Moon of Alabama Brecht quote
September 15, 2008

The Wild Ride

Wow. I did not expect the pulling of the plug for today, but it happened:

Bloomberg headlines:

Two broker dealers and one insurance company practically gone. It is going to be a dark Monday for a lot of 401k holders.

When will the other broker-dealers, Morgan Stanley, Goldman Sachs, JP Morgan and Citigroup go down the drain? How can BofA survive swallowing Merrill? Remember, they already picked up a bankrupt Countrywide. Did they have so many counterparty risk with Merrill that they had to buy it?

I expect the Fed to lower interest rates this week (Tuesday?) to 1.75 or even 1.5%. The dollar will then go down again, commodities will go up.

 

Posted by b on September 15, 2008 at 3:15 UTC | Permalink

Comments

Adding - the Fed again puts taxpayer money into risk to prop up markets:
Fed to take equities as loan collateral

The U.S. Federal Reserve on Sunday said it would begin accepting equities as collateral for emergency loans for the first time ever, as it laid out a series of steps to calm financial markets and brace for the expected collapse of investment bank Lehman Brothers.
...
Perhaps the most significant change was the decision to accept equities as collateral for cash loans under its Primary Dealer Credit Facility for investment banks. Previously, PDCF collateral had been limited to invest-grade debt securities.

It also said it was increasing the total amount that it offers under a separate program that lends out liquid Treasury securities to $200 billion from $175 billion. It will also begin holding more frequently some of its auctions under this so-called Term Securities Lending Facility.

In a third step, it said it will temporarily allow insured depository institutions to extend liquid funds to their affiliates for assets that would normally be accepted in tri-party repurchase agreements.

Posted by: b | Sep 15 2008 3:52 utc | 1

You don't need to wait for the interest rate cut. The writing is already on the wall and the US$ has started its dive to oblivion. b's comment is apt. How long can these people at the Fed and Treasury keep propping up their financial buddies before taxpayers begin to revolt? I guess the final bailouts will stop when the last golden parachute is paid out.

Posted by: gordon | Sep 15 2008 4:20 utc | 2

Let's see...

90% of America's "homeowners" either actually own their homes outright or they have still performing flat-rate mortgages. Of those 90%, 90% bought their homes before the recent credit.con tulip bubble, and the "loss in value" they're seeing is still a net positive in the asset column from above where they bought it.

We're up 1/4, but now down 1/8, although our property taxes are up 50%, go figure.

Some 54% of Americans either work for government or civilian contractors to it, their paychecks and pensions secure, by in large, except teachers and emergency response folks won't see a pay raise anytime soon. In the private side, somewhere north of 90% of work-workers still have their jobs. They may not have bonuses anymore, but their payroll checks still cash without bouncing. Sure, construction workers, realtors and mortgage brokers are going to have one hell of a time, but they account for less than 15% of non-governmental workers, so less than 7% of the general population.

Recapitulating, 90% of 90% of 93% of Americans are doing OK, or about 3 out of every 4 of US. The losing quartile, absent a few 10,000's of Wall Street brokers, hold in aggregate less than 10% of US economic wealth, and now hold closer to 5%.
So 75% of 95% of ordinary, non-leveraged, non-junk wealth in the US is still OK.

We've come off consistent year after year runups in the S&P500 that beat the CPI:

2001 3.85%
2002 5.37%
2003 4.87%
2004 5.53%
2005 5.47%
2006 5.78%
2007 5.96%

Historically, S&P500 always outperforms gold during US economic recessions.
What's the problem? Nobody is talking another Great Depression except the gold bugs.
Oil will collapse in price back below $75 a barrel, where experts in oilfield economies say it should be. Given global demand destruction, we might even see $50. That $100 selloff goes straight to your bank account and grocery tab.

