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  Tuesday  October 14  2008    08: 53 AM


It's certainly been all economy all the time around here lately. I know I have some other links around here somewhere. It's just that everything else pales by comparison. Hopefully, these will be the last economy links for the week. Unless, of course, more shit hits the fan.

When $700 Billion is Chump Change

"Once a run gets started it is rational for other people to join in."
- Mervyn King, Governor of the Bank of England, commenting on bank runs

Probably about now the people who actually wanted the massive bailout of the Wall Street crooks are asking themselves, "What exactly did we buy with the $700 Billion in taxpayer money?" It's a little late to ask that question You don't purchase a car without kicking the tires, you don't purchase a home without having the foundation inspected, and you don't bail out Wall Street unless you made certain that the money isn't going to be wasted.

With the DOW dropping nearly 2,300 points in just the 7 days since the bailout was announced, the sheeple are realizing that they've been mugged by the crooks yet again. Except this time the taxpayer wasn't held up. We gave them our wallets willingly.

Now here's the kicker: That $700 Billion is only the downpayment. The real payments are already happening and Congress didn't vote on it.

How much is this going to cost all of us? More than you can possibly imagine.

The global financial crisis is turning into a bigger drain on the U.S. federal budget than experts estimated two weeks ago, ballooning the deficit toward $2 trillion.
Bailouts of American International Group, Fannie Mae and Freddie Mac likely will be more expensive than expected. States are turning to Washington for fiscal help. The Federal Reserve said this week it will begin buying commercial paper, the short- term loans companies used to conduct day-to-day business, further increasing costs. And analysts now say the $700 billion bank- rescue plan passed by Congress last week may have to be significantly larger.

Can you even imagine a $2 Trillion yearly deficit? To put this into perspective, this country has accumulated just over a $10 Trillion in 230 years. Now we'll be adding 20% to that in a single year, and then do it again next year. Where is all that money going to come from in a country with no savings?


Global Economic Crisis Likely To Have Profound Consequences For US Politics, World Relations

The global economic crisis is likely to have profound, long-range consequences for American politics and for the relations of the United States with the rest of the world, severely constraining any effort to maintain or revive the Bush administration's propensity for unilateralism, and posing a broad international challenge to free market ideologies, according to a range of experts.

The scope of these changes remains uncertain, and all those who responded to October 11 and 12 inquiries from the Huffington Post warned that predictions in these circumstances are perilous. But there is a strong consensus that it would be a mistake to minimize the coming upheavals.

In the United States, economic developments have the potential to lay the groundwork for a political transformation with major alterations in both the composition of, and balance of power between, the major political parties. There are "reasons for thinking that the American election of 2008 may be the equivalent of the election of 1932 - an electoral sea change ushering in a new wave of government intervention and, if that intervention is successful, a durable electoral realignment," says Peter Hall, Krupp Foundation Professor of European Studies at Harvard, in a wide-ranging analysis he provided to the Huffington Post, available in full at the end of this article.


It's Wall Street's Turn to Bolster Confidence

In putting several trillion dollars in government funds on the line, the country has now done just about everything that Wall Street could have asked to address the financial crisis. The question now, as John Kennedy might have put it, is what Wall Street is ready to do for its country. So far, the answer is not much.

After getting their closed-door briefing yesterday from Paulson on the government's latest initiatives, Wall Street's finest literally ran from the Treasury to their waiting limousines, bypassing a media scrum eager to convey any scrap of wisdom or insight.

Court reporters will tell you they can always tell the innocent from the guilty on these kinds of perp walks, and the Wall Street crowd yesterday looked particularly guilty, unable even to conjure up a soothing word to a nation fretting over its shrunken 401(k)s, or a simple thank you to taxpayers for having saved their bacon. Their silence and invisibility throughout this crisis attests to the moral and political bankruptcy of a financial elite that is the perfect match for the financial bankruptcy they have now visited upon their investors, their creditors and their customers.

After yesterday's "historic" meeting, we are told by industry apologists that we are supposed to be grateful to nine leading banks for having "volunteered" to accept additional capital from the Treasury, along with a government guarantee for newly issued bank debt, even if it means having to accept a dilution of existing shares and a few harmless restrictions on their operations.

Pardon me if I'm less than blown over by this munificent offer, but it hardly seems commensurate either with the severity of the current crisis or the depth of the banks' culpability in fomenting it.

If Wall Street were truly serious about convincing Main Street that we're all in this together, its top executives would have stepped before the cameras yesterday and promised not to cut lines of credits to long-standing business customers who have never missed a payment.

They would have committed themselves not to foreclose on any homeowner who is willing and able to refinance into a new, government-guaranteed, fixed-rate mortgage set at 85 percent of the current value of the property.

They would have offered to suspend dividend payments until capital levels had been restored to pre-crisis levels.

They would have given us their solemn promise not to advise clients to hold on to their own investments while quietly dumping whatever they can from their own portfolios and shorting every security in sight.

With the Treasury now desperate for help in managing its new rescue efforts, they would have volunteered, at no cost to taxpayers, the services of some of those investment bankers and financial wizards who now don't have much else to do.

And the maharajas of finance could have set a wonderful example if they had all gotten together and agreed to work for a dollar a year until the crisis has passed.


  thanks to Talking Points Memo

But the maharajas of finance will do no such things. Instead they will be back to their old tricks of scam and fraud that got us into this mess.