Posted inUncategorized

What you do with zombies

Mila
The time for good options to deal with the banks was in, oh, 1999. That was when the Gramm-Leach-Bliley Act passed, repealing the last of the Depression-era regulations that had kept the American banking system sound for more than six decades. (Yes, the same Gramm who got rich once he left the Senate and joined a big bank, and called us a "nation of whiners.") Now some of our largest financial institutions are Zombie Banks — but we have no Mila Jovovich armed with miniskirt and full arsenal to take them down. They are left with only the most primal instinct: To feed on the Treasury. Resident Evil, indeed.

Paul Krugman makes the case for nationalization today. Socialists Lindsey Graham and Alan Greenspan have also signed on. Economist Nouriel Roubini, who called the crash, says a takeover would avoid throwing good money after bad. Indeed, some of this is not too complicated: Think back to the wreck of the Penn Central railroad, when the government stepped in and created Conrail. Later it was relaunched as a successful public company. Receivership is a better way to think of this than the charged word "nationalize."

Who loses? The shareholders. And as much as one might get a populist shiver up the leg from the idea of some big hedge funds getting sucker punched, remember that average Americans were lured into the market, too. They've lost about half their nest eggs already. Those in bank stocks — and Bank of America and Citi are widely held — will lose more. But, as Jovovich's Alice teaches us, you can't mow down a bunch of zombies without collateral damage.

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Posted inPolitics: National

Who to blame

So Alan Greenspan is shocked, shocked that gambling was going on in the casino that he and his fellow radicals made of the capital markets. In his testimony before Congress Thursday, he talked about how stunned he was that the markets weren’t self-regulating, that speculation and greed led to this disaster, which he likened to a “once in a century” financial tsunami.

But this is no act of God. The ongoing financial collapse is the direct result of the deregulation, trade, privatization and tax policies enacted by Alan Greenspan and the other rigid ideologues of the Republican Party over the past quarter of a century. The longtime Fed chairman is a disciple of the author Ayn Rand, whose advocacy of a brutal individualism has been turned into a devil-take-the-hindmost reality that would make Atlas blush.

It’s important for the American voter to understand this. The collapse of their savings, the deferment of their retirement dreams, the loss of their homes, the decline in their earnings, the elimination of their jobs – all has been the result of very conscious policies. They were promised an "ownership society," but, as Barack Obama said, the reality is that most Americans are on their own.

If Americans understand this, the election will not be in doubt. And, God willing, the calamity will discredit this extremist philosophy, just as happened in 1932, for decades to come. For this orthodox ideological extremism is every bit as bankrupt and failed as all its false prophet predecessors. Alan Greenspan and company, including former Sen. Phil Gramm, the great – and greatly compensated by the banking industry – deregulator and economic guru to wealthy Republican John Sidney McCain III, are the most dangerous of men: true believers.

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Posted inUncategorized

To bail or not to bail?

Let’s set aside the demands of the extremists on the right, calling for more deregulation and tax cuts to address the financial crisis. It’s like trying to discuss the finer points of Plato with a small, yapping dog. Otherwise, I can understand the desire on the left and right to "punish Wall Street" by defeating the bailout plan. Unfortunately, the markets are so intertwined and inherently fragile, the first casualties are going to be on "Main Street" (a bittersweet anachronism for a nation that has mostly abandoned its main streets).

Wall Street — and increasingly overseas investors — owns Main Street.

The plan voted down yesterday was flawed but better than the original Czar Paulson contraption, which would have given the former head of Goldman Sachs unlimited access to use American treasure trying to extinguish the wildfire he and his greedy buddies started. Well, not quite — and here we get back to the unworkability of "punish Wall Street" argument. Deregulation, a casino-like attitude on Wall Street and a bubble-blowing Fed were the biggest culprits in the mess. But, so, too were the American people.

We voted in the deregulators and stood cow-like as it happened, the jobs disappearing, wages stagnating. Worse, too many of us thought we could get rich quick off real estate, like day trading before it. We bought overside houses and ran up credit-card debt we couldn’t afford. We bought SUVs to drive ever-longer distances as oil was peaking. We wanted tax cuts that gutted our schools and infrastructure. We wanted all that stuff at Wal-Mart. The casino became our ruling totem. It’s quite a remove from the generation of the Boomers’ parents that saved and waited to make purchases until it could afford them. It’s their passed-along wealth that is helping cloak the "banana republic with nukes" that we’re becoming.

So here we are. Were it not for the legacy of Franklin Roosevelt, we would already be seeing bread lines. And how many better ways could we use $700 billion…

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Posted inUncategorized

Alan Greenspan: He did it his way

Alan Greenspan is worried about his reputation and is trying to set the record straight in an interview with Rupert Murdoch’s Wall Street Journal. I was prepared to be sympathetic after reading this quote:

"I was praised for things I didn’t do," Mr. Greenspan said during one
of three interviews at his sun-drenched office in downtown Washington,
D.C. "I am now being blamed for things that I didn’t do."

But then the reporter tells us that the former Federal Reserve chairman "doesn’t regret a single decision." This makes my bullshit detector go off. How could any thinking person live a full life, especially one at the pinnacle of international leadership, and say with a straight face they have no regrets. Even Frank Sinatra had a few.

Greenspan wants us to draw the correct lessons from his tenure and the current market disaster, so that we don’t implement the wrong policies. But what if the wrong policies are the very ones implemented on Mr. Greenspan’s watch?

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