All Cheney's Hallibani negatives affecting the general population, high energy, high food, will start easing off. Soon Cheney will be gone, expatriated to Dubai.
Even if McCain wins, he'll win dust and defeat with a majority Democrat Congress.
The only change we'll see is credit will be tough to get, other than credit card debt, and how is that any different from blue collar reality?

Politics and economics have become pop personality cultism. Greenspan, Bernanke and Paulson are brand names recognized around the world. Who gives a farthing? Unless you were unwise enough to keep your 401(k) in any of the announced-far-in-advance-before-2Q08 junk funds, you'll be all right. Unless you were foolish enough to invest in banks and brokerages instead of general index funds or CD's, you'll be all right. If you panicked in August and bought gold, well, that'll learn ya. You might still retrace $850 and close out, unless you were unwise enough to join in the general commodities clusterf-ck, after the credit.con housing bubble freeze.

Life will go on. The sun will rise and the moon will set. The oceans will wash the shore, and the rains will come a little later every year, but they'll come in time for a golden harvest. There is still more than enough food to feed every American.

What happens on Wall Street stays on Wall Street. No duality. Nothing to see but deluded fools, scandal sheets and paparazzi. Look away from their craven nakedness.
Enjoy your Thanksgiving, and give thanks that, there but for G-d, it might be you.

Posted by: Noah Sark | Sep 15 2008 5:02 utc | 3

We've come off consistent year after year runups in the S&P500 that beat the CPI:

Those are interesting numbers.

I wonder where and why you picked them. Let's see some current numbers.

At the end of 2000 the S&P500 closed at 1,320. As of now the S&P500 is at 1,251.
At the end of 2000 gold was at $280. As of now gold is at $780 per once.

Hmm - was the CPI negative in all those years?

Posted by: b | Sep 15 2008 6:09 utc | 4

Noah,

You could have made a nearly identical argument for most people being OK in 1930. How did that turn out?

Posted by: jeff65 | Sep 15 2008 6:27 utc | 5

Krugman ask the right question:

The real answer to the current problem would, of course, have been to take preventive action before we reached this point. Even leaving aside the obvious need to regulate the shadow banking system — if institutions need to be rescued like banks, they should be regulated like banks — why were we so unprepared for this latest shock? When Bear went under, many people talked about the need for a mechanism for “orderly liquidation” of failing investment banks. Well, that was six months ago. Where’s the mechanism?

And so here we are, with Mr. Paulson apparently feeling that playing Russian roulette with the U.S. financial system was his best option. Yikes.

Posted by: b | Sep 15 2008 6:37 utc | 6

Fasten your seatbelts, it's going to be a bumpy week.

Posted by: CluelessJoe | Sep 15 2008 7:24 utc | 7

In the Happy Little Kingdom of Denmark, a large local bank (Roskilde Bank) busted last month -- with a debt, as of now, of $1 billion. The reason for the bust was large bad loans to speculators -- how the speculators lost their money, I haven't seen a word on.

Recently, HSH Nordbank stopped loaning to the smaller and medium sized Danish banks. This puts them in a bind and several of them are offering themselves up to be eaten by the bigger Danish fish. The bank experts here say this in neither surprising or negative -- I can agree with the surprising, but the negative I beg to differ on.

My son-in-law made a bad dicision in not selling his apartment last summer -- as of now he has lost about 15% of the free value on his pad.

The reason he wouldn't listen to me is that his brother is a financial "expert" making twice the wage I ever made in some financial shit job advising people on bonds and securities and told him that the bottom going out of the housing market here was just a "bump".

For some reason, that old Johnny Cash number, "How high's the Water, Mama?" is running through my head.

Posted by: Chuck Cliff | Sep 15 2008 9:08 utc | 8

Not sure why BoA paid so much - $29/share, when Friday close was $17.05...

