Stoopid Stuff

Leaky Boat

The problem is that nobody, not me, not you, not Hank Paulson has any idea what they're doing. I have a couple questions about this whole 700 Billion Dollar Bailout program.

1. Is it necessary?
This is the biggest question. And I think it's quite telling that this is the question the players in Washington LEAST want to address. What would happen if we did nothing? What would happen if we spent significantly less? Shouldn't that that be the very first question anyone asks? How can we determine what we need to do if we aren't allowed to have a conversation about what we WANT to do will accomplish?

2. Will it even work?
Honestly, why should it? And by what mechanism? All we have proposed to do is buy a specified amount of grossly overvalued non-performing investment vehicles at some, very likely overvalued price. After we do that, all we know for sure is that the government, and that means taxpayers, has lost. We now own these ridiculous derivative mortgage-backed investments and credit default swaps that never had any real value in the first place. Will that do ANYTHING to improve the position of the firms holding them? Oh yeah? How much of this worthless debt are they holding? What else do they own that is overvalued on their balance sheets? What will be their next demand? Under the current (lack of) oversight regime, we have no idea. It's all guesswork.

Think it through, for gawds sake. Every bank and investment firm that owns this crap is failing. Why would anyone believe that in a sixty trillion dollar market, 700 Billion dollars will be enough to prop them up? Especially with the immediate history of these firms taking the money and just investing it themselves in safe international funds. Nothing changes.

3. Is it enough?
Of course not. They're lying. Again. This is an immense global market that has been generating ridiculous wealth for it's participants for well over a decade. Every new loan product that they could think up, no matter how unsupportable, was greedily snapped up and repackaged and resold. Brokers made millions. Fund managers made tens of millions. Brokerage firms made HUNDREDS of millions. All predicated on an unsupportable basis. And now the chickens have come home to roost. I personally would tell them to eat shit.


4. Will it actually do more harm than good?
Since the entire process is a fait accompli, I guess this is the only real question that matters. If it actually staves off some kind of apocalyptic collapse, then it was probably well spent, even if it was overspent. But know what? I am not optimistic. We are going to go significantly deeper into debt. This isn't something that happens in a vacuum, unilaterally. We have to have partners who will buy this huge additional debt. Ask yourself. Why would they? Our financial system is in collapse, and we're asking these international investors to trust us that in thirty years we'll be able to honor our commitment. Of course, in many cases, they have a significant investment in our ability to continue to support this level of consumer spending, so they might make questionable investments. But at some point, there's just no justification that can drive further investment. At that point, the US economy is in deep trouble. And yeah. Nobody's talking about that little problem.

What will happen when we, America, have nothing to offer but the ability to destroy your enemy in a matter of days in exchange for money? What will it mean when the only export we have to offer is the "War Fighter"? What will the world look like when we have to sell "regime change" because we have nothing else to offer?

I honestly never thought I'd see America fall this far in my lifetime. I mean sure, everything ends, all empires and regimes fall, only to be replaced by others, but this last eight years has been breathtaking in it's horror. And make no mistake. It's going to get very much worse. My pity to all you young folks...

posted by mikey @ 5:24 PM