by FeloniousMonk on Fri Oct 10, 2008 at 02:59:44 PM PDT

                      [ Parent ]

            •  And why compete, when you can collude? (7+ / 0-)

              Large scale competition-based capitalism sans regulation is a childish fantasy.

              Greed is the driving force, and cartels and monopolies that carve up the market, price fix, and shut out any non-cartel competition are the inevitable result unless forcibly prevented.

              I don't believe for a second that Rethugs don't understand this.  They're just owned lock, stock and barrel by the cartels, is all.

              --
              But seriously, CNP, when McSame keels over during his inauguration, who are you really going to let run out his term?

              by DemCurious on Fri Oct 10, 2008 at 06:26:33 AM PDT

              [ Parent ]

              •  But collusion falls to concentration (1+ / 0-)
                Recommended by:
                FeloniousMonk

                50 entities fixing prices is unstable; one entity controlling a market is unshakable.

                Bush-Cheney-McCain have been active proponents of concentration. Caribou Barbie? She may be the loose nut in the construction; one hopes we never find out!

                You kids behave or I'm turning this universe around RIGHT NOW! - god

                by Clem Yeobright on Fri Oct 10, 2008 at 06:33:23 AM PDT

                [ Parent ]

                •  I'll quibble with you on the statement that (1+ / 0-)
                  Recommended by:
                  Clem Yeobright

                  "one entity controlling a market is unshakable".

                  Surely, monopolies in a given market are advantageous to the monopoly. But, when expanded beyond one market, that meme becomes shakier.

                  The best example I can quote is the USSR. That was one entity controlling ALL prices. There is a very good argument that that was the very reason for their ultimate downfall. The argument goes something like this.

                  There has never been an ability to synthesize all the interactions between prices of inputs (raw materials, labor and capital). Because of that inability, the ability to accurately calculate costs is an impossibility. If costs can't accurately be calculated, neither can prices.

                  I suspect we may be approaching a day when it IS possible to calculate all the interactions ... then, I guess we better LOOK OUT for the next Communist regime.  :-)

                  I stopped counting angels on pinheads, so, obviously, it's a waste of time to discuss it with the pinhead.

                  by FeloniousMonk on Fri Oct 10, 2008 at 08:19:44 AM PDT

                  [ Parent ]

                  •  Doesn't Walmart JIT exemplify that? (1+ / 0-)
                    Recommended by:
                    FeloniousMonk

                    I don't dispute you, but I was not thinking in terms of total control of an economy - rather, I was alluding to the concentrations in broadcasting, banking, etc.

                    You kids behave or I'm turning this universe around RIGHT NOW! - god

                    by Clem Yeobright on Fri Oct 10, 2008 at 10:07:39 AM PDT

                    [ Parent ]

                    •  My point was overstated. (1+ / 0-)
                      Recommended by:
                      Clem Yeobright

                      I'll agree that within a market monopoly has an unfair advantage. ("Unfair" being irrelevant in the case of a monopoly, since no real competition exists).

                      I'll even go one step further to say, I believe that one of government's major reasons for existence is to prevent monopoly where it stifles a competitive market (such as retail, like Walmart) and to own or apply significant regulation and oversight in markets where monopoly is a natural tendency (radio frequencies, power distribution, telecom networks, and maybe insurance).

                      My (not well made) point was that when those "market leaders" begin to merge and significant influence on government follows, the slippery slope leads to a logical impossibility, i.e., the USSR.

                      I stopped counting angels on pinheads, so, obviously, it's a waste of time to discuss it with the pinhead.

                      by FeloniousMonk on Fri Oct 10, 2008 at 11:27:59 AM PDT

                      [ Parent ]

                      •  And my point in agreeing is (1+ / 0-)
                        Recommended by:
                        FeloniousMonk

                        that Walmart has solved many of the algorithms that left the USSR such a mess. Store managers don't place orders as in the capitalist model; the centralized computers tell the manager what he will sell and manage his inventory for him (and in many cases his shelf-space as well).  That's JIT.

                        I did a system for a department store chain several years ago and was stunned to discover that the stores may not know what they have on order. The central office exposes its sales records to manufacturers (in this case in particular the mfgr was Haggar pants) and the buying decisions are made by the seller's computer!

                        You kids behave or I'm turning this universe around RIGHT NOW! - god

                        by Clem Yeobright on Fri Oct 10, 2008 at 12:24:38 PM PDT

                        [ Parent ]

                        •  EEEeeeeuuuuwwww! (1+ / 0-)
                          Recommended by:
                          Clem Yeobright

                          I get your point.

                          ... that's a whole new scheme to me. And, back in the 1980's, I did a buying/POS package for Boat U.S. with some fairly sophisticated formulas ... but NONE where the decisions were made this way. All decisions were at the ultimate discretion of the store manager.

                          I stopped counting angels on pinheads, so, obviously, it's a waste of time to discuss it with the pinhead.

                          by FeloniousMonk on Fri Oct 10, 2008 at 12:49:38 PM PDT

                          [ Parent ]

              •  So greed is bad... (0+ / 0-)

                ... because it leads to monopolies and collusion, right?

            •  Your Analogy is Kind of Old School (3+ / 0-)
              Recommended by:
              conchita, Clem Yeobright, NBBooks

              Competition is the basis of capitalism -- providing the best product or the lowest price.

              Yes, in a manufacturing based system.

              Does this overall philosophy/principle apply to the financial sector? I don't see where it does.

              thanks to repuglican/clownservative demanded de-regulation of the financial services industry-- an industry which grew to be 20 percent of overall GDP-- there has been little to no real federal government oversight of this industry.

              From Kevin Phillips':

              Over the last five years, financial services has reached a swollen 20-21% of U.S. GDP -- the largest sector of the private economy.

              Manufacturing led financial services by 2:1 back in the 1970s, but by 2006 beaten goods production had shrunk to just 12% of GDP.

              Do most Americans understand this? Of course not. Newspaper front pages have shunned any discussion; 60 Minutes has not even spared the transformation sixty seconds, despite its vast implications. This upheaval is probably "the greatest story never told" about the two decades between, say, 1986 and 2006.

              http://www.huffingtonpost.com/...

              "Cigna cannot decide who is going to live and who is going to die." -- Nataline's mother

              by Superpole on Fri Oct 10, 2008 at 09:33:04 AM PDT

              [ Parent ]

              •  The same applies to services (0+ / 0-)

                Who are you going to hire to mow your lawn, the kid who does a crappy job and charges 20 bucks or the kid who does a good job for 15 bucks?

                •  $2 Trillion Loss = Lawn Mowing? (1+ / 0-)
                  Recommended by:
                  Clem Yeobright

                  simple services like lawn mowing, etc., can hardly be compared to the massive financial services sector.

                  just ask anyone with a chunk of investment loss in the overall $2 Trillion loss the past few days if they thought it was THEIR responsibility to police the investment houses and stock brokers charged with investing THEIR money?

                  I'm 100 percent confident investors will tell you it is the responsibility of the federal government to provide the regulations and policing.

                  oh, "sorry".. that's right.. what we really need according to clownservative investment philosophy is to FREE the market from "unnecessary and burdensome over-regulation by the federal government".. when that happens, "we will see the magic of the marketplace blossom and make profits for all".

                  What a weak Load.

                  "Cigna cannot decide who is going to live and who is going to die." -- Nataline's mother

                  by Superpole on Fri Oct 10, 2008 at 12:51:25 PM PDT

                  [ Parent ]

        •  Why have confidence? (3+ / 0-)
          Recommended by:
          Clem Yeobright, malharden, farbuska

          The truth is, "they" don't know what they are doing, they are throwing things up and hoping something works.  "They" have been manipulating statistics for most of Bush's term, so how can we have any confidence that something is working or not?  The bankers know this as well as anyone.

          And finally, "they" don't really want to acknowledge the root causes of the problem - which is that the US model of capitalism is dead.  "They" want to cure a dead patient.

          What can Obama say to bankers that will give them confidence that he can raise the dead, or, failing that, will satisfy them if they find out he intends to change the economy's fundamental assumptions?

        •  CNBC and MSNBC keeps saying Obama is the reason (1+ / 0-)
          Recommended by:
          Clem Yeobright

          or one of the reasons the markets are tanking because he plans on taxing the rich/small businesses and that causes concern. They said he needs to get specific quickly.

          Read My Lipstick-You're Bullshit!

          by ladona on Fri Oct 10, 2008 at 08:07:04 AM PDT

          [ Parent ]

      •  My birthday! (8+ / 0-)

        I'm glad Obama chose that day to cheer me up! :)

        "People place their hand on the Bible and swear to uphold the Constitution. They don't put their hand on the Constitution and swear to uphold the Bible." --J.R.

        by michael1104 on Fri Oct 10, 2008 at 05:45:45 AM PDT

        [ Parent ]

      •  blood, toil, tears and sweat (5+ / 0-)

        We are going to need a combination of a fireside chat and a Winston Churchill speech, because this supremely indebted nation is going to continue to get an economic reality check that is going to affect everything it does for the remainder of its existence.  I'm not an optimist on where we are headed, but I do think that extraordinary leaders make a difference.  The best thing that could happen right now is someone, hopefully Obama, to forcefully communicate the idea of commonweal and shared sacrifice, and to stress that disposable consumer culture is beyond over.

    •  by 1/20/09 there will be nothing left to shine (0+ / 0-)

      upon. this is just part of the Straussian plan, this was deliberate, intentional and done with much forethought and malice. they knew their chances to hang onto power were slim and they were hellbent on destroying anything left to leave nothing but a nightmare for the next president.

      impeachment-it does the body good impeachment-it isn't just for blow jobs anymore impeachment-i can say no more i expect no less

      by playtonjr on Fri Oct 10, 2008 at 07:13:44 AM PDT

      [ Parent ]

  •  Who is this 'bush' of whom you speak? (11+ / 0-)

    Do you mean the guy who was in the headlines a lot the last few years? The bumbler? Is he still alive?

    You kids behave or I'm turning this universe around RIGHT NOW! - god

    by Clem Yeobright on Fri Oct 10, 2008 at 05:36:10 AM PDT

  •  but who gets to act (13+ / 0-)

    as leader until we have a new president?

    Obama and Voelker are consulting, so can we infer that Voelker is to some extent channeling Obama policy while removing some risk for Obama who might be seen as interfering if he speaks too plainly?

    This might be one time that I think the parliamentary system would work more efficiently to change government to address challenges.  

    Hopefully Bush either gets pushed by the rest of the world or Paulson wakes up and starts asking the new administration for input.

  •  I saw that editorial and have to say (4+ / 0-)

    I did find it encouraging.

  •  thank you! (8+ / 0-)

    Your previous posts have been disturbing, to say the least, so this is particularly welcome.   Thanks for turning our attention to a reputable economic voice who isn't jumping over the cliff.  

  •  Slipping into darkness (16+ / 0-)

    As the world's economy continues its descent into the George Bush Memorial Sewage Treatment Plant. George Bush outlines his "legacy":
    -Destruction of US human rights leadership?  Check - Weakening of US military capabilities? Check - Dollar eliminated as world's default default currency? Check - World's view of the US as a safe haven for investments? Check.

    In short, George Bush has screwed this pooch so thoroughly, "superpower" in the future will be a synonym for "delusional"

  •  I too believe we will get through this mess, (10+ / 0-)

    but I think we are not over the bad news yet.  I keep thinking back to all the anarchist protests at the G8 summits and realizing they had a point about increased globalization.  Keeping my fingers crossed that we are not all in the soup line together.

    •  metamorphosis and dissolution (2+ / 0-)
      Recommended by:
      conchita, Brooke In Seattle

      This is the encouraging metaphor that occurred to me this morning.  I'll readily admit that it's based entirely on my own assumption (and observation) that things tend to work themselves out.  I don't know shit about global financial markets.

      A couple of years ago, when my son was going through a fascination with butterfly life cycles, we kept a monarch caterpillar through chrysalis to butterfly.  It was pretty amazing, but I found myself wondering how the metamorphosis worked.  I have a passing familiarity with human embryology and wondered if it was similar.

      What I found out was that the caterpillar in the chrysalis basically dissolves.  Points of cellular organization persist, but to the naked eye the interior of the chrysalis would look like caterpillar soup for a while.

      I think we're in the "soup" stage of an economic chrysalis, and no one will know where the true points of organization are until it's over.  I also don't have any confidence that the result will be nearly as attractive as a monarch butterfly.

  •  My house had a 13,5% interest rate in 1983, is th (5+ / 0-)

    that what we are headed for?

    McCain:economic policy shaped by lobbyist

    by eyesonthestreet on Fri Oct 10, 2008 at 05:44:10 AM PDT

  •  I am still concerned (6+ / 0-)

    by what The Daily Show postulated a couple weeks ago: That Bush doesn't just want to go down in history as the worst President ever, he wants to be the last President.

    A couple more months of this and we will be fighting over road-kill...

    Hopefully, there will be something left for Obama to save.

  •  Question (8+ / 0-)

    I heard on Bloomberg that people had pulled 70 billion out of mutual funds and 50 billion before that. The analyst said most of it went to banks. The money was put into cds or savings to get FDIC coverage. If true those banks have to pay interest even if it is a low rate. This is the question don't that have to lend that money in order to earn the money to pay the interest?

    •  Only reason we're NOT seeing hyperinflation yet (14+ / 0-)

      all the money locked up in low - or NO  - yield T-Bills and CD's is NOT circulating.  The Bnaks won;t loan it out - scared they won't get it back.

      The Fed and Treasury keep shoveling money into the system.  The bansks and financial institutions won't put any out into circulation as loans until they're hip deep in cash.  THEN when people start using that cash they're going to find out it's worth only a fraction of what it had been worth.

      •  Thanks (1+ / 0-)
        Recommended by:
        historys mysteries

        But how do they pay the interest?

      •  Yep. The Fed had better start printing $1k bills (6+ / 0-)

        24 hours a day.

        And when a loaf of bread hits $25, those $300k mortgages that people are 'buried under' are going to become gold, aren't they?

        Problem solved!

        You kids behave or I'm turning this universe around RIGHT NOW! - god

        by Clem Yeobright on Fri Oct 10, 2008 at 05:58:43 AM PDT

        [ Parent ]

      •  incisive (4+ / 0-)

        Yeah, it could definitely play out like that.  That would actually be an OK scenario.

        Worst case scenario: money could just keep evaporating to cover the derivatives losses, never going into circulation, until it's entirely worthless.

      •  That's an astute comment (2+ / 0-)
        Recommended by:
        In her own Voice, farbuska

        hadn't thought of it that way, but it makes sense.

      •  Who they gonna lend to??? (2+ / 0-)
        Recommended by:
        mataliandy, In her own Voice

        The Fed and Treasury keep shoveling money into the system.  The bansks and financial institutions won't put any out into circulation as loans until they're hip deep in cash.  THEN when people start using that cash they're going to find out it's worth only a fraction of what it had been worth.

        The sum total of debt in this country is around 52 trillion dollars when everything is all added up.