Posted by: Tosk | Sep 15 2008 10:52 utc | 9

Somewhat in agreement with Noah (i.e. a disconnect between Wall Street and Main Street), except that it is partially one way." Often they are doing great and making out like bandits when the rest of the U.S. is doing much more poorly. When this happens there's a huge disconnect. When they do poorly and are moaning about the reduction in size of their huge bonuses, then too it has little effect on most "normal" people (slight disconnect.) However, when they really hurt it turns into an existential threat to the nation and they need and get help! No different than every other big interest group that donates freely to politicians >)

Posted by: Tosk | Sep 15 2008 11:05 utc | 10

Here's the answer!

Link to the Greatest Sale Ever!

Posted by: Diogenes | Sep 15 2008 11:09 utc | 11

“How can BofA survive swallowing Merrill?”

Damned fine question b. I guess the BoA has gone mad!

Bank of America agreed to pay 0.8595 shares of Bank of America common stock for each Merrill Lynch share. The price is 1.8 times stated tangible book value...

The price, which comes to about $29 per share, represents a 70 percent premium to Merrill's share price on Friday

Unbelievable. Not being in the best condition themselves, with BAC’s stock down 40% from a year ago, how can they fork out those kind of premiums? The risk they are prepared to take on this deal could be the straw breaking their camel’s back. I would not be surprised if it turns out that some as yet unknown arrangement with the Feds was made to backstop the entire gamble.

Lehman Bros is a potato too hot to handle, but the model has been set, and the more often taxes are being used to mop up the mess caused by badly run finance houses, the more creditors get the idea that the Feds will continue to come to the rescue, playing the white knight saving the banker’s day.

Posted by: Juan Moment | Sep 15 2008 11:12 utc | 12

@Tosk and Juan M.

Not sure why BoA paid so much - $29/share, when Friday close was $17.05...

I see two possibilities.
a. The Fed or Treasury chipped in the difference (they urged for the deal)
b. If Merrill would have gone down, the consequences for BoA would have been harsher than by buying Merrill for this price now (we don't know how much counter-risk and in what direction exists between the two. That could easily be double digit billions.)

I believe a and b were part of this.

As BoA pays in shares, I wonder how much this deal will dilute their current shareholders.

Posted by: b | Sep 15 2008 11:52 utc | 13

@13 - adding

there might be another motif.

With Merrill added, BofA is now definitely "too big to fail". It may have just bought its own survival (via later fed support because it is "too big to fail")

Posted by: b | Sep 15 2008 12:14 utc | 14

b-14. I wouldn't disagree, but isn't there a point where taxpayer's money runs out? Where there has to be a slow down in supporting financial institutions with public money? "too big to fail" might also be "too big to rescue" in a few weeks time.

Posted by: Alex | Sep 15 2008 12:25 utc | 15

@Alex - 15 - isn't there a point where taxpayer's money runs out

But the U.S. government has a technology, called a printing press (or, today, its electronic equivalent), that allows it to produce as many U.S. dollars as it wishes at essentially no cost. By increasing the number of U.S. dollars in circulation, or even by credibly threatening to do so, the U.S. government can also reduce the value of a dollar in terms of goods and services, which is equivalent to raising the prices in dollars of those goods and services. We conclude that, under a paper-money system, a determined government can always generate higher spending and hence positive inflation.
Remarks by Governor Ben S. Bernanke - Deflation: Making Sure "It" Doesn't Happen Here

Posted by: b | Sep 15 2008 12:40 utc | 16

@ Tosk, I'm not sure either but so far, a deal has only been announced. No money has changed hands and it taked months before such deals get completed. if MER stock is trading well under 29, it means the market sees a risk it wont go through. (in premarket trading, MER at about 21.6, up 4.5 BAC is 28.64, down over 5)

Do check out Mish Shedlock's blog if you haven't already. The Fed is now breaking the law (not for the first time) in order to save the remaining investment banks. Yet another reason why Ron Paul was right to call for the Fed's dismantlement.

Posted by: Lysander | Sep 15 2008 12:45 utc | 17

Thanks for linking to Mish Lysander (though he is a deflationist) he has a quite good point.

