Posted inPolitics: National

The doomsday machine

Two new books and an article in Wired are making more people aware of the doomsday system constructed by the Soviets during the 1980s, when they feared an American nuclear attack. Perimeter, nicknamed "the Dead Hand," went operational in 1986 and guaranteed that even if the leadership was killed and all command-and-control systems disrupted, the Soviets would still launch an all-out nuclear counter-attack. Like Skynet of the Terminator movies — Linda Hamilton, call your office. And "the dead hand" is still operational, although Moscow officially won't discuss it. It's a good thing nothing ever goes wrong with complex systems.

As we observe a one-year anniversary nearly every day of some calamity from last year's Great Panic, I can't stop that feeling of grating ambivalence. Yes, Messers Bernanke, Paulson and Geithner averted a collapse of "the global financial system" and perhaps averted another Great Depression. That's the story line and even I buy it most of the time. But now the too-big-to-fail banks have gotten even bigger. The derivative boys are back at work. Promised re-regulation is being gutted. The pain has fallen on average Americans and the American taxpayer.

It's almost as if "the global financial system" built its own Dead Hand doomsday machine. So the question becomes: Did we avert apocalypse last fall and winter, fortunately shutting down this fearsome device. Or did we actually arm it by our actions. In other words, should we have called the bastards' bluffs in late 2008?

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Posted inUncategorized

This is going to hurt

The $750 billion financial bailout is turning into a scam rivaled only by the practices of the financial sector that precipitated this signal disaster. The geniuses overseeing this "rescue" thought it would be dandy to save Bear, Sterns — but then let Lehman Brothers collapse. They pumped $45 billion into Citigroup — which went out and bought a $50 million corporate jet. Merrill's "savior" CEO was redecorating his office to the tune of more than $1 million while headed into a shotgun marriage with Bank of America — which is now begging for more bailout billions because of Merrill's disastrous bets. AIG and the rest of the gang handed out billions in bonuses while their hands were out for the taxpayers money. And the system is still sick, reeling afresh with any day's new shock.

Maybe $300 billion of the TARP money has been committed — maybe more. Then there are perhaps trillions in dollars printed out and essentially given to the big banks through Federal Reserve "lending facilities" — which the Fed is keeping secret. Behind the scenes, the big banks continue to lobby and squeeze members of Congress. In exchange for the taxpayer money, it's unclear what the taxpayers get in return, whether any of the bailout money will ever be paid back. These guys make Bernie Madoff look like the Better Business Bureau.

Now the cognoscenti are talking about nationalization as the answer — whatever "nationalization" means. As the New York Times reports,

That has already happened; taxpayers are now the biggest shareholders
in Bank of America, with about 6 percent of the stock, and in
Citigroup, with 7.8 percent. But the government’s influence is far
larger than those numbers suggest, because it has guaranteed to absorb
the losses of some of the two banks’ most toxic assets, a figure that
could run into the hundreds of billions of dollars.

As one of many who were punked by Paulson in the original panicked rush to pass the bailout, I say let's take a deep breath, stop, look and consider:

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Posted inPolitics: National

Barely avoiding economic judgment day, maybe

I’ve been traveling this week as the American financial markets came as close to collapse as at anytime since 1929. And make no mistake: this disaster is real, it will unfold in unexpected ways, and it won’t be an event that is over quickly such as in 1987 — or even the S&L scandal. Some early takes:

–It would be ironic if Republican John Sidney McCain III were elected and George W. Bush left one positive legacy by stabilizing the meltdown — the "let the markets rule" so-called conservatives, who saved the day thanks to mechanisms put in place by Woodrow Wilson, FDR and successive liberals. If we didn’t have tools such as the Fed, FDIC, SEC, etc. — this could have been a calamity on the order of the "panics" of the 19th century, with worldwide contagion.

–This event should totally discredit the deregulation, market-religion ideas pursued over the past 25 years — it is the direct result of these policies. But maybe not. The administration may use unprecedented intervention to save capitalism, and then go back to their Milton Friedman sock-puppet talking points. And the duhs and ignos won’t care — Obama’s black, remember?

–Gee, remember when W intended to "spend his political capital" privatizing Social  Security into the toxic investment bank dumps that are now failing? Republican John Sidney McCain III still wants to do this.

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