        We are not going to go past that ceiling, period end of discussion, the entire basis of our economy, debt fueled consumption and the financial instruments that enable it, has come to a hard and fast tire screeching stop.

        Goverments will have to take control of the entire financial and banking industries in all of the western world, and they will end up doing so before much longer, before anything starts to unfreeze. The plain fact is the more the government intervenes the more it undermines the confidence in the public sector financial system and that is what is plainly underway here...

        What we do for ourselves dies with us, what we do for others and the world remains and is immortal. (Albert Pine)

        by laughingriver on Fri Oct 10, 2008 at 06:15:49 AM PDT

        [ Parent ]

      •  question on my hurricane insurance payment (0+ / 0-)

        I received an immediate pay-out from my insurance company for Ike and of course put it in my bank account at BoA (very small interest rate).  The check was written on Citibank, so it should be good--I'm sure the money was immediately transferred to BoA--who put a 10 day hold on it for my use.  (ie they get to use it for

        Oct. 8 (Bloomberg) -- Bank of America Corp. agreed to buy back $4.5 billion in auction-rate securities and pay a $50 million fine in a nationwide settlement announced by New York Attorney General Andrew Cuomo.

        My intuition is that I should get my repair work done as soon as possible or that money may not be worth anything in the near future.  Or that the funds could be frozen.  I'm no economist--am I thinking in the right direction?

        Find your own voice--the personal is political.

        by In her own Voice on Fri Oct 10, 2008 at 08:05:02 AM PDT

        [ Parent ]

    •  What's happening in the markets right now (2+ / 0-)
      Recommended by:
      greenheron, spookthesunset

      is like the 'bank runs' of the early 20th century.  FDIC is preventing that again, but people are bailing out of the market in a panic--I talked to one woman yesterday who had liquidated all their retirement accounts (at a huge loss) to move the money to 'safe' investments.  Maybe I'm too much of an optimist, but I think that's just foolish (unless you've got to retire in the very near future).  Hard times are coming, probably a depression, but pulling out vastly deflated assets now won't help much, especially if fears of hyperinflation turn out to be true.

      "Going to church does not make us Christians any more than stepping into our garage makes us a car." --Rev R. Neville

      by catleigh on Fri Oct 10, 2008 at 06:45:32 AM PDT

      [ Parent ]

  •  A Depression is locked in (17+ / 0-)

    and cannot be avoided; what we are working on now is preventing the Depression from becoming a Dark Age.

  •  Let's hope the adults have enough power today (3+ / 0-)
    Recommended by:
    mataliandy, catleigh, Wisteacher

    the responsible adults

    not the McPalin mobs

    this is the thirties

    pick: FDR, Mussolini, (Stalin)

    or : Obama, Palin, (Paulson)

    Tax Paradigms, Feed Imaginations

    by jhpdb on Fri Oct 10, 2008 at 05:48:45 AM PDT

  •  Well, yes, if you think there is no problem with (19+ / 0-)

    the very system itself, I suppose you would think "we" will get through this.

    Personally, I believe nothing will be fundamentally solved until we completely abandon the Milton Friedman / Margaret Thatcher / Ronald Reagan ideology of a mythical "free market" and "free trade." Aka, neo-liberal economics, aka the Washignton Consensus.

    What that means above all is forcing financial markets and the banking system to return to their proper role of subservience to the needs of the real economy.

    Furthermore, it also means we must deliberately seek to build something other than an economy based on fossil fuels.

    A conservative is a scab for the oligarchy.

    by NBBooks on Fri Oct 10, 2008 at 05:51:29 AM PDT

    •  I'm thinking (3+ / 0-)

      Create a new system of banks independent of the current banking system. Prime it with cash.

      Do a one-time global debt forgiveness program - wipe out all debts and all the banks that are up to their eyeballs with bad paper.

      Any cash infusions go through the new banking system, and are fed straight into the real economy for food purchases/production, infrastructure, energy, business support (non-financial industry businesses), and new business creation. No more funny money. Ban any management level employees from the banks that partook of the bad paper frenzy from working in banking again.

      The goal: Keep people in their homes, employ them, keep them fed, and create something of value on which trust can be built.

      For a couple trillion dollars, we can certainly support our population long enough to recover - as long as they're starting with a clean slate.

      Finally, that ill-advised, illegal, immoral war: it's over.

      Beware the everyday brutality of the averted gaze

      by mataliandy on Fri Oct 10, 2008 at 06:41:25 AM PDT

      [ Parent ]

  •  the summit of finance ministers in DC (1+ / 0-)
    Recommended by:
    historys mysteries

    today might find something that works.

  •  Will companies learn from this disaster? (10+ / 0-)

    Will companies stop reinvesting their capital in risky investments and instead fund R&D and raise wages?  Support health care and pension plans?  In sum, act responsibly with regard to the people who make their businesses run?

    I saw this morning that GE lost something like 26% of its stock value based on its bad capital investments.  GE, the Gold Standard.  GE, the company in which my 92-year-old Grandmother invested her meager savings in order to supplement her meager Social Security check.  

    Will they be responsible toward my Grandmother (who has already lived through a depression, thank you very much) and not just Warren Buffet?

  •  we will! (8+ / 0-)

    I think rejecting fear-mongering is an important step. We will get through this. We are a rich nation. We have lots of options for where we go from here.

    The scare tactics employed in the bailout discussion, lacking any specifics that could be verified or refuted, made it pretty clear that a wealthy Goldman Sachs executive was demanding taxpayer money to make sure his wealthy friends got wealthier, the very group of wealthy people who literally created the mess we're in.

    The philosophical distinction I would make is that as a former Fed chair, I think Volcker is a little too predisposed toward monetary policy, and I don't believe you can fix things if you don't point fingers. Accountability is so fundamental to solving problems and preventing them from happening again later that to me, any plan that doesn't involve investigations, firings, and prosecutions simply sets us up for another rough spot down the road.

    I think one of the core problems is that there is too much money sloshing around. I think what we really need is better fiscal policy, taxing the wealthy to pay for Iraq and Afghanistan and the drug war; increasing unemployment, food stamps, and the minimum wage; investing in infrastructure, implementing single payer health insurance, and so forth.

    It doesn't matter how much money rich people have to lend; if someone's wages can't afford their standard of living, their standard of living will shrink. Debt can't solve a wage crisis, no matter how easy we make the credit.

  •  I'm think I'm reliving that scene in Braveheart.. (14+ / 0-)

    ...where Mel Gibson's character keeps telling his troops to "Hold...wait...steady...wait..." while a massive, seemingly superior force is bearing down on him.  We've kept our money in the market in both our 401k's and our IRAs.   We've watched them both drop nearly 28% since the beginning of the year, overall; however, if one drills down to different funds, some are down but not nearly that high.  So, we're praying/hoping that diversification and the fact that we have (hopefully) many more years until retirement will help get us through this.  Still, when YOUNGISH people we consider to be smart and market savvy are pulling all their money out of the market and are buying T-bills, bonds, and hoarding cash/gold/clam shells, it takes all the courage we can muster to ""Hold...wait...steady...wait..."

    "You underestimate Bush at your peril: it takes a brilliant man to feign utter and complete globe-spanning stupidity." Hunter of DailyKos

    by mrclean on Fri Oct 10, 2008 at 05:56:44 AM PDT

  •  I disagree about Volker. (3+ / 0-)
    Recommended by:
    TJ, goinsouth, terryhallinan

    Volker embraced monetarism on a lark.
    His failed Miltonian experiment cost the U.S. economy precious time and wild and unpredictable swings in the Fed Funds rate along with M1.
    He was a disaster.

  •  We do need adult leadership. Each of us also has (11+ / 0-)

    the responsibility to not panic and not spread the panic. We need not feed the fear that Bush sparked w/ his speech a couple weeks ago.
    I feel especially badly for people 1 or 2 years away from retirement that held unsecured investments.
    I wish us all well as we wade through this financial mess.

    We can't solve problems by using the same kind of thinking we used when we created them. Albert Einstein

    by BigVegan on Fri Oct 10, 2008 at 05:59:48 AM PDT

  •  i expect to see 2 or 3 of these meltdowns (6+ / 0-)

    if I live my projected full lifespan to 2070, so yes, we'll get through this.

    I don't expect anyone to learn anything so I guess around 2045 we'll be at this again.

    ask about Central PA Kossacks! (0.12, -3.33)

    by terrypinder on Fri Oct 10, 2008 at 05:59:52 AM PDT

  •  I said in a previous diary that this (11+ / 0-)

    crisis presents an opportunity, when everyone is tuned in and paying attention.

    We can (not that we will, mind you) choose to address the energy crisis and climate change. We can choose to address our other economic policies. We can choose to recognize that there is no such thing as a thriving "free market"; that we live in a hybrid world where the old bugbears of "socialism" and "capitalism" are irrelevant and we can craft an economy that really, actually floats all boats.

    Not that we will--again--mind you, but this is an opportunity to make the right choice.

  •  Bonddad, yer one of my favorite Kossacks... but (4+ / 0-)

    You finally came up with a lame diary title.

    I mean, define not getting through this financial crisis.

    We'll all die? The government collapses? 80% unemployment?

    Fine diary. Lousy title.

    It rubs the loofah on its skin or else it gets the falafel again.

    by Fishgrease on Fri Oct 10, 2008 at 06:04:01 AM PDT

  •  good job democrats (0+ / 0-)

    republicans did NOT propose the powers of partial bank nationalization to the bailout bill: congressional democrats did.  

    john mccain was not the responsible party, despite his cute games in the middle of this crisis, for this important provision that might actually stop this chaos:  congressional democrats did.

    good job democrats.

    bad job republicans, again.  bad job john mccain, again.

    and credit where credit it due:  paulson has done yeoman's work during this crisis.  he is still partially to blame though...

  •  The bizarre world order (5+ / 0-)

    where the US got to be the consuming engine of the rest of the world has hit its logical limit.

    Who knows what will come out of this wreckage, politically, economically, financially, socially.

    But a lot of American nonsense - trash culture and its right wing Jesus-land counterpart - may be phenomena totally linked to this old order. And as such, the nonsense may be over.

  •  you know what, FUCK em. (10+ / 0-)

    I am sick to the point of puking that every syllable of financial bullshit uttered over the last month revolves around saving "institutions."  Screw institutions.

    Institutions brought us the dot com bubble.  Then they brought us the housing bubble.  I have not a moment's hesitation saying let Wall St be razed and turned into a park.

    Globalization, hyper-gains in productivity, sky-rocketing access to credit.  What has it wrought?  Decimated incomes for the huge majority of americans.

    so fuck all of these plans, institutions and players.

    Let the system crash.  Start over.  And any plan that allows for the accumulation of gobs of money and power should find its author immediately lined up and shot.

    Dear Mr. President, There are too many states nowadays. Please eliminate three.
    P.S. I am not a crackpot.
    -Abe Simpson

    by fromer on Fri Oct 10, 2008 at 06:06:51 AM PDT

  •  Around our kitchen table (11+ / 0-)

    it's been discussed this week that it's easier being poor when everyone is facing it.  Poor being a comparative term.  If we all see this as something that is facing everyone (maybe even internationally) then we will all bite the bullet and pull together.  If however, some fat cats are seen figuring a way to game the system and make money while everyone else suffers, those are the times of revolution.  I believe the election maybe the first shot in that revolution.  

    I'm not advocating communism or even socialism, but these are the times when those "to whom much was given much will be required."  

    I'm an American I can handle the truth!

    by stas61690 on Fri Oct 10, 2008 at 06:09:13 AM PDT

    •  The shame is less... (2+ / 0-)
      Recommended by:
      Brooke In Seattle, Cliss

      ...the envy is less...you have people to talk to and share with.

       I've been broke during national "good times" and during times of recession.

       Trust me: it's MUCH easier when you've got company with which to share your misery, when you don't have to sit on the sidelines while the entire damned country lives at the mall, and when you can blame the government, or other circumstances, for some of your problems--instead of just yourself.

    •  It Would Be if We Poor Still Grew and Made (4+ / 0-)

      most stuff.

      Right now we're all dependent either on the Republicans for government entitlements or on the Republicans' global business constituents for consumables and jobs.

      As a descendant of Highland Scots, most of whom were gotten rid of to make way for more lucrative sheep, it's not historically been a good think when a country's ownership finds itself with a mainstream population it no longer needs.

      We are called to speak for the weak, for the voiceless, for victims of our nation and for those it calls enemy.... --ML King "Beyond Vietnam"

      by Gooserock on Fri Oct 10, 2008 at 09:18:12 AM PDT

      [ Parent ]

  •  The market has lost about 25% (10+ / 0-)

    over the course of the last week. This is since 2003. Does anyone really believe that the true value of the stocks on the market had appreciated 25% since 2003? I don't. I think that this was a case of too much money chasing too little real assets. I don't really know that much about the market but I remember the P/E (stock price to earnings) ratios going to historic highs well above the norm. I would appreciate it if someone with real market knowledge would look at this and explain what a "true" market value might be.

  •  Thanks, bonddad. (3+ / 0-)
    Recommended by:
    ladybug53, mollyk, addisnana

    Your calm words are helpful.

    "How can I tell you everything that is in my heart. Impossible to begin. Enough. No. Begin." Maira Kalman from The Principles of Uncertainty

    by orphanpower on Fri Oct 10, 2008 at 06:12:31 AM PDT

  •  The trickle down theory means our (2+ / 0-)
    Recommended by:
    catleigh, Wisteacher

    investments and jobs are all trickling down the drain! Thank You Reagan and Milton Friedman and W Bush! What geniuses! Maybe a Medal of Freedom or two is warranted!!!!

  •  Buggy Whips are a growth industry. (3+ / 0-)
    Recommended by:
    mataliandy, CharlieHipHop, Temmoku

    With the decline of the automobile, horsedrawn transportation will make a comeback.

    The War on Drugs is $40 billion a year of Government waste.

    by ben masel on Fri Oct 10, 2008 at 06:16:05 AM PDT

    •  I actually agree. (2+ / 0-)
      Recommended by:
      mataliandy, Rabbithead

      I think we will see more horses being used as transportation in the next ten years.  Horses have the added advantage of being edible should they break their leg or otherwise become non-operational as work animals.

      Yeah, it's gonna get that weird.

    •  Bicycles..... (5+ / 0-)

      No enough horses out there any more.

    •  Bicycles and electric trains (4+ / 0-)
      Recommended by:
      nicolemm, conchita, jdmorg, catleigh

      That's the ticket.  Easy to take care of, super efficient, sustainable and still fast enough for us to maintain lifestyles (at least, those of us who don't live in deepest farthest suburbia).  Before cars, in the Midwest we had interurban electric trains.  In the late 1920s they all went bust due to competition from cars . . . . well, all except Iowa Traction and Chicago, South Shore and South Bend.  CSSSB still hauls commuters between Chicago and South Bend on the entire route except for the now-freight-only section between South Bend Airport and downtown South Bend; sadly, Iowa Traction is long since freight-only.  We need to bring back the interurbans.