In yesterday's piece I wrote:

I expect that comrades Paulson and Bernanke of the United Socialist State Republic of America (USSRA) will lose the chicken game and will again commit double digit billions of U.S. taxpayer money to bail out the capitalists and to socialize their losses.
And indeed as Mish finds
"A group of banks including Bank of America Corp., Citigroup Inc. and JPMorgan Chase & Co. are putting up $70 billion for a borrowing fund aimed at providing liquidity."

"The Federal Reserve also said it will accept other types of securities -- including equities -- as collateral for making direct loans to investment banks, according to a joint statement today. The firms plan to use the facility beginning this week."

If 1/3 can be borrowed, rest assured 1/3 will be borrowed. That money will come from the Fed.
...
The steps taken above, including the first ever action to swap equities, illegal actions in regards to Federal Reserve Act Section 23B, and the $23 billion liquidity provided by the Fed shows the claim "no government funds for Lehman" is patently false.


Posted by: b | Sep 15 2008 13:08 utc | 18

I understand that BoA's board isn't stupid. They saw the writing on the wall and foresaw LEH going down the gurgler, which they knew would most likely spell also MER's bitter end. Seeing the counterparty risk, the logic went that instead of loosing $50B its better to buy MER (without cash mind you) for $40B. But how on earth can MER be worth $40B when at the same time Lehman is fetching an apple and an egg?

Also, what escapes me is why BoA would offer such a huge premium when they didn't have to. Why not wait a few more days and gobble up MER for less than $10 a share? Someone is going to be left holding the bag, my guess is it'll be BoA's shareholders, so some heavy short selling is to be expected come Monday morning in NY.

BAC: closing 12 Sep at 33.74
Pre-Market: 28.35 -5.39 (-15.98%) 15 Sep 9:20am ET

Suicidal tendencies.

Posted by: Juan Moment | Sep 15 2008 13:24 utc | 19

The figures speak for themselves:

The collapse of Lehman, which listed more than $613 billion of debt,
That's about Sweden's GDP.

Posted by: Juan Moment | Sep 15 2008 13:46 utc | 20

b-16. Obviously the US government possesses printing presses. Mugabe does too. Printing more dilutes the present stock in the same way as issuing more shares, as you've just been talking about. The point is that these are really massive sums of money. How long before they overtake the cost of the Iraq War? Actually, contrary to Bernanke, the US is not free to simply print (electronically) as much as it wants - that's typical American exceptionalism. Mugabe can, and nobody can do too much about it, as Zimbabwe is economically isolated. In the case of the US, I can think of quite a number of countries who will have something to say if the US tries that stunt. This time they won't sit and take it quietly, as Bernanke imagines.

Actually as far as I know, they are not about to overtake the Iraq War. But how long before it is a question? As you've been saying, b, we are not at the end yet.

Posted by: Alex | Sep 15 2008 13:53 utc | 21

Actually as far as I know, they are not about to overtake the Iraq War. But how long before it is a question? As you've been saying, b, we are not at the end yet.

The Iraq war is supposed to cost $1-2 trillion. The collective damage from the financial deleveraging will be higher.

The U.S. taxpayer damage will be lower in my estimates.

The current unknown are pension funds. Those who were invested in stocks and worse, MBS, CDO, CDS, will come out badly and fail. Then the pension benefit guarantee corp (PBGC) will have to take them over. That again has little reserves (like FDIC) and is informally (see Freddie, Fannie) backstopped by the government.

There might be a few hundred billions of losses in there that are not in my estimate. I have yet to see someone write about it in the blogs or media. The big pension collapse will be a huge story of its own. There are some 30,000 private pension funds with 44 million worker and retirees. Do the math. It is going to be a huge problem.

This spring the PBGC moved from 85% invested in fix income to 45% fixed income + 45% equity + 10% other stuff. The PBGC just starts to invest in real estate. I wouldn't call those smart moves ...