      Besides, horses in this country are not realistic for all but a tiny minority until the animal rights lobby gets off their high horse about horse slaughter.  Not easy to own an animal that when the bitter end comes, you have a huge carcass that you can't do anything with because the slaughterhouses are closed by PETA-sponsored law and it's too big to bury or cremate.  

  •  The thing that is most troubling about all this (7+ / 0-)

    and is the thing which argues most strongly against any near term calming of the waters is that the bad news keeps leaking out like water torture.

    This problem has already been "Identified", "quantified" and then "comtained" a dozen times in the past year and a half and every time that has happened, it has promptly gotten worse.

    There is very little chance that anyone that the public will have confidence in can arise from this rubble to lead us back to normalcy.

    Either no one really knows what in hell is happening or those who do know are trying to keep a lid on it as long as they can so they can hopefully wriggle out from under it and dump it in the lap of a new administration, which also doesn't seem to have a clue about what in hell is happening.

    That's why we are in a panic.

    The financial house is on fire and someone has nailed the fire exits shut.

  •  YES WE CAN (2+ / 0-)
    Recommended by:
    spookthesunset, mollyk

    All we need is confidence in the system.  

  •  The economic defibrillation is not working (5+ / 0-)

    Right now we are flatlining.

    If we survive this financial heart attack we will be put into chemotherapy.

    We may survive but we will look quite different after this ordeal.

    Until trust is restored, perhaps because Obama inspires trust, we are toast.

    Dailykos.com; an oasis of truth. Truth that leads to action -1.75 -7.23

    by Shockwave on Fri Oct 10, 2008 at 06:20:54 AM PDT

  •  We should never allow a repub again to weaken our (3+ / 0-)
    Recommended by:
    Shockwave, Captain Nimrod, Wisteacher

    budgetary position in good times, they leave us with diminished power when things turn bad - thanks to the excesses they unleash far more than because any unexpected outside development, btw.

    We should never allow repub ideologues near public money ever, ever, ever, ever again. Not in this century, not in the next, not as long as money exists.

    •  the problem (4+ / 0-)
      Recommended by:
      conchita, Superpole, Don Enrique, Randtntx

      is that what is happening right now is a Republican's stated goal. Have you ever heard Grover Norquist speak? Their goal has been to kill the New Deal and now, with all this spending, they have done that. They are all in cash watching this panic selling today and LAUGHING at all of us. This is all by design, it's the Democrats you should be pissed off at for being too stupid to convince the American people that this was the Republican's plan all along.

      Now, people had lost their fear. From that moment I knew we would win. - Oscar Olivera

      by Josh Prophet on Fri Oct 10, 2008 at 06:27:55 AM PDT

      [ Parent ]

      •  BEENGO! (3+ / 0-)
        Recommended by:
        northsylvania, conchita, Cliss

        This is all by design, it's the Democrats you should be pissed off at for being too stupid to convince the American people that this was the Republican's plan all along.

        Exactly.

        Not only have congressional Democrats been stupid and lazy regarding the radical right's plan to defund the social safety net, they have been directly complicit with other radical and anti- Constitutional behavior such as helping the repuglicans to pass the Authorization for Use of Military Force Against Iraq Resolution.

        29 democratic Senators (including Joe Biden) voted for this nonsense, 21 democratic senators voted against.

        in the House, it was 81 democrats voting in favor with 126 voting against.

        http://en.wikipedia.org/...

        in the senate, we had 29 democratic senators voting in favor of giving carte blanch war making powers to the Executive branch-- more or less a total violation of the U.S. Constitution which specifically states Congress has the power to make and fund war.

        letting these sorts of violations slide is exactly why were are in the mess we are in today. not only do numerous repuglican congresspeople need to be voted out of office, numerous so called democratic congresspeople need to be booted out of office as well.

        failing to do so means NO improvement in the current disastrous situation.

        anyone thinking Obama alone will turn this train wreck around is sadly mistaken.

        "Cigna cannot decide who is going to live and who is going to die." -- Nataline's mother

        by Superpole on Fri Oct 10, 2008 at 08:49:27 AM PDT

        [ Parent ]

  •  Roosevelt: (8+ / 0-)

    This is preeminently the time to speak the truth, the whole truth, frankly and boldly. Nor need we shrink from honestly facing conditions in our country today. This great Nation will endure as it has endured, will revive and will prosper. So, first of all, let me assert my firm belief that the only thing we have to fear is fear itself—nameless, unreasoning, unjustified terror which paralyzes needed efforts to convert retreat into advance. In every dark hour of our national life a leadership of frankness and vigor has met with that understanding and support of the people themselves which is essential to victory. I am convinced that you will again give that support to leadership in these critical days.

    Recognition of the falsity of material wealth as the standard of success goes hand in hand with the abandonment of the false belief that public office and high political position are to be valued only by the standards of pride of place and personal profit; and there must be an end to a conduct in banking and in business which too often has given to a sacred trust the likeness of callous and selfish wrongdoing. Small wonder that confidence languishes, for it thrives only on honesty, on honor, on the sacredness of obligations, on faithful protection, on unselfish performance; without them it cannot live.

    Our greatest primary task is to put people to work. This is no unsolvable problem if we face it wisely and courageously. It can be accomplished in part by direct recruiting by the Government itself, treating the task as we would treat the emergency of a war, but at the same time, through this employment, accomplishing greatly needed projects to stimulate and reorganize the use of our natural resources.

    Finally, in our progress toward a resumption of work we require two safeguards against a return of the evils of the old order; there must be a strict supervision of all banking and credits and investments; there must be an end to speculation with other people’s money, and there must be provision for an adequate but sound currency.

    In the field of world policy I would dedicate this Nation to the policy of the good neighbor—the neighbor who resolutely respects himself and, because he does so, respects the rights of others—the neighbor who respects his obligations and respects the sanctity of his agreements in and with a world of neighbors.

    http://historymatters.gmu.edu/...

    the Captains of Industry aren't on the phone saying, "Get me Palin, she can dress a moose."

    by ubertar on Fri Oct 10, 2008 at 06:22:00 AM PDT

  •  Dow futures minus 338 (4+ / 0-)
    Recommended by:
    Shockwave, revsue, Cliss, addisnana

    Bonddad.... can I call you, Dad?  Ok.

    I agree.  We'll get through this, and hopefully we'll learn something through it.  The 'Free Markets are Perfect' mantra should be dead by now.  Everyone should be clear how horribly polarized CEO and worker's wages are.  

    An economic disaster is often what a society needs to figure out what its real problems and solutions are.

    But, it's like going to sea for the first time.  For the first day or so of motion sickness, you're afraid you're going to die.

    After that, you're afraid you won't.

    "If the Nuremberg laws were applied, every post WWII US President would have been hanged." =Chomsky

    by abenjaminc on Fri Oct 10, 2008 at 06:22:27 AM PDT

  •  I agree with you that we will (3+ / 0-)
    Recommended by:
    adigal, Marc in KS, Cliss

    get through this.
    But I also agreed with you a week or so ago when you said there may not BE a solution. This stuff just has to unwind and run its course to some extent.
    When we do finally get through it though, I'm hopeful that this recession will usher in a new era of better savings habits, living within our means, and a more meaningful economy that relies less on consumption and more on investments in our future.

    "If being an elitist just means not the dumbest motherfucker in the room, then yeah, I'm an elitist." - Get Yer War On

    by sadair on Fri Oct 10, 2008 at 06:23:43 AM PDT

  •  A silver lining to the credit crunch (7+ / 0-)

    Unable to sell bonds, States are ditching plans to build new prisons, and reforming their sentencing structures to adjust.

    The War on Drugs is $40 billion a year of Government waste.

    by ben masel on Fri Oct 10, 2008 at 06:24:30 AM PDT

  •  I humbly disagree re: getting through (15+ / 0-)

    While your technical analysis of market factors is fantastic I have to humbly disagree with your conclusion. The fact that we've passed the peak of oil production, now three and a half years behind us, totally changes the dynamic. Things will get really nasty as the system disgorges all of the fraudulent paper, but then when we get to the point where we try to stand up again we'll find our energy ceiling has lowered.

    The only hope I see for powering (pun intended) our way out of this is an effort along the lines we put out in world war II, where we treat oil depletion and global warming like the deadly perils they are and build things specifically to counteract them, with the attendant triage of our economic activities.

    This isn't an idle theory for me - I saw this stuff shaping up last summer and made a career change to renewable energy. We're in the fight of our lives over the next decade or so ...

  •  For those of you who have not yet read ... (0+ / 0-)

    ... Krugman's new piece: here it is.  

    He is recommending a British-style infusion of capital ASAP.  

    "When fascism comes to America it will be wrapped in the flag, carrying a cross, wearing lipstick and winkin' atcha." - Sinclair Lewis paraphrase

    by shakti on Fri Oct 10, 2008 at 06:25:57 AM PDT

  •  Colon Cleansing (3+ / 0-)
    Recommended by:
    Babsnc, ubertar, Losty

    I tend to view this market downturn like a thorough colon cleansing.

    Sure, it's not going to feel good at first. But, we need to purge the markets of these bad investments. And, sure some good ones are going to be flushed out during the process, but they will be rebuilt (and stronger) once the parasitic ones have been taken care of.  With a healthy dose of regulation to get things in order, we can do our best to keep the bad investments from taking over once the system is healthy again.  This can only end well.  

    I think, therefore I'm liberal

    by ScienceRocks on Fri Oct 10, 2008 at 06:29:29 AM PDT

  •  Questioning the system (1+ / 0-)
    Recommended by:
    Cliss

    Building on what others here are saying about thinking beyond rescuing the "system," does anyone know if the Obama campaign has anyone thinking about deeper systemic changes?  

    I believe that the US model of capitalism is finished, and that, while I acknowledge resuscitation efforts will go on, someone ought to be thinking about what pieces will be replaced.

  •  The longer they wait the worse it gets (7+ / 0-)

    This whole world wide rate cut was a joke to stall doing the right thing. Here's my take on that whole meeting:

    US Fed: we need to do something but we can't shoulder the inflation risks alone, how bout everyone cut 1%?

    G8: It won't work, why don't you do the obvious, and nationalise your banks already?

    US Fed: (thinking, shit! my buddies told me we were gonna make a killing off of US taxpayers, wtf!)Listen, how bout we promise to consider it, so how bout that 1% cut.

    G8: how bout we cut it .5% and let you see how little impact that has, will you promise to do it after that?

    US fed: (thinking, got to roll the dice, we may get lucky here) sure, sure...deal

    Japan: WTF! we're already at .05%, wtf do you want us to do, pay people to borrow money? Oh wait, that was Greenspans plan 4 years ago, so how did that work out for you?

    US fed: (thinking, oh shit, they're on to us) Look, were just trying to protect the bondholders of US banks here...no really!

    G8: what about the taxpayers?

    US fed: Ok, meeting over!

    The purest form of Capitalism is Organized crime!

    by KingGeorgetheTurd on Fri Oct 10, 2008 at 06:30:21 AM PDT

  •  I wrote a diary last night on the impending OCC (5+ / 0-)
    Recommended by:
    conchita, Minerva, Cliss, two roads, iBlue

    collapse.

    That's the Options Clearing Corporation...

    Options expiration is next Friday and I don't see where the money is going to come from to cover all of the naked puts out there.

    Falling Economic Dominoes.

    I'd really like to see Bonddad address THIS issue.

    Happy little moron, Lucky little man.
    I wish I was a moron, MY GOD, Perhaps I am!
    -Spike Milligan

    by polecat on Fri Oct 10, 2008 at 06:30:24 AM PDT

  •  President Carter (7+ / 0-)

    Perhaps he was the bravest US political leader in the last half of the 20th century. By allowing Mr Volker to raise interest rates to cure the economic ills of this nation the President cost himself any chance at a second term. In contrast, just look at the Greenspan years. Any time there's been any difficulty the answer has been to set interest rates at zero and let an asset bubble create imaginary wealth.

    Now, we are here. The "imaginary wealth" era is over and we are faced with a factual contraction. That we will recover eventually is a given. But the Panic of 2008 is going to have several years of pure pain associated with it before any recovery begins. This isn't a short term rain-shower. It's going to be a proper storm. Nobody checked the weather forecast because bad weather was 'unthinkable'. Don't worry, be happy! Now we have to pray the roof doesn't get blown away because why would anyone need to fix it? =/

    from the cusp of the next great depression

    by KevinEarlLynch on Fri Oct 10, 2008 at 06:31:00 AM PDT

  •  bondad, (2+ / 0-)
    Recommended by:
    stevej, side pocket

    why do you think Bush will try to avoid international cooperation?  If, as everyone seems to think, this is an international crisis and requires and international solution, he would be stupid to....

    Oh.  Wait.  

    I get it.

    --

    Another vice president who's a hunter. What could go wrong there?

    Jay Leno

    by Marc in KS on Fri Oct 10, 2008 at 06:32:15 AM PDT

  •  I don't know if I would ever call Paul Volcker (3+ / 0-)
    Recommended by:
    Hornito, revsue, fhcec

    great. He was competent. He was better than Alan Greenspan. Let's not go overboard with acolades about any banker or money king. Remember, your audience here are little people like me who live paycheck to paycheck or retirement check to retirement check. Great to me is my father who raised most of his children during the Great Depression and somehow put a roof over their heads. Great to me is not some big wig, power obsessed person who pulls the strings on Wall St.

    You cannot simultaneously prevent and prepare for war..... Albert Einstein,

    by tazz on Fri Oct 10, 2008 at 06:32:25 AM PDT

  •  A first (4+ / 0-)

    Bush is a lame duck watching is legacy (what little is left) circle the bowl.

    "There will be no legacy for Mr. Bush."

    Never thought I'd be quoting the late William F. Buckley, but on this one, I think he's 100% correct...

  •  From Acrossthecurve this morning: (2+ / 0-)

    The US market has always represented the ultimate safe haven venue yet this morning according to my screen at about 700AM New York time the yield on the 2 year note was actually several basis points higher than where it closed late yesterday. Indeed, the yield on every Treasury issue is higher than the level at which it finished in late trading yesterday.Is this the beginning of the end for the dollar and the Treasury market? Is this the first sign of the bursting of the bubble in Treasury securities? That market, in a sense, represents the ultimate bubble as it exists at the whim and caprice of foreign investors, who have as participants in a Faustian bargain, financed our war(s) and our lifestyle so generously over the last decade. Maybe even that bizarre construct is crashing about us as we speak.

    McCain/Palin: Lie Traffickers

    by ccmask on Fri Oct 10, 2008 at 06:33:47 AM PDT

  •  Sorry...forgot the link (0+ / 0-)

    McCain/Palin: Lie Traffickers

    by ccmask on Fri Oct 10, 2008 at 06:35:17 AM PDT

  •  I had a thought yesterday... (2+ / 0-)
    Recommended by:
    Cliss, spookthesunset

    We all know Bush is a lame duck, and his address to America the other day went mostly ignored by the public.  Perhaps had he not so thoroughly wasted whatever shred of credibility he might have had at one time he could stand up and be able to calm peoples' fears.

    On the other hand, until the election is finally decided next month, neither John McCain nor Barack Obama has the right to make such a 'presidential' address.

    What we need is for Bush to hold a joint address with both McCain and Obama on the stage beside him.  I doubt he would do it, but it would go a long way to showing the people that we're all in this together and we're all working to right the ship.

  •  My Mom, (God love her) is almost 80... (5+ / 0-)

    and in an assisted living facility that she needs now for several health issues and she is damn near wiped out.  Yes, you could argue it is her own fault, but she worked as a secretary her entire life and squirreled it away so she could be where she is now.  She was born in '29 and last night she told me "she just wanted to be an ostrich now and duck her head in the sand".  This after I told her she had to be aware of her money and help me make these decisions going forward for her.  God I just cry!

    •  how is it her fault? (2+ / 0-)
      Recommended by:
      northsylvania, jdmorg

      My MIL is in a similar situation. She had GM -- down 70% -- among other losing assets.  She did as she was told by her financial advisor. We are trying to keep her in her current facility, which is very caring. The problem is that she can't be alone for psychological reasons, and paying for an overnight person is killing us. If we told her the state of her finances she would be so upset she'd never rest.

  •  The DOW Just Broke Through 7900 n/t (2+ / 0-)
    Recommended by:
    davidkc, iBlue

    <div style="font-size:10px;text-align:center;background-color:#ffd;color:#f33">If the terriers and bariffs are torn down, this economy will grow - G. Bush

    by superscalar on Fri Oct 10, 2008 at 06:38:28 AM PDT

    •  And bounced off it (1+ / 0-)
      Recommended by:
      side pocket

      8,500 has been a consensus resistance level.

      The next stop down, though, is about 7,000...

      Have you accepted Spam as your personal Lord and Savior? :)

      by cskendrick on Fri Oct 10, 2008 at 06:59:33 AM PDT

      [ Parent ]

      •  Curious (0+ / 0-)

        Do you think that the DOW will close above 8500 today? I get the feeling that a lot of people are rushing back into commodities, but the base metals can't hold their prices, and there seems to still be a lot of liquidation going on there.

        DOW at 8611 (+32) as I write this, but I don't know if that is a good thing. This defies the classic 'bottom' that everybody would be normally looking for.

        <div style="font-size:10px;text-align:center;background-color:#ffd;color:#f33">If the terriers and bariffs are torn down, this economy will grow - G. Bush

        by superscalar on Fri Oct 10, 2008 at 07:09:39 AM PDT

        [ Parent ]

        •  Well... as of 2:34 EST... (0+ / 0-)

          I think my answer is "No." to your question.

          Right now I think I am going to focus my financial planning on maximized cash flow and debt retirement. better and more reliable implied return there.

          Have you accepted Spam as your personal Lord and Savior? :)

          by cskendrick on Fri Oct 10, 2008 at 11:40:00 AM PDT

          [ Parent ]

  •  Bonddad, you have your work cut out for you. (4+ / 0-)
    Recommended by:
    northsylvania, Sparhawk, jdmorg, Randtntx

    The next month (not just the next few weeks) are going to see a fantastic effort to rewrite the history of this mess so it's all the fault of Barney Frank, Fannie Mae, and liberals, and not a failure of the Republican era of deregulation.  They won't give up on this, anymore than people like Michelle Malkin gave up on rehabilitating Joe McCarthy, Japanese internment, and missing WMDs.

  •  Will We See A Bank Holiday? (1+ / 0-)
    Recommended by:
    two roads

    More and more I am believing the answer is yes.

    <div style="font-size:10px;text-align:center;background-color:#ffd;color:#f33">If the terriers and bariffs are torn down, this economy will grow - G. Bush

    by superscalar on Fri Oct 10, 2008 at 06:40:52 AM PDT

  •  Opportunity for necessary change (8+ / 0-)

    You can call it a recession, a depression, or simply an opportunity for necessary change.  The systemic problems aren't simply on Wall Street, or Capitol Hill, or Main Street.  They're attitudinal and they have to do with our having normalized an exceptional situation: the U.S. economy as existed from 1946-1968, when 5% of the world's population accounted for over 50% of the world's production, not because we were "better" or "smarter" but just because every other industrialized economy had been bombed to dust in World War II.

    The attitudinal change has to do with accepting our role as citizens of the world, rather than masters of it.  Once we do that - and it won't be painless, but it's necessary nonetheless - we'll be able to begin the cooperative world effort of trying to create a sustainable economic system that meets the challenges of our generation.

    It will not be The One Right System For All Time.  No such system ever has or ever will exist.  But it can be The Best System We Can Devise For Our Time.

    Every generation has to do that.  It's our turn at the mill.

  •  Dow falls below 8000 (1+ / 0-)
    Recommended by:
    SolarAngel

    People's savings are being wiped out.

    •  For now (4+ / 0-)
      Recommended by:
      stevej, greenheron, Cliss, spookthesunset

      Hold tight.  A cash position now is worth lots -- there are some fantastic buys out there. Even if not, unless your time scale is short, the market will (eventually) recover.  

      So concludes our stiff-upper-lip public service message....

      AAAAARRRRRRGGGGGGHHHHHHH!

      If you don't know where you are going, you will wind up somewhere else. Yogi Berra

      by Twin Planets on Fri Oct 10, 2008 at 06:52:40 AM PDT

      [ Parent ]

      •  I tell and have told everyone (2+ / 0-)
        Recommended by:
        Cliss, GMary

        to go to cash last November.  None of the old timers at work listened to me.  Now they've lost upwards of a hundred thousand apiece, and added an indefinite number of years to their "sentences."  Our HR guy last week forwarded a piece by a mutual fund manager which (shocker!) said not to "try and time the market" and to stay in no matter what, that things will get better.  
           There needs to be a probable upside to any investment, including the market.  Right now, there is no upside.  No one is hiring and no homes are being sold for an increased price.  That's really all you need to know as to when to enter or exit the market.  No Cramer, no Zack's, no Motley Fool, no Cabot's Newsletters are necessary, although they can help.  It's all about preserving your capital and keeping relatively safe on the sidelines until there is good news.  Why in the ever lovin' blue-eyed world would I risk my money in the market when it can be earning 4 percent in a CD?  Right now the Dow is whipsawing around 8200 while traders try to guess what will happen over the weekend.  Sound like a safe place for your life savings?  Yikes!  The trend is not your friend.
          One hopes Obama can make some headway with this unbelievable mess, but it looks gloomy for years from most people's point of view.

    •  Sorry, but... (2+ / 0-)
      Recommended by:
      Brooke In Seattle, GMary


      ...the stock market has nothing to do with 'savings'. It's a place people bet that they'll make money. People are losing these bets. It's unfortunate, but that's the choice they made.

      p.s. Real 'savings' go into bank accounts, CDs, government-insured bonds, etc., where the return is guaranteed.

      The fact is that the average man's love of liberty is nine-tenths imaginary, exactly like his love of sense, justice and truth. - H.L. Mencken

      by two roads on Fri Oct 10, 2008 at 08:16:16 AM PDT

      [ Parent ]

  •  Looks like any optimism is a very small minority (0+ / 0-)

    We Changed The Course! Now we must hold their feet to the fire.

    by hcc in VA on Fri Oct 10, 2008 at 06:43:35 AM PDT

  •  I posted this comment yesterday (4+ / 0-)
    Recommended by:
    javelina, fhcec, Cliss, spookthesunset

    in a recent diary of mine.

    Even in the worst cases, we bounced back. My biggest gripe with Bush in this matter is not even so much what he did to initiate its beginning of this crisis; it's what he is doing to continue it. He is screaming panic and fear. It was the only means he knew to pass the Paulson legislation. He has neither the authority nor the ability to calm the nation down. Panic never improves any situation. If you're hair is on fire you can spend the time running in circles or you can do something about it.  

    If you look at the stock market during the Great Depression you will find the Dow Jones at its peak was at 381 (September 3, 1929). By October of 1930 it fell to half of that (190). It continued to fall down to 41 by July of 1932. That's freaky bad.  But - it returned to that halfway mark (190) in less than five years. Even during the Great Depression, stocks were a good investment when they were at half value if you kept them for several years, much less keeping them for the long term. On top of that, stocks provide other forms of value beyond their quotation price (think dividends).

  •  It's time to buy the mortgages! (0+ / 0-)

    There's nothing to do but wait for the government to buy up all the bad mortgages to give the housing market a floor.

    Until the housing market has a floor, the deriviative-based house of cards built on that foundation cannot be valued.

    Until the value of the derivatives are known -- however low that may be -- no-one can trust anyone else's balance sheet.

    Until banks can trust each other, there will only be solidity where liquidity is needed.

    Until there is liquidity, the economy will continue to tank.

    IT'S TIME TO BUY THE EFFING MORTGAGES!!!

    I'm "That One", too! Are you?

    by Jimdotz on Fri Oct 10, 2008 at 06:46:05 AM PDT

    •  That's McCain's plan, isn't it? N/T (2+ / 0-)
      Recommended by:
      scorpiorising, Jimdotz

      -5.38/-3.74 I've suffered for my country. Now it's your turn! --John McCain with apologies to Monty Python's "Protest Song"

      by Rich in PA on Fri Oct 10, 2008 at 06:50:29 AM PDT

      [ Parent ]

      •  yes, and it concerns me greatly (2+ / 0-)
        Recommended by:
        northsylvania, Jimdotz

        I'm very concerned that McCain is floating this idea and not Obama.  It's obviously B.S. coming from McCain, since he's always been a free market fundamentalist and can't really believe in "bailing out" and these low-income "irresponsible borrowers".  But I think this may be the only approach to the crisis that will work.  And it's McCain who grabbed this idea first (at least, first among the presidential candidates).

        •  It wasn't McCain's idea... (3+ / 0-)
          Recommended by:
          conchita, Losty, ladona

          It was FDR's:

          The Home Owners' Loan Corporation (HOLC) or Home Owner's Refinancing Act, was a New Deal agency established in 1933 under President Franklin D. Roosevelt. Its purpose was to refinance homes to prevent foreclosure. It was used to extend loans from shorter loans to fully amortized, longer term loans (typically 20-25 years). Through its work it granted long term mortgages to over a million people facing the loss of their homes. The HOLC stopped lending circa 1935, once all the available capital had been spent. HOLC was only applicable to nonfarm homes, worth less than $20,000. HOLC also assisted mortgage lenders by refinancing problematic loans and increasing the institutions liquidity. When the HOLC ended its operations and liquidated assets in 1951, HOLC turned a small profit.

          It was a WINNING PLAN for homeowners, lenders, AND tacpayers.

          IT'S TIME TO BUY THE EFFING MORTGAGES!!!

          I'm "That One", too! Are you?

          by Jimdotz on Fri Oct 10, 2008 at 07:06:09 AM PDT

          [ Parent ]

    •  the housing market will not hit a floor (10+ / 0-)

      until there are reasonable ratios between wages and prices. so either wages have to go up dramatically, houses have to come down dramatically, or we can just start the bubble cycle all over again with unsustainable ratios created with cheap credit and more ARM's

      To sin by silence when they should protest makes cowards of men~~ Abraham Lincoln

      by Tanya on Fri Oct 10, 2008 at 08:05:13 AM PDT

      [ Parent ]

    •  I don't agree, your just rewarding banks (1+ / 0-)
      Recommended by:
      Jimdotz

      by buying these mortages.  What the heck would prevent them from doing the same exact thing again??      

      Banks instead should be forced to renegotiate these mortgages on better terms for the home owner at a loss for the bank. Whit set terms and a clear indication that the home owner can afford these payments the mortage would have weight, perhaps less than the bank would hope for, but tough luck.

      "I'm a pessimist because of intelligence, but an optimist because of will" - Antonio Gramsci

      by HGM MA on Fri Oct 10, 2008 at 08:05:45 AM PDT

      [ Parent ]

  •  I'm just scared... (3+ / 0-)
    Recommended by:
    scorpiorising, Cliss, FishBiscuit

    My parent's own a small restaurant and this past week has been the slowest it's been in 12 years. My mom said the last time it was this bad was in the early 90's when Bush 1 was in office. Expenses this month may mean  dipping into savings. TMobile headquarters across the street from them just laid off more than 3000 workers and thats our lunch business. It has to get better fast.

    Read My Lipstick-You're Bullshit!

    by ladona on Fri Oct 10, 2008 at 06:48:26 AM PDT

    •  Unfortunately (4+ / 0-)
      Recommended by:
      Brooke In Seattle, Tanya, Cliss, ladona

      I do not think there is going to be anything fast about this situation...we are unwinding the damage that started under Reagan and escalated since...most prominently and rapidly under Bush.  These policies allowed for extreme crooked behavior and put our nation in EXTREME Debt..dangerous levels...if your home budget looked like our Nations..you would be headed to bankruptcy court.  We have gutted our nations infrastructure through job and manufacturing exportation, made our schools uncompetitive and all but crushed our middle class...Not trying to be pessimistic but..really the bill is due and it's time to pay the piper...I do not see how we can fix something quickly that took thirty years to get us to this point.

  •  We didn't need this hypertrophic credit market (3+ / 0-)
    Recommended by:
    adigal, Cliss, two roads

    It should shed all of its speculative junk and get back to the right size and scale needed to finance actual productive activities.  That may mean half the pre-crisis size, or a quarter--I don't know.  But clearly it needs to shrink.

    -5.38/-3.74 I've suffered for my country. Now it's your turn! --John McCain with apologies to Monty Python's "Protest Song"

    by Rich in PA on Fri Oct 10, 2008 at 06:49:48 AM PDT

  •  Some safe bargains (3+ / 0-)
    Recommended by:
    northsylvania, Cliss, Losty

    Here are some reasons to start buying securities.

    Consider food processors.  These include some of the biggest conglomerates in the world.  They deal in a commodity that has a very stable demand side.  They do not involve themselves in finance to any meaningful level.  Yet their shares prices are down.

    Other commodities are not nearly as essential.  Nonetheless, any commodity is a real thing.  So, while it’s value can fluctuate, they tend to follow inflationary/deflationary pressure.  That is, they tend to keep their relative value.  So, again anybody heavily into high demand commodities is relatively safe.  Like say razor blades.

    There are also consumer commodities which don’t look so hot.  Any purchase that can be put off will like be put off for a while.  These are the stocks to avoid until they show demand for their goods is still sufficient to support their prices.

    This brings us to autos.  Autos are a commodity but not one that we don’t have to really replace on a regular basis.  However, remember who is winning in the polls and one of his major campaign promises – Obama and growing a green auto industry.  So, while GM might have a big financial exposure through DiTech, Chrysler and Ford do not.  So, while more risky, these types of companies also have a brighter future than most.

    Anyway, while banking is in the toilet, and this is bring down everything, this is not entirely rationale.  Even in bonds there are some bargains.  State bonds and municipal bonds look attractive with very high rates for the short term stuff.  Yes, there is some risk that they may fail to make all payments, but a total default is not very likely.