Posted by: b | Sep 15 2008 14:12 utc | 22

Others wonder about the BofA deal do: S&P downgrades Bank of America, places Merrill on review

Standard & Poor's on Monday downgraded Bank of America Corp.'s (BAC:
Last: 29.34 -4.40 -13.04%) long-term counterparty credit rating to AA- from AA and placed its ratings on Merrill Lynch & Co. (MER: Last: 21.85 +4.80 +28.15%) on review. S&P also placed Bank of America's rating on review for a possible further downgrade. The actions follow Bank of America agreement to acquire Merrill for $50 billion in stock. "The downgrade of BofA and the placement of the ratings on CreditWatch with negative implications reflect the risks of acquiring Merrill Lynch in the present turbulent market environment," said John Bartko, an S&P credit analyst, in a statement.

The cost of the downgrade for BoA will be big in the current environment.

Posted by: b | Sep 15 2008 14:28 utc | 23

First we hear Palin spouting off her faith-based nonsense about how Alaska's cup runneth over in so much oil that we can "drill, baby, drill" our way into energy independence.

Next we'll be hearing McCain spouting off his brand of nonsense about how we can tax cut our way out of this financial crisis.

Then we'll hear the two of them together spouting off even more nonsense about how our economy will get back on track if only we'd make sure big government gets off the backs of business.

And apparently both Palin and McCain don't have enough sense to realize that our military might isn't worth a damn if our economy is going down the tubes, otherwise they'd have the sense to stop rattling Russia's cage and stop hurling death threats at her.

Posted by: Cynthia | Sep 15 2008 15:12 utc | 24

what escapes me is why BoA would offer such a huge premium when they didn't have to. Why not wait a few more days and gobble up MER for less than $10 a share?

me too. why buy the shares @ $29?

Posted by: annie | Sep 15 2008 15:27 utc | 25

as b wrote:

a. The Fed or Treasury chipped in the difference (they urged for the deal)

you bet, no matter how occult or invisible.

Posted by: Tangerine | Sep 15 2008 15:44 utc | 26

Annie asks,

"Why not wait a few more days and gobble up MER for less than $10 a share?"

Because beggars can't be choosers...

Posted by: Cynthia | Sep 15 2008 15:59 utc | 27

Americans are still as snug as bedbugs. Denial sure is a powerful; except, the "Shock Doctrine" is real. It occurred in Russia and Iraq. It is all that is left to rip off the very last dollar from the American Middle class. The McCain/Palin election is a green light for the Great American Economic Train Wreck. The frightening thing is that it is all very predictable and has been clearly shown over and over again right here and on other liberal blogs.

Posted by: VietnamVet | Sep 15 2008 16:07 utc | 28

Because beggars can't be choosers

how is it the buyer is the beggar?

Posted by: annie | Sep 15 2008 16:24 utc | 29

This guy just lost my respect: Pimco's">http://www.cnbc.com/id/26719710">Pimco's Gross: Global Credit Crunch Is Worsening

Gross says Pimco is unwinding Lehman trades it had (why did they still have them?) and that the market needs capital not liquidity.

He said of the markets "We need a buyer of assets now"

That was pretty direct call for the Fed or Treasury to start outright buying of stocks. This after a bit of a bear market that is not yet really big in historical terms.

The guy recently made a killing when the Treas rescued Fannie and Freddie. Now he is calling for stock market intervention? Oh boy ... free markets and all ...

Posted by: b | Sep 15 2008 16:30 utc | 30

@ b in 18. Yep that was clever legerdemain on the Fed's part. Let Lehman fail so they can spout on about moral hazard, and deflect the publics' view. Then, go ahead and bailout Meryl through B of A before that contagion hits the fan. I'm curious how they will bailout AIG and WaMu? They seem to be having little trouble selling 10 year bonds (yields down 20 BPs) so they can do this for a while still.

Posted by: Lysander | Sep 15 2008 16:30 utc | 31

@annie how is it the buyer is the beggar?