    •  razor blades are not consumer commodities? (1+ / 0-)
      Recommended by:
      Cliss

      While I agree that there are probably some great deals out there, I don't quite follow your logic re: consumer commodities versus "high-demand commodities".

      •  I think of them as the same (2+ / 0-)
        Recommended by:
        northsylvania, Cliss

        That is, things like razor blades, food, cigarettes, liquor, drugs (legal) and others are things that have a constant demand and are consummed are the items I mean.  I think of them as commodities because they are things, but this might not be a standard defination.

        There are other things like tires, cars, clothing that are also nearly constant, but can be stretched.  Computer games on the other hand are easily skipped.  That's what I was trying to get at.

        In light of your comment, I don't think high demand is a good way to describe them.  Perhaps essential, nearly essential and descritionary might be better terms.

        I hope this helps.

  •  We are not out of it yet (1+ / 0-)
    Recommended by:
    Cliss

    Some homes that are forclosed were using 2 year interest only mortgage payments.  But there are still the 5 and 10 year ones out there also.  Plus what about everyone that has the credit cards maxed.  There is light at the end of the tunnel, but its going to be a long tunnel.

  •  This is not reassuring (8+ / 0-)

    Having an executive from Goldman-Sachs head up the bailout plan is ludicrous. This is slanted against the working class, obviously, and firms will be bailed out, at cost to the American taxpayer, with little effect on the average lives of Americans.

    Spread the wealth around and create jobs with that bailout, rather than buying up bad assets.

    This "bailout" plan is a joke.

    •  It's competence, and Paulson doesn't have it (2+ / 0-)
      Recommended by:
      scorpiorising, Cliss

      I'm not even worried about the source of the Treasury Secretary at this point.  I just want to see someone who is competent at the helm and has a clear vision of where to go.

      And in this regard, Paulson is not worth the dirt on the shoes of his predecessor at Goldman (i.e. Corzine).  Do not forget that Paulson forced Corzine out of the firm over his decision to bailout Long Term Capital Management in 1998 -- if Corzine had not done what he did, we'd have had a world depression then.  Paulson is a greedy, incompetent numbskull who is out of his depth and who at this point is good for nothing but following others.

      Let's clear out the flotsam and get some adults with a clear vision of where they're going (e.g. Larry Summers, Robert Reich).

  •  I don't see any leadership in the future until (2+ / 0-)
    Recommended by:
    spookthesunset, addisnana

    Nov. 5th at the earliest, Jan 21st at the latest.

    ... the watchword of true patriotism: "Our country - when right to be kept right; when wrong to be put right." - Carl Schurz; Oct. 17, 1899

    by NevDem on Fri Oct 10, 2008 at 06:59:51 AM PDT

  •  Nouriel Roubini and RGE Monitor (8+ / 0-)

    If you have not heard of these, get on it.

    Roubini has been a tremendous authority on the current credit crisis, and RGE Monitor is a great blog that, at least temporarily during the current run, is free to registered users (normally there's a fee).

    If you don't want to go through the rigamarole of registering, Roubini also gives interviews on Yahoo Finance from time to time, such as this one.

  •  Impeachment (3+ / 0-)
    Recommended by:
    SecondComing, Tanya, Cliss

    if we had impeached Bush, Cheney and Paulsen as part of the
    bailout, under the crimes of gross financial mismanagement
    and failure to lead, we could have gotten everyone behind this.

    Have the senate nominate a caretaker president
    who can manage the crisis until the Obama Administration

    George Bush is Living proof of the axiom "Never send a boy to do a man's job" E -2.25 S -4.10

    by nathguy on Fri Oct 10, 2008 at 07:01:32 AM PDT

    •  Was thinking about this (1+ / 0-)
      Recommended by:
      Cliss

      If it was inevitable (which is debatable), then it would have been easier for Republicans to blame Democrats for the collapse...

      Still, I wouldn't want Pelosi in the Presidency right now...

      Maverick - a calf that has become separated from its mother. By convention, it can become the property of whichever lobbyist finds it first.

      by Minerva on Fri Oct 10, 2008 at 08:08:16 AM PDT

      [ Parent ]

  •  Is Sheila Bair (FDIC) one of the good "guys"? (2+ / 0-)
    Recommended by:
    Cliss, snaglepuss

    I'm leery of saying this about anyone who works for Bush, even if only indirectly, but she's struck me as several cuts above the rest. Is she?

    Plus, as an aside, yet another reason why impeachment would have been a good idea.

    I mean, it's not rocket science or really that radical. Guy does a horrible job and is massively derelict in his duties, you FIRE his ass and get someone else in there!

    To the GOP, change means doing a 360.

    by kovie on Fri Oct 10, 2008 at 07:03:25 AM PDT

  •  Volcker (5+ / 0-)
    Recommended by:
    Sparhawk, annan, Cliss, lisastar, netgui68

    Obama should name him to an economic transition team now.

    I mean, within the next ten minutes.

    You can call me "Lord Bink Forester de Rothschild."

    by bink on Fri Oct 10, 2008 at 07:08:24 AM PDT

  •  Not better til no more Bush (1+ / 0-)
    Recommended by:
    Cliss

    I think that America and the rest of the world have no trust in Bush as a leader. Any Bush solutions will not be believed by anyone. Obama can't say too much now because the situation is too volatile and because, technically speaking, Bush is still President. I expect some optimism on Nov 5, when Obama becomes President elect. Until then, I am pessimistic. I am no economist and am a seriously battered investor whose retirement funds are turning into a fond memory.

  •  "Cash for trash" is action (4+ / 0-)
    Recommended by:
    Tanya, Cliss, In her own Voice, two roads

    but does it solve anything, or does it just dump ever-growing amounts of the loss in the taxpayers' laps?

  •  There seems to be a building consensus (6+ / 0-)

    to abandon the $700 billion bailout and use the money to prop up banks that are salvageable, letting the rest go under, so that those that survive are confident enough to lend to one another.  I think this is the way to go, as the British have done.

    I loves me some Marxist Utopian Mush!

    by Captain Nimrod on Fri Oct 10, 2008 at 07:14:16 AM PDT

  •  Israeli banks will not be hurt (5+ / 0-)
    Recommended by:
    Hornito, conchita, relentless, Tanya, Losty

    Bank of Israel chief: Israeli banks unlikely to collapse

    Heard only the last portion of Volker's conversation with Rose, but I did hear him say "the entire world is involved" or words to that effect.

    For the most part Volker had prudent things to say.

    However, he seemed to forget that there's a Rest of the World out there -- the Middle East is NOT involved; Israeli banks will not be hurt; in spiteful and foolish moves, the US Congress and numerous parts of the Israel lobby in the US worked to isolate Iranian banks.  Now William Kristol is whining that Iran is enjoying shadenfreude. Say thank you to Gary Ackerman, Joe Lieberman, Ilana Ros Lehtinen, etc., Mr. Kristol.  

    America, you reap what you sow.

  •  No we won't (1+ / 0-)
    Recommended by:
    adigal

    This crisis and global warming are just natural signs that we are at the End Times.  You betcha!

    Emancipate yourselves from mental slavery; none but ourselves can free our minds

    by synchronicityii on Fri Oct 10, 2008 at 07:16:35 AM PDT

  •  Really? (0+ / 0-)

    We're not all going to die?

    Obviously we will get through, even without the all caps.

    This is CLASS WAR, and the other side is winning.

    by Mr X on Fri Oct 10, 2008 at 07:17:42 AM PDT

  •  Thanks, I needed that! (2+ / 0-)
    Recommended by:
    bink, lisastar

    I'm still scared out of my wits and sick to my stomach at what the combination of trickle down economics and massive deregulation courtesy of the rethugs has done to this economy.

    I am voting Obama, therefore I will stand tall till I meet my end...

    by JayIsConfused on Fri Oct 10, 2008 at 07:26:31 AM PDT

  •  When a car goes over a 100 foot cliff... (4+ / 0-)
    Recommended by:
    Tanya, Cliss, In her own Voice, two roads

    ...and one surveys the wreckage at the bottom of the cliff, is it appropriate to say "the car got through it?"

    What I mean to say is: doesn't the "we'll get through it" framing sort of evade the key question about the state we're in at the end?

    Maverick - a calf that has become separated from its mother. By convention, it can become the property of whichever lobbyist finds it first.

    by Minerva on Fri Oct 10, 2008 at 07:26:50 AM PDT

    •  and who the "we" are (2+ / 0-)
      Recommended by:
      In her own Voice, two roads

      Does the we mean you and me, us the average american? or does it mean wall st and a political ideology that props up the least deserving while throwing under the must the most in need?

      To sin by silence when they should protest makes cowards of men~~ Abraham Lincoln

      by Tanya on Fri Oct 10, 2008 at 07:57:09 AM PDT

      [ Parent ]

  •  The last time this happened.... (7+ / 0-)

    The last time something like this happened on a global scale, there was a rise in global fascism that resulted in a world war. And that was (just) before the advent of nuclear weapons. I shudder to think about the consequences now.

    My parents were children during the Great Depression, and I've commented to them that those (in the US) who survived the GD and WW2 hit the f-in' jackpot. But they had to survive. For this one, some will, and some won't, and I have to think the odds of surviving are lower given our collective ability to annihilate ourselves (as well as a sizable group of nut-jobs more intent on fulfilling biblical prophesy than thinking rationally)

    As I've watched the market crash for the past week, I've been awake in the wee hours stressing. Yes, we'll get through this crisis in the long run, but not all of us will, and what shape will we be in when we do? My job is disappearing (not for the first time). What does that mean to my family's future? During the GD, my mother's family decamped to the UP of Michigan and did subsistence farming to survive. What choices will I face? What pain will my daughter have to endure?

    If someone will get up and tell the American people the truth, then s/he would get their head handed to them as being unpatriotic; unless they knew how to communicate that truth. FDR knew how. I'm hoping BO knows how. In one respect McButt (as my daughter calls him) and his people are right. The people of this country are its greatest strength. If government can facilitate and rally the people we'll collectively survive. But given the distrust in government (seeds sown by the conservatives of the past 30-40 years), I am doubtful that will work.

    Cynically,
    Pal E Boy

    •  Yes, those stories are also running through my (2+ / 0-)
      Recommended by:
      Justus, Randtntx

      mind. My parents/grandparents also told stories from the Great Depression. I'm glad they aren't around to see their hard earned assets disappearing.

      However, having been raised during the post war boom, I do wish I had some of their wisdom and survival instincts.

      On the other hand, I don't think going back to a subsistence life style is going to work for very many of us, so we're going to have to project our creativity into the future and figure out how to shift gears on our economic engines to produce a more sustainable future.

      Greening our economy is a good place to begin.

      Thinking caps ON!

      "Let us not look back to the past with anger, nor towards the future with fear, but look around with awareness." James Thurber

      by annan on Fri Oct 10, 2008 at 08:00:59 AM PDT

      [ Parent ]

  •  stock market falls on Bush's speech, rises (3+ / 0-)
    Recommended by:
    annan, fhcec, Justus

    on Bonddad's reassurance! Heh. sob.

  •  Perplexed by the recent rise in the $ v Euro (1+ / 0-)
    Recommended by:
    Minerva

    The US Dollar jumped in value against the euro to levels not seen in over a year as soon as Congress neared passage of the rescue/bailout plan.  This is perplexing to me.  The only explanation I can think of is that it represented an intention by the US to stay on top of the crisis.

  •  The way to get through this is to realize (6+ / 0-)

    that now we are on the cusp of a great change, one that can lead to a successful future if we have the courage to work for it.  We need to convert our economy, our way of life into a sustainable low-carbon economy.  This will be a multi-trillion dollar effort that will generate huge economic rewards in terms of employment, creation of new industries, reduction in the trade / current account deficits (because of 100's billions in oil imports will be shrunk).  We will save trillions over the next generation by winding down the oil-military industrial complex, which will not be needed if we move to energy self-sufficiency.  We must also work toward reinvigoration in the idea of community and working together- for each other, the generations to follow and for the health of the planet.

    Changes in the world of finance obviously need to reflect these coming changes.  The old paradigm of constant economic growth fed by insatiable consumerism founded on the burning of fossil fuels is DEAD as the current financial crisis is clearly demonstrating.  Lets use this financial chaos as an opporunity to form a new social/economic/financial model, one that will be compatible with the realities we must face this century.  

    Key elements for this great restructuring:

    - A new energy infrastructure centered around low-carbon electricity, especially for transportation (electric trains for long haul freight, electric trolleys / light urban rail for moving people, plug-in hybrid cars otherwise).  Renewable fuels for vehicles that must use liquid fuels (aircraft, ships, heavy trucks, etc.), which can be thermochemically manufactured from captured CO2 and water using a cheap energy source.

    - A drive to maximize efficiency everywhere energy is consumed

    - Localized community-based living arrangements to reduce transportation requirements

    - A new monetary system not based on debt creation, so the money system can remain stable in a steady-state economy

    The intrinsic nature of Power is such that those who seek it most are least qualified to wield it.

    by mojo workin on Fri Oct 10, 2008 at 07:43:39 AM PDT

    •  electing Obama is just the beginning (6+ / 0-)

      if we have the courage to work for it.

      We are in for a long, very difficult struggle. As our president he will need every one of us to help bury the republican party and fight the right wing media so he and congress can actually accomplish anything (see Bill Clinton)

      I can't wait.

      If we cannot elect this man, we don't deserve him.

      by lisastar on Fri Oct 10, 2008 at 07:59:36 AM PDT

      [ Parent ]

      •  Extreme, rapid change induces fear (2+ / 0-)
        Recommended by:
        Cliss, lisastar

        and causes dislocation and hardship.  We need hope in order to rise to the occasion and overcome these fears and meet these challenges.  We need hope in our future, and this can happen if we believe in ourselves and what we can do as a community.  

        I sketched what I believe this future should look like, and the key to success lies in how we re-work our ENERGY systems- low carbon yet also affordable and abundant energy.  The wealth and future of our civilization hangs in the balance.

        We can make the massive, multi-trillion dollar changes that will be necessary for a successful transition to a new economy that does not center itself around oil!  All we need is clear, intelligent, inspiring LEADERSHIP.  With that we can pull through anything.  There is power in words inspired by intelligence, reason and faith.

        Go OBAMA!

        The intrinsic nature of Power is such that those who seek it most are least qualified to wield it.

        by mojo workin on Fri Oct 10, 2008 at 09:53:26 AM PDT

        [ Parent ]

    •  excellent comment, thanks mojo n/t (1+ / 0-)
      Recommended by:
      Cliss

      Find your own voice--the personal is political.

      by In her own Voice on Fri Oct 10, 2008 at 08:36:23 AM PDT

      [ Parent ]

  •  Preliminary Lehman CDS Settles for 9.75% (2+ / 0-)
    Recommended by:
    Minerva, In her own Voice

    CDS issuers will have to cover the rest (90.25%) for Lehman bonds; Liability will exceed $360 billion. This is going to cause more failures, who's next? GS and MS have large CDS exposure.

    •  Letting Lehman fail was like pushing the first... (1+ / 0-)
      Recommended by:
      lysias

      ...domino in a 10-mile-long chain.

      Do you have a link on Lehman's CDS settlement?

      Maverick - a calf that has become separated from its mother. By convention, it can become the property of whichever lobbyist finds it first.

      by Minerva on Fri Oct 10, 2008 at 08:35:46 AM PDT

      [ Parent ]

    •  FDR declared contracts to provide gold (0+ / 0-)

      null and void.  Why can't Washington declare CDS's null and void?

      The influence of the [executive] has increased, is increasing, and ought to be diminished.

      by lysias on Fri Oct 10, 2008 at 08:52:45 AM PDT

      [ Parent ]

    •  Final Lehman Settlement at 8.625 (1+ / 0-)
      Recommended by:
      Cliss

      CDS sellers will pay 91.375 cents on the dollar. Huge losses expected, write downs and failures to ensue on Monday.

      •  Can the CDS sellers pay that much without (0+ / 0-)

        failng, THEMselves?  And if they can't, if they pay less,
        don't the people they pay TO fail?  Do the people they pay TO
        fail EVEN though they got paid, because they got paid 8.625% less
        than they needed to be paid?

        HELL, MY creditors would've been OVERJOYED with 91.375%!
        In my case, 8.625% was more like what they GOT, NOT what
        they lost!

        "You can't nice these people to death."-- John Edwards

        by ge0rge on Fri Oct 10, 2008 at 01:44:54 PM PDT

        [ Parent ]

  •  Shrub's slogans not helping (6+ / 0-)

    Dow down another 100 points during Shrub's speech. While the markets are certainly fluctuating at a dizzying pace today, our lame-duck prez doesn't seem to be inspiring much confidence.

  •  I really have to disagree with this line (5+ / 0-)

    The bottom line is we are far past the point of ideology.

    It is all about ideology, it was a conserative ideology of deregulation, service cuts, exporting jobs, running an entire economy on credit, and tax policies that have created the greatest disparity in wealth since the robber barrons. It is new political ideology that will turn this around. Economic ideologies don't change in a vacum the political ideology has to lead the way.

    To sin by silence when they should protest makes cowards of men~~ Abraham Lincoln

    by Tanya on Fri Oct 10, 2008 at 07:54:55 AM PDT

  •  just need to say: you people are amazing! (4+ / 0-)
    Recommended by:
    scorpiorising, relentless, Cliss, Randtntx

    and I am proud to be a member of this intelligent, compassionate community.  Good luck to all of us in the coming days!

    For every swing to the right, there will be a swing to the left.

    by livjack on Fri Oct 10, 2008 at 08:00:55 AM PDT

  •  You are wrong. (6+ / 0-)

    If the government did nothing we would get through this.

    There is a serious danger of extreme hyperinflation because of government action.  This is what happened with the Weimer Republic.  We have a fiat currency.  It is very dangerous for the government to try to inflate its way out of its economic problems as it is doing.

    Jim Rogers, who has been very right about everything, said this yesterday on CNBC.  

    •  I saw the Jim Rogers interview... (4+ / 0-)

      He predicted an "inflationary holocaust", as the Federal Reserve prints more and more money so that it can become the bank of loans.

    •  You are recommending that the fed repeat 1929 (1+ / 0-)
      Recommended by:
      New Deal democrat

      I don't agree that you are recommending a good course of action. The tighter credit should have happened years ago, when it was safe. Good policy at one point in the economic cycle isn't always good policy at a different point.

      Hyperinflation doesn't just happen, the Fed can stop it when needed, but easy money is an important part of the current solution.

      •  There are two major problems with the FED action. (5+ / 0-)
        Recommended by:
        lysias, conchita, greenheron, Cliss, abraxas

        1.)  It has been so haphazard that noone knows what the hell they are going to do.  This has brought uncertainty to the market.

        2.) Their actions will create hyperinflation and they cannot stop it so easily.  Why aren't treasuries rising here with the market tanking?

        The proper response should not be financial.  They should be building mass transit and high speed rail and sustainable living.  We will not address our real problems until next year if we do it at all.

        The real problem with the economy is not financial.  We have invested too heavily in McMansions and granite countertops.

        •  Agree with first not with second (0+ / 0-)

          Yes, it is haphazard because the Fed completely underestimated the problems in the market.

          No, it will not create hyperinflation unless it chooses to. It can tighten the money slowly. Right now the money supply is not increasing because only the best debtors are getting loans. As confidence comes back into the system, the fed can carefully match what the ECB does and there is really no danger that the ECB, which still follows the path of the old Bundesbank, will ever engage in highly inflationary monetary policy.

  •  was volker working for g bush to sabotage carter? (0+ / 0-)

    the huge iflation numberrs are often cited when dissing carter.

    ignoring the talk radio monopoly continues to be the biggest political blunder in decades

    by certainot on Fri Oct 10, 2008 at 08:17:52 AM PDT

    •  No, Inflation was in place for Nixon and Ford (0+ / 0-)

      It accelerated under the oil shock. Volcker was appointed by Carter.

      Volcker took his job seriously. Carter was a good man in many ways but he didn't have a good way to rally people when times were tough. He might have been a great president at a different time, but 1977 was the wrong time for Carter, much as 1929 was the wrong time for another man who had done admirable things, Herbert Hoover.

  •  Heard him on Charlie Rose (0+ / 0-)

    Last night.  BTW Rose has the best speakers analyst on the financial mess.  What a shame he isn't prime time. The corporate media sucks - Lou Dobbs anyone?

    Maybe it is music that will save the world - Pablo Casals

    by Palmetto Progressive on Fri Oct 10, 2008 at 08:18:50 AM PDT

  •  Hey Bonddad, thanks. (0+ / 0-)

    Your diaries have been great for explaining things and pointing to sources of more information.  I have been forwarding them to a congressional candidate for several weeks now.  You are more helpful than you know.

  •  Yes Volcher and team will add creditability (1+ / 0-)
    Recommended by:
    Cliss

    Market rally in 82 under his direction

  •  The last five months of Herbert Hoover's (3+ / 0-)
    Recommended by:
    Cliss, Justus, spookthesunset

    administration (the ones after the Nov. election that elected FDR) did a lot of damage to the U.S. economy, basically because of a lack of leadership.  It was in the last weeks that there was a big string of bank failures, and bank holidays declared in most of the states.  One result of this debacle was the 20th Amendment, which moved the inauguration of the new president from March to January, preventing similar long hiatuses in the future.

    We cannot afford to have a similar hiatus in the last months of the Bush/Cheney administration, especially after November's election.  There is a similar crisis, and the lack of leadership of a discredited lameduck administration will again do a lot of harm.  A caretaker President Pelosi's brief administration could be a lead-in to the new Obama administration.  We need to call for Bush and Cheney to resign.

    The influence of the [executive] has increased, is increasing, and ought to be diminished.

    by lysias on Fri Oct 10, 2008 at 08:36:19 AM PDT

  •  One more reason you are wrong, (6+ / 0-)

    Long term bonds should be rising here with the market tanking.  

    Long term bonds today are holding steady and they have been falling recently.  The TLT was near 100, and now it is at 96.66

    This is a very dangerous hyperinflation signal.  Why aren't bonds rising with the falling market?  People are losing faith in the USA dollar.

  •  Enough Phil Gramm/Greenspan free markets. n/t (1+ / 0-)
    Recommended by:
    Cliss
  •  I'm glad. . . (2+ / 0-)
    Recommended by:
    adigal, Cliss

    I'm glad that I have you to read the WSJ for me and relay the results. I've thought this panic selling was going to happen for a while.

    I'm sad for all those who've lost their retirement savings (apparently, many did), but Americans have been asking for this since Reagan told people that irresponsible fiscal policy was a good thing and there's now a rather harsh reappraisal going on about Greenspan, who apparently doesn't know the difference between tactics and strategy.

    The victorious strategist only seeks battle after the victory has been won, whereas he who is destined to defeat first fights and afterwards looks for victory.

    by Pacifist on Fri Oct 10, 2008 at 08:39:53 AM PDT

  •  What it really is. Inevitable end of Reaganomics. (7+ / 0-)

    We have to identify the current financial mess for what it is. The inevitable end of the Reaganomics, Republican economic ideology practiced over the last 25 years.  Massive deficits and debt due to tax cuts for the wealthy and business and lack of government regulation of banks and financial markets.

    This is also the legacy of Alan Greenspan who aided and abetted Reaganomics by encouraging the massive debt and lack of regulation.

    It is ironic that it is Paul Volcker, Carter's Fed Chairman, who is the person we can turn to since it was Carter and Volcker who Reagan and Greenspan defeated in 1980 and began their economic reign of terror.

    •  I hope somehow that my father (5+ / 0-)

      can see what's happening.  He spent the last twenty years of his life railing against the Culture of Greed: he denounced Reaganomics from the day of the Innauguration ("roses in the toilet bowls!") and "ketchup as a vegetable."

       He collected files on CEO salaries and deregulation's flaws and the corporate take-over of the global economy.  He wrote letters and newspaper articles. He preached from the pulpit. He started email lists. He nagged politicians and worked hard for the Green Party and, later,  Kucinich's Presidential bid. He poured his heart out.

       All this, after spending the previous 20 years fighting for civil rights and social justice, before that...

       He died two years ago just at the time when it seemed, to him, that all was lost. He died when all his ideals and dreams and battles seemed hopeless and futile. He wrote to everyone he knew--family, friends, politicians and clergy--essentially saying, "I give up the fight."

       IF ONLY he were alive to see Obama about to become the first African-American President and the death of Reganomics!  I so wish there were someway to reassure him: "it wasn't all in vain, Daddy."  

    •  This analysis is wrong. (1+ / 0-)
      Recommended by:
      ge0rge

      Reagan agreed with the Volker policy of fighting inflation.  The tax cuts enacted in the early 80's were, in part, hoped to offset the monetary tightening.  Nevertheless, the country went into recession in '82 as the interest rate hikes took full hold.  Reagan reappointed him '83.

      Many progressives and liberals did not like the high interest rate policy at the time, and there was much criticism directed toward the fed as unemployment numbers spiked.

      •  Amen (0+ / 0-)

        Bonddad is a moderate-to-conservative voice here, which OUGHT to make him reviled.  Instead, he is on the rec-list.  AND HE DIDN'T SAY ANY thing
        in the diary!  "We need leadership." ???????????
        PLEASE!
        What would that leader SAY, that YOU are not saying??
        If YOU don't know what to say then SHUT UP!

        "You can't nice these people to death."-- John Edwards

        by ge0rge on Fri Oct 10, 2008 at 01:39:10 PM PDT

        [ Parent ]

      •  Analysis right. Reaganomics = Deficit/Debt. (0+ / 0-)

        "The tax cuts enacted in the early 80's were..."

        Non-existent.

        Reagan cut taxes on wealthy but increased taxes on middle class. Reagan enacted the biggest tax cut in history to that point by raising SS taxes way beyond amount needed to pay for SS.

        This shifted tax burden to middle class working Americans and ran up huge deficits and debt.

        Debt/GDP was 33% in 1981 when Reagan took office and jumped to 65% by 1992. Clinton reversed it getting down to 58% in 2000 and the Bush Jr blew it up to 70% by 2008.

        That is killing US economy. 5% of US Federal budget is paying just the interest on the Reagan/Bush debt.

  •  A leadership crisis (3+ / 0-)
    Recommended by:
    lysias, side pocket, adigal

    The economy is dependent on psychology. If people believe that it is healthy, then they invest, hire, expand and the economy does better. A typical positive feedback loop. If people believe that the economy is sick then they lay off workers, they put off capital expenditures and the economy shrinks. The psychology starts at the top, the US CEO, the big Kahuna, the POTUS, El Presidente. Guess what, the voters voter their fears and they got no leadership at all. This is possibly the worst of all convergences, a nitwit, lame duck President and a financial crisis. We have three months and ten days until we have a real leader in Washington, a virtual eternity for a crisis like this. If McCain is elected, then we are really fucked (I don't like to use that word in print, but it perfectly describes this situation.)

    What should a leader do? First admit the reality that we have a panic situation. Second, say that the government will not allow the worst possible outcomes, that would be zero credit, a bank run and a complete collapse of Wall Street. People are preparing for the worst right now. Their actions will cause it to happen, unless the President can convince them otherwise. People have to start thinking about recovery and the opportunities it presents.

    What should Bush do? 1) Ask Cheney to resign. 2)Appoint Obama VP, with the approval of Congress, 3) Resign. This could all happen in one week's time. This is the right thing to do, but there isn't a chance in hell that he would do it. The election would continue as it, but Obama would become the acting President.

  •  Thanks for this! n/t (0+ / 0-)
  •  I personally see this entire situation as the (1+ / 0-)
    Recommended by:
    adigal

    best thing that could have happened at this specific point in the evolution of a global consciousness.

    I believe that it will make the first term of Obama's administration that much easier because in one stroke the republican philosophy of every man, woman and child for themselves has been proved to be unworkable.

    Everyone is hurting,or will hurt. Developed nations, emerging nations, consumers, producers, insurgents, extremeists, some quantum shift has occurred that will force us to view each other as neighbours, brothers and sisters where one's own welfare depends on another's welfare.

    I do not expect a sudden blinding light to shine from the sky but the foundations have been laid for conscious, creative, strong and equitable leadership that will impact the entire planet.

    I see the future as enormously hopeful. I also believe, because i choose to, that Presidrent Obama is not only up to the job, he is the only one at this point who can occupy the most powerful leadership position.

    I am certain this blind intention of apologising for my optimism. If I were not a dyed in the wool atheist it would almost make me believe in a god or goddess.

  •  ha, are you sure? (0+ / 0-)

    Everyone has a creepy sense of freak out.

    freak out

    All right, everybody be cool, this is a robbery! -GW Bush

    by audiored on Fri Oct 10, 2008 at 09:01:02 AM PDT

  •  When was the last time the inflation "indicators" (0+ / 0-)

    got changed. You know, not to include food and heating. To me inflation has become a meaningless term. I have been seeing inflation in consumer goods for years.

  •  why is it (2+ / 0-)
    Recommended by:
    scorpiorising, EastcoastChick

    when W opens his mouth about the economy the market takes a huge dump???

  •  Sounds trite, but really the nation is in peril (0+ / 0-)

    and we need to all come together. Stop with the "terrorist" attacks on Obama. McCain knows he has no chance, so might as well concede gracefully. For once, let him go to DC and ACTUALLY work on a solution: would be putting COUNTRY FIRST?

    Well? Shall we go? Yes, let's go. Defeat John McCain.

    by whenwego on Fri Oct 10, 2008 at 09:15:06 AM PDT

  •  WTF is Mark to Market? (0+ / 0-)

    Another very questionable accounting practice that allows the holder of questionable assests to pump their value. See Level 3 Assests. Here is a very good explanation by Motley Fool:
    http://www.fool.com/... Isn't exciting when you get a bunch of ass holes together who have invented all sorts of complicated schemes to make money by not making any thing but smoke and mirrors?  What do we get? Credit Default Swaps that added up to over 46 Trillon - more than our GDP.  General Motors, a great American company is now down to four dollars and change (Great depression levels) on the NYSE.  Thanks you fucking idiots.  Get out and get a real job. Maybe some more dealers are needed at the tables in Los Vegas.  I am 70 years old and it is damn hard to try to learn enough about this shit to make any sense of it.  The idiots that have mismanaged my 401K got their feelings hurt when I told them to fuck off and put it all in T Bills while I've got a tiny bit left. When Barack is elected maybe he can put alot of Americans back to work making really neat, valuable, stuff that will save the environment.  Right now I can't get a part time job at McDonalds. Sign me completely pissed old SC guy.  

    Maybe it is music that will save the world - Pablo Casals

    by Palmetto Progressive on Fri Oct 10, 2008 at 09:17:00 AM PDT

  •  Yes and Chernobyl residents got through Chernobyl (2+ / 0-)
    Recommended by:
    jmgotham, In her own Voice

    So what bonddad?  Get through this?  So what?

    We'll get through death, each one of individually.  Does that mean we should just accept being murdered?

    What's your point with that title?  Just bend over and take it while the kleptocrats steal trillions from us?

  •  Sure we will.. (1+ / 0-)
    Recommended by:
    Earth Ling

    ..but at what cost?

    I'm being taxed to my limit and paying more for essentials.  I can't afford for the cost of living to rise.

    And, sure, we'll make it through this but it's not like we're going to go back to a roaring economy any time in the near future.  Our financial standing has fundamentally changed.  The "good times" are gone.  

    Being told "we'll make it through this" rings hollow.

    Everyone has a plan 'til they get punched in the mouth. -Mike Tyson

    by jmgotham on Fri Oct 10, 2008 at 09:18:05 AM PDT

  •  No Adults Bond "dad"? DeFazio, Kaptur are Adults (1+ / 0-)
    Recommended by:
    CHCH

    Why don't you talk about them?

    Why do you overlook them?

    If people like you would use your highly regarded Adult Status On DKos and pay attention to the FAR better options that are available to us, YOU could have made a difference over these past few weeks.

    The Adult David Sirota

    The Adults DeFazio and Kaptur

    Read this stuff Kossacks.  It is exactly when you start thinking "Oh, I don't understand this complicated stuff, I guess I better turn off my brain and trust the Adults that say they're Adults - even if they are the ones that led us into this mess."

    •  finishing my sentence... (3+ / 0-)
      Recommended by:
      relentless, FishBiscuit, CHCH

      It is exactly when you start thinking "Oh, I don't understand this complicated stuff, I guess I better turn off my brain and trust the Adults that say they're Adults - even if they are the ones that led us into this mess." that your reptilian brain should kick you in the ass and say "Wake Up, Pay some Fucking Attention! You're about to get Fucked!"

  •  I certainly have infinitely more respect (2+ / 0-)
    Recommended by:
    In her own Voice, Earth Ling

    for Volcker than Paulson (but any number times zero is zero). This crisis is moving too fast for people to adjust. Personally I feel like I'm sitting on the beach waiting for a huge wave to crash on my head. Even now Bush is making all the wrong moves IMO (allowing Paulson to pick his cronies to run the bailout, failing to crackdown on AIG for their outrageous behavior, not getting a huge number of financial experts to publicly support their plan, and taking so long to get started).

    I'm reminded of KO's sig line:

    If your going through Hell, keep going.
    Winston Churchill

    Love that "power of the purse!" It looks so nice up there on the mantle (and not the table) next to the "subpoena power."

    by Sacramento Dem on Fri Oct 10, 2008 at 09:36:10 AM PDT

    •  Diffent Comparison (0+ / 0-)

      "I certainly have infinitely more respect...for Volcker than Paulson (but any number times zero is zero)..."

      How do you feel about Bernanke compared to Volcker?  Volcker was head of the Fed starting under Carter.  Paulson is Secretary of the Treasury.  Theoretically, the head of the Fed is supposed to be more independent than the Treasury chief.  That hasn't always been true during the last 15 years.

      "Love the Truth, defend the Truth, speak the Truth, and hear the Truth" - Jan Hus, d.1415 CE

      by PrahaPartizan on Fri Oct 10, 2008 at 10:30:43 AM PDT

      [ Parent ]

      •  I have yet to see a Bush appointee (for anything) (0+ / 0-)

        that I have a great deal of confidence in. Bush has chosen to put Paulson out front on this, it's kind of hard to bring everyone together when you treat every situation as a partsan battle. Theoretically the US Attorneys are supposed to be non-partisan as well. I did hear Al Gore say some nice things about Bernanke once, but I still would prefer Volcker.

        Love that "power of the purse!" It looks so nice up there on the mantle (and not the table) next to the "subpoena power."

        by Sacramento Dem on Fri Oct 10, 2008 at 10:46:43 AM PDT

        [ Parent ]

      •  Infinity times zero is not zero, it's (0+ / 0-)

        indeterminate, i.e., any (finite) number at all.  

        One can prove this.  Divide any finite number by infinity, and you get zero.

        The influence of the [executive] has increased, is increasing, and ought to be diminished.

        by lysias on Fri Oct 10, 2008 at 11:11:36 AM PDT

        [ Parent ]

  •  G7 meeting (1+ / 0-)
    Recommended by:
    In her own Voice

    Who is representing us at the G7 meeting this weekend?  Does anyone know?  I can't find the info anywhere.  I know Bush will be there, but I hope to God there are some brains accompanying him.  If he gets his ego involved with not following Brown's plan it will be a disaster.

  •  Charlie Rose did an interview with Volcker. (1+ / 0-)
    Recommended by:
    peraspera

    Link.  It was good to hear someone with his authority discuss the situation.  

    It's the real economy that he's focused on and worried about.  One thing I really wish people would stop saying (that Volcker made clear) is "this is worst crisis since the Great Depression".  That comparison is beginning to jump the shark like jumping the shark did.  25% unemployment at it's worst.  We're not there.  Of course it's possible but we are nowhere close at the moment.  We need to try to stay clear-eyed about this.

  •  Not quite enough (3+ / 0-)
    Recommended by:
    lysias, relentless, Cliss

    NY Times spelled it out "Wall Street spent most of the Bush years trafficking in bad debt".  

    Fundamentalists will not admit that the banking system is filled with 63 trillion dollars of worthless paper.  All their reasons for the melt down from Senator Obama to subprime loans are smoke screens.  The 63 trillion dollars are gone; vanished.   Credit markets are frozen and will remain frozen until lenders can trust again.  

    The only way is nationalize the banks.  Wipe the bad debt off the books.  Start anew and enforce transparency.  Dumping money into the banks by itself is not enough.  

  •  These McBama bailouts are not the answer. (1+ / 0-)
    Recommended by:
    relentless

    There's no quick fix. No investments will be safe as long as we have a ever-weakening consumer economy, where people don't have money to spend. These problems must be corrected from the bottom up.
    I've tried diligently to explain this. I've even used the analogy of an economy being like an ecosystem. When the smallest species(working class) become deprived of resources and begin to perish, the next species up the food chain(small business etc.), which rely on those smaller species, become deprived or resources and begin to perish, causing the next species up the food chain(investor class, stockholders etc.) to become deprived or resources and begin to perish, and so on..., until the whole thing comes crashing down, just like in '29. Everything, including an economy, is built from the bottom up. These McBama top-down bailouts are not the answer.
    Maybe I could use a different analogy. How about the analogy of a block building? If we take a sledgehammer and start destroying the bottom blocks of a block building(like what has been done over the last 3 or 4 decades), if we destroy enough of them, the whole block building will fall.
    Do you think our presidential candidates will get that one?
    It will take another New Deal(New Energy Deal) to even begin to restore economic fundamentals.

  •  Things that need to be done.... (2+ / 0-)
    Recommended by:
    relentless, Cliss

    The multi trillion dirivative market needs to be controlled and done away with.

    A shadow banking system needs to be put in place....These will have new balance sheets....and capitalised by the US government.

    All banks and institutions need to come clean....if there insolvent so be it....if not they need to be recapitalised.

    A new world currency system needs to be put in place.

    The republican party needs to go away.

  •  Global Cooperation... (4+ / 0-)

    ...has to solve some very short term problems right now just to keep economies running.  An example is the reports I am seeing out of the shipping trade - shippers cannot ship because their counterparty is denying their letter of credit.  Also, global shipping panamax rates are seeing some very scary drops and ships are going empty.  These are indicators that economic activity is flatlining. These are ships shipping things like raw goods to China and grain around the world.  I think that Paulson, the IMF, British bankers, et-al are working to restart the heart, but the veins and capillaries are already shutting down and hence the body will suffer damage that I don't think anyone can yet predict.  I caution - we should not be paying attention to things like market pundits 'calling the bottom' and other such irrelevancies - there will be time to sort that out later.  Even recapitalizing banks may not be quick enough if credit confidence cannot be very quickly restored.

    Another thing to not pay attention to is those who assert then there has been little recessionary damage to the economy to date.  The paper economy of the finance sector, prior to this implosion, was a very significant percentage of our economy, and it is being essentially destroyed.  Humpty cannot be put back together again.  There cannot help but be a severe economic contraction from a blow of this magnitude.  We are watching an economic tsunami happening to the world.  I just hope we get through it with some sense of stability of the nation-states and order intact so there is some kind of a foundation to rebuild upon.

    •  I agree because the markets are deleveraging (1+ / 0-)
      Recommended by:
      TheWesternSun

      as we speak.....we need to look past all the turmoil and damage and begin building a new foundation.

      •  Its a vicious cycle (1+ / 0-)
        Recommended by:
        Parisgnome

        of deleveraging.  Deleveraging is another word for a bank run.  We are seeing a cross-border bank run on all financial system players, and all currency players.  Currency manipulations like the carry trade are dead. Emerging markets are being decimated due to the currency imbalance. I see reports that there is a shortage of physical gold  now. And the liquidity crisis, which is a crisis of confidence, is due to the underlying solvency crisis.  It is happening in hyper-real time and I don't see how they stop it.

    •  What about this? (0+ / 0-)

      Apparently Iceland is on the verge of national bankruptcy.

      What does that mean for us since many EU nations hold alot of Iceland's debt?

      http://www.reuters.com/...

      •  Iceland (0+ / 0-)

        has been described as more of a hedge fund than a nation.  In any case, Iceland is one symptom of the major problem facing the Eurozone - each nation-state is taking steps to guarantee its own deposits, but not necessarily those deposits in banks in other nations.  Therefore, a British entity (a person, a city, or whatever) may have money in an Icelandic bank.  There is no guarantee for these funds, and Iceland had said it will not guarantee funds in the three major banks they have essentially nationalized.  Therefore, a British council might go broke because it has lost its money in an Icelandic bank. Now you have nations acting against each other when they should be cooperating, as Gordon proved proved when he said he would freeze their assets

        In a larger sense, there is a tie between monetary policy and currency.  IE, the actions of the Fed affect the dollar, the Bank of Japan the Yen, etc.  In Europe, central banks and governments are now acting in their own national interests, yet the Euro trades in international currency markets against currencies from other nations that are not thus fractured.  Therefore, one cannot really assign a measure of health to the Euro.  Some see the eventual destruction of the Euro as a potential result - I do not have a crystal ball for this.

        In any case, yes, Icelandic bankruptcy is a major problem, and it presages a problem of a bigger scale - how do you unwind a global banking mess without cooperation among nations, which I fear is a little too over-optimistic.  Look for more european states to have major troubles (Spain, the Netherlands) to name two, and, of course, Russia.

        •  Thanks for this! (0+ / 0-)

          I was reading how they were looking to Russia for cash and how the Euro nations are squabbling a little over what should be done. I see your point...if the Euro nations don't cooperate the Euro will tank, which is definitely bad news for us here.

          For a non economic type this is all very complex...the way all of the nations are all so economically intertwined...and are all in trouble over all of the fake money that has been circulating.

          •  Remember (0+ / 0-)

            that economic problems are intertwined with geopolitical forces.  In this case, many suspect that Russia is offering to help in order to gain access to the ex-US military base at Keflavik.  This would put Russian bombers much closer to North America.

  •  If you look at the stock market action (0+ / 0-)

    It is stepping down.....waterfalling it will not end till someone restores confidence....the problem is too big I'm afraid....Dow 4500 is coming as the selling is relentless.

  •  Soros will be on Moyers tonight with a plan (4+ / 0-)
    for mortgages.  He thinks we should model it on Denmark, which has the best system in the world in his opinion.  He will be on Moyers tonight.  I plan to watch.  

    Winning without Delay.

    by ljm on Fri Oct 10, 2008 at 11:04:16 AM PDT

  •  Tom Petty: Free Falling...popping into my head (0+ / 0-)

    involuntarily...can't keep it out...wonder if my brain is trying to tell me something....

    simplicity is the most difficult of all things

    by RichardWoodcockII on Fri Oct 10, 2008 at 11:11:59 AM PDT

  •  I wasn't that happy with Volcker (1+ / 0-)
    Recommended by:
    In her own Voice

    We could only get a floating interest rate on a farm loan. Volcker raised interest rates to 14%.  That, plus inflation being high was hard to deal with.  It was a hard two years because we paid such high interest. We had decided to sell, but my husband got a raise and interest went down.

    Volcker cut inflation from 13.5% in 1981, down to 3.2% by 1983.

    We always thought high interest rates hurt us more than the inflation did.  My husband's rich aunt was thrilled.  She said to me "Aren't these high interest rates wonderful?"  I said, "It depends on if you are paying them or earning them."

    Volcker, born 1927 served under Jimmy Carter and Ronald Reagan.  (August 1979 to August 1987).

    He is an economic advisor to  Barack Obama.

    According to the New York Time's article written in 1987:

    The main philosophical difference between Mr. Volcker, a Democrat, and Mr. Greenspan, a Republican, appears to be in their views of the structure and regulation of the banking system. Mr. Volcker has tended to resist deregulation of banks while Mr. Greenspan is more favorably disposed to it.

    more.

  •  I figured out what's going on with the market (1+ / 0-)
    Recommended by:
    Cliss

    Remember Tooter the Turtle? He always wanted some fantastic adventure and it would get out of hand and his friend the wizard would make it all go away. My friends, Bush is Tooter the Turtle. He wanted to be president and finally realized what a mess he's made of everything. It's all unwinding as we look on in morbid fascination. It's like 8 years never happened. Poof. There goes the last 8 yrs. of the economy.
    "Help me, Mr. Wizard!"

  •  What’s the alternative? (1+ / 0-)
    Recommended by:
    Cliss

    Of course we will get through this.  Or it won’t matter in the least.

    All of this is water flowing under the bridge.  I would rather worry about how to make the most of the aftermath.  Because without a doubt, we will get through this.

  •  The Revenge of the Short-Sellers! (n/t) (0+ / 0-)
  •  Tell Perino We'll Get Trough... (0+ / 0-)

    During today’s press briefing, White House press secretary Dana Perino suggested the Bush administration would oppose any effort to extend jobless benefits — a stance the White House has taken before. She explained their position by saying, “we want people to be able to return to the workplace as soon as possible.” The suggestion was that extending benefits somehow prevents people from returning to work.

    She concluded by saying that “the best way to help” the economy and unemployed people is for unemployed people to simply “get back to work.”

    Perino Confirms White House Won’t Extend Jobless Benefits, Says People Should Just Find A Job

    Oh wait. We have nothing but LIBERAL REPORTERS working in a LIBERAL MEDIA here in America!! How could I have forgotten that?

    by hopalong on Fri Oct 10, 2008 at 12:08:59 PM PDT

  •  Anyone else in the Room Enjoying This? (1+ / 0-)
    Recommended by:
    CHCH

    ....I mean, the end of American Style Capitalism.  I realize that the middle class is getting the squeeze, but I grew up (and currently reside in) Flint, MI where the Middle Class was liquidated by Reaganomics and the Neo-Liberal's 30 years ago so forgive me if I'm gloating a bit.

    Here's some pointers.....Boxed Mac & Cheese goes a long way.  Converse Canvas tennis shoes:  Cheap and durable.  If you live in a city, public transportation can get you just about anywhere you need to go for cheap.

    ...and, more importantly, don't be afraid to ask for help.  Communities have survived far worse in the past.  Your pride will not get you food to eat.

    Today's Halloween Movie Viewing: Dawn of the Dead (1979)

    by jds1978 on Fri Oct 10, 2008 at 12:49:41 PM PDT

    •  Perspective from London Banker (2+ / 0-)
      Recommended by:
      northsylvania, jds1978

      There is still a touching confidence among many in the City that the US authorities will provide the "leadership" to reinforce collapsing markets. As John Plender of the Financial Times quipped, "Gaul votes for Rome to take the strain." This seems to me to display a total incomprehension of the way US authorities operate to externalise pain and loss to the greatest extent possible in times of crisis. Gaul, after all, was an occupied state that was militarily and economically exploited to Rome’s advantage for centuries before Rome’s collapse. Saving Gaul was never a high priority once Rome was threatened.

      Elsewhere in the world, bureaucrats continue to show up at the office in the morning and check to make sure all boxes are ticked, all forms are correctly ordered, and all initiatives in progress continue their stately way forward unimpeded by global chaos. I find this comforting, although much of their efforts will ultimately prove futile and failed.

      Finally, an optimistic note. I was reminded yesterday that the vast bulk of "wealth" created during the Greenspan/Bernanke bubble years accrued to the very top percentiles of population – with many in the OECD middle class and lower class either stagnating or getting poorer as they mired themselves in unsustainable debt. While opportunity and employment grew strongly in emerging countries, there too the elites gained disproportionately as income inequalities surged. The crash of global financial markets therefore will have disproportionate effect on the elites, impoverishing them to a far greater extent, although it will be felt throughout society as employment, pensions, investments and public services contract.

      Once we hit bottom of this downturn, some years hence in all probability, we may experience a democratisation of wealth and opportunity like none seen since the end of World War II when education reforms and unionisation laid the groundwork for the rise of the American and OECD middle classes. Those who have lost economic and political power during the boom years, are likely to organise and retake authority within economic and political systems during the bust years. The collapse of concentrated wealth in Wall Street will spur more collaborative capital formation and investment throughout the economy. This could provide reorientation of economic progress toward more equitable, sustainable and democratic outcomes in coming generations. I hope so, it’s the only bright spot of the week.

      http://londonbanker.blogspot.com/

  •  Morgan Stanley (1+ / 0-)
    Recommended by:
    vets74
    may be toast by the end of the weekend if it doesn't consummate a deal with UFJ.

    This would be disastrous.

  •  We need leadership?? (0+ / 0-)

    How can anything this content-free make the rec-list?
    Yes, I'm disgusted.

    People in general simply DO NOT know what they are doing.

    The local impact of this for me is on my school district.
    Our county has suburban areas where affluent parents don't want
    to pay proportionate property taxes to educate poorer children.
    The county is growing and therefore has to construct new schools.
    Land-acquisition and construction costs are high up-front and
    have to be amortized over years (that's why you usually get
    a mortgage on a house), so we finance school construction by selling
    bonds.  The bond-issues are not always approved because affluent
    homeowners and conservatives generally are always voting against them.
    In 2007 we thought we had won a victory by getting a $1B school-
    bond approved, 53-47.

    Now it turns out that in the current state of market turmoil,
    THE USUAL SUSPECTS WILL NOT BUY these bonds!
    This county has a AAA rating and municipal bonds generally
    ARE TAX-FREE income.  YET STILL our market has dried up.
    What's even MORE RIDICULOUS about this is that given that
    STOCKS ARE PERFORMING SO HORRIFICALLY, EVERYbody should be
    in MASS FLIGHT INTO BONDS!!!

    But people are just irrationally terrified:
    "What if the economy tanks, and home values fall?
      What if that erodes this county's property tax base?
       What if this county then can't pay the interest on these loans?"
    S H I T!!!!!!!!!!!!!       SHUT THE FUCK UP!
    IF DEMOCRATS are in charge then the STATE will back the county and
    the NATION will back the states and the FED will back the nation and
    the TREASURY will back the FED and CONGRESS AND THE TAXPAYERS
    will back THAT!

    This withholding is not something beyond control.

    THIS IS A CAPITAL STRIKE .

    The proper response to THAT is targeted nationalization.

    "You can't nice these people to death."-- John Edwards

    by ge0rge on Fri Oct 10, 2008 at 01:37:25 PM PDT

  •  Did you write Bush's speech today? (2+ / 0-)
    Recommended by:
    northsylvania, In her own Voice

    Because that seemed suspiciously like one made by the Roman Emperor when the Visigoths (as distinct from the Audiogoths, I guess) were sacking Rome.

    I know that Romans are distressed at seeing their city invaded by bands of armed men, raping and pillaging. Fear and anxiety are feeding on one another as one home after another is burnt and the inhabitants killed. I want to assure all of you that the Roman government has a comprehensive plan to deal with this crisis, and that there is reason for hope and optimism. The fundamentals of Rome are sound. And, although the current pillaging crisis is concerning, there is no reason for excessive despondency and panic.

    McCain: Out of touch and out of time.

    by Anne Elk on Fri Oct 10, 2008 at 01:38:28 PM PDT

  •  Folks this Holiday season will be a disaster. (1+ / 0-)
    Recommended by:
    James Kresnik

    Everone will be hunkered down, few shoppers.  No big ticket items at all. No one's going to buy a car or a house in this environment. No one is going to do home improvement or add anything in terms of construction jobs. No one has any spare cash left for such things. Everyone will be holding on to what they've got. I know I will.

    Luxuries will be a LOW priority.  Vacations will be a LOW priority. No one will fly. Would you pay these outrageous airline prices?

    And what this will all lead to is massive layoffs in retail and service sectors.

    Who was Bush_Horror2004, anyway?

    by Dartagnan on Fri Oct 10, 2008 at 01:42:37 PM PDT

  •  G7 Meeting......guess what....no consensus (0+ / 0-)

    http://www.bloomberg.com/...

    Oct. 10 (Bloomberg) -- Finance ministers and central bankers from the Group of Seven nations met for crisis talks in Washington amid an unprecedented public split over what to say in their joint statement.

    The draft communiqué under consideration is ``too weak'' and fails to reflect the gravity of the financial turmoil, Italian Finance Minister Giulio Tremonti told reporters in Washington before the talks began. ``We won't sign it.''

    While Britain has pushed for a coordinated agreement to guarantee loans between banks, one official from a G-7 member said it was unlikely the G-7 would endorse their proposal. Two European officials said earlier that the group was considering saying that no systemically important bank would be allowed to fail, and laying out principles for all nations to follow.

    G-7 economic leaders ``have never released a statement that they have not reached consensus on,'' said Jenilee Guebert, senior researcher at the G-8 Research Group at the University of Toronto. ``It would be unique. At this stage, however, for him to be saying this doesn't necessarily mean it will transpire.''

    In one reversal earlier today, Italian Prime Minister Silvio Berlusconi said governments may shut financial markets, only to take back the remark later. White House spokesman Tony Fratto said there would be no interference in market openings or closings.

    Threat to Stocks

    Italy's rejection of the draft exposes fault-lines through the group over how to respond to the worst financial crisis since the Great Depression and may add to investor fears that policy makers are still not doing enough to beat it. U.S. stocks slumped for an eighth straight day.

    Officials gathered in Washington as global stock markets suffered their worst week since the 1970s. Policy makers had warned earlier against anticipating a commitment to any single course of action to quell the panic.

    ``Don't imagine we'll have a harmonized response that will be the same for everyone because you can't apply the same method to different market situations,'' French Finance Minister Christine Lagarde said. German Finance Minister Peer Steinbrueck said ``solutions may be different from country to country.''

    Investors and economists have urged officials to step up their efforts to protect banks as a credit freeze threatens to choke off lending to companies and households and send the world economy into a deep recession.

    IMF's Lipsky

    International Monetary Fund First Deputy Managing Director John Lipsky, in a Bloomberg Radio interview today, urged ``decisive and coherent'' action. Still, he also said ``it would be unrealistic to expect that there would be some grand plan unveiled that would solve all the problems.''

    ``If there's not a coordinated commitment on interbank lending, I don't think the market has any other way to go than down,'' said Jens Nordvig, a currency strategist at Goldman Sachs Group Inc. in New York.

    Unprecedented interest-rate cuts and bank bailouts haven't quelled the panic in markets, putting officials under pressure to pull even more policy levers today or risk exacerbating the financial and economic turmoil. Among options being discussed today: Pumping taxpayer funds into loss-ridden banks and guaranteeing their deposits and lending between them.

    The Standard & Poor's 500 Stock Index slid 5.9 percent to 856.66 at 1:37 p.m. in New York, capping off a 27 percent plunge so far this month. The European Dow Jones Stoxx 600 Index has lost 20 percent in that period, and Japan's Nikkei 225 Stock Average has slumped 27 percent since Oct. 1.

    `Act Now'

    ``Governments must act now and decisively to restore confidence, otherwise we are in for serious trouble and a long- run recession,'' said Moorad Choudhry, head of treasury at Europe Arab Bank Plc in London.

    The policy makers from the U.S., Japan, Germany, U.K., France, Canada and Italy are meeting for the first time since the financial crisis intensified last month. They will release a statement at about 6 p.m.

    Officials said they recognized the need to step up, with Bundesbank President Axel Weber saying that ``doing nothing is not an option at this stage.'' U.K. Chancellor of the Exchequer Alistair Darling told Bloomberg Television that ``it is absolutely essential that the world's largest economies act together, and they act together now.''

    President George W. Bush addressed his nation, pledging the administration ``will continue to act.''

    European Summit

    Bush will meet with the G-7 tomorrow, an echo of former President Bill Clinton's visit with the group in 1998 amid the Russian debt default and collapse of hedge fund Long Term Capital Management LP. The broader Group of 20 will also convene tomorrow. European leaders will hold a summit the following day in Paris.

    Former Federal Reserve Chairman Paul Volcker urged that ``all of them now admit or all of them own up to the fact their own banks are going to need support,'' in an interview with PBS Television's Charlie Rose show yesterday.

    The G-7's dilemma is that even after a battery of policy actions, money markets remain gridlocked as banks shun lending to each other for fear they will lose the money or because they need it themselves. The cost of borrowing dollars for three months in London today rose to its highest this year and the rate in Tokyo jumped to the highest since 1998.

    Darling wants countries to guarantee lending between banks, either by turning central banks into clearing houses for the loans or having governments back them. That would ``be an effective way of easing the crisis,'' said Marc Chandler, head of currency strategy at Brown Brothers Harriman & Co. in New York.

    U.K. Plan

    Fratto said today ``we're reviewing'' the U.K. proposal. Treasury Secretary Henry Paulson two days ago stopped short of endorsing the plan when asked about it in a press conference.

    The U.S. already plans to follow Darling in another way by purchasing stakes in a wide range of banks within weeks, tapping authority included in the $700 billion rescue package passed by Congress last week.

    The U.K. is engineering a 50 billion pound ($87 billion) strategy to partly nationalize at least eight British banks. Japanese lawmakers are also considering reviving a law that expired in March that would allow them to inject public money into regional financial companies.

    Having previously maintained that German banks were sound, Steinbrueck said Germany's approach to saving them on a case-by- case basis was no longer working and that a broader strategy was required. ``We have to move away from discretionary behavior,'' he said.

    U.S. FDIC

    The U.S.'s Federal Deposit Insurance Corp. said today it has ``significant latitude'' to take further steps to support banks and their depositors using emergency powers. European leaders have already promised to protect savers.

    Steinbrueck and Lagarde cautioned against expectations of a common strategy from the G-7. Lagarde said it is possible to ``show unity and coordinated proposals'' without a ``harmonized response.''

    If governments fail, central banks may have more work to do after already executing emergency rate cuts this week. New York University professor Nouriel Roubini recommended they slash interest rates by at least 1.5 percentage points to avert a depression.

  •  South Korean Rips US created Dirivatives (0+ / 0-)

    South Korean Finance Minister Kang Man-soo, before leaving Seoul for the Washington DC IMF meeting this weekend, told the Washington Post: "The United States almost forced the rest of the world to open up their financial sectors. It has been telling the world that its derivatives are an advanced technique created by some genius.... Derivatives and hedge funds are like casino gambling. A lot of Koreans are asking, how can the US be so weak?"  

    Minister Kang also insisted that the G7 "bring emerging markets into consideration as they make plans for a solution," backing up the call by President Sarkozy to expand the G7 to a G14 to discuss the creation of a new economic order.

  •  Volcker as Treasury Sec (0+ / 0-)
    Could Volcker be Obama's Treasury Secretary, or would it be better to have him at the head of the Fed again?

    "The only thing we have to fear is fear itself." - FDR

    by Vitarai on Fri Oct 10, 2008 at 02:10:44 PM PDT

  •  OK, so where 'could' the leadership come from... (1+ / 0-)
    Recommended by:
    vets74

    between now and Jan 20, 2009?  Any thoughts or ideas bondad? Would a non-gov't person like Volker or the Sage from Omah (or other?) be willing or able (ie invited and participated with by Bush/Paulsen et al) to help?

    Barack Obama can inspire Americans to get involved!

    by davekro on Fri Oct 10, 2008 at 02:22:29 PM PDT

    •  $1 / year advice is more like it. (0+ / 0-)

      O'Bama needs a Kitchen Cabinet with broad cred's.

      He is getting good advice, now. Best advice, later.

      We're out $75,450 per taxpaying household from the market drop this year, plus $7,000 (in a Debt Tax) for the now-silly-looking bail-out.

      Anything like non-W. sanity plus competent financial economics ==> Democratic victories for a decade.

      $1 is plenty.

      Droogie is as Droogie does....

      by vets74 on Fri Oct 10, 2008 at 02:54:45 PM PDT

      [ Parent ]

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