Maybe they really had no choice. If they had enough bad deals with Merrill or a huge bet on Merrill's stock price, a Merrill bankruptcy would probably have blown BofA away too. I am sure they had some reasoning like that (and help from the Fed) and good reason to do it now for that price.

I am sure we will read about that over the next days.

Posted by: b | Sep 15 2008 16:35 utc | 32

@Tosk, @annie
They're not paying $29 cash, they're paying $29 worth of BoA shares. Given that those have dropped about 17% in value today (so far), you might ask if that bonus is enough, given the risk of accepting BoA shares for payment.

Posted by: DharmaBum | Sep 15 2008 17:08 utc | 33

That didn't take long. NY Fed hosting meetings on AIG


WASHINGTON (Reuters) - The New York Federal Reserve was hosting meetings on Monday on the situation of embattled insurer American International Group Inc (NYSE:AIG - News) with representatives of the Treasury Department, financial services firms and state officials, an official said on Monday.

ADVERTISEMENT
"At the request of AIG and a consortium of financial institutions, we are providing premises to discuss the situation," a New York Fed spokesman said.

The New York Fed has been "in touch" with the office of New York Gov. David Paterson, but the spokesman declined to comment on details of the contacts.

Paterson said state officials have reached a deal that would allow the insurer to access $20 billion of its own capital by shifting funds from insurance subsidiaries to the parent company.

Paterson also said New York State Insurance Superintendent Eric Dinallo has asked the federal government to provide additional funding to AIG, which employs 8,500 people in New York.

A source told Reuters the New York Fed has hired Morgan Stanley to review options regarding AIG.

The Fed and the Treasury Department declined to comment.

They are worried about the 8,500 jobs? Maybe, but the devil saves others to save himself.

Posted by: | Sep 15 2008 18:15 utc | 34

Hate to beat a dead horse but...in big bold letters on the Yahoo finance page it says;
"Paulson: Americans should remain confident in U.S. Financial System."

Run for the hills.

Posted by: Lysander | Sep 15 2008 18:44 utc | 35

thanks b.

dharma bum,
They're not paying $29 cash, they're paying $29 worth of BoA shares.

they are paying 50 billion (of their own stock) they are valuing at 29, and then their own stock becomes worth 17 as a result of the purchase?
this may be over my head.

Posted by: annie | Sep 15 2008 18:47 utc | 36

good to see even richard 'wo are they hanging' quest in high dudgeon

Posted by: remembereringgiap | Sep 15 2008 18:50 utc | 37

It's interesting how knowledgeable so many of you are concerning matters of high finance. That does answer the nagging question I've had since lurking here. Apparently, a number of you have a dog in this show, otherwise, how could you be so well-versed in these matters unless you have a particular penchant for parroting. In answer to Spyware's question as to why nothing's being done about it, well, we may have our answer. It's called vested interest, and it means until that investment evaporates, or is divested, those with this vested interest will continue to support the status quo, with minor adjustments for things like minority rights. Me, I don't have a dog in this show and like Tyler Durden, I await the collapse of Civilization. It can't come soon enough. The talk of the intricacies of this ridiculously inefficient, overly-complicated numbskullery is nauseating. It's a web of convolutions, and it's predictably pathetic to prop it up and support it.

True progressive leftists should be cheering right now, but instead, I sense people here, not all perhaps, are outraged. That tells me they have something to lose that they haven't lost already. Come now, it's time to remove that bundle from atop the camel so you can make it through the narrow passage in the wall, and then, and only then, can you unite with those for whom you allegedly advocate, the poor.

Posted by: Alan | Sep 15 2008 19:27 utc | 38

Funny how many self-righteous lectures we're getting now that the grand economic souffle is deflating...

Posted by: Tantalus | Sep 15 2008 19:56 utc | 39

personally, alan, i find it hilarious & i'm wondering if richard 'how are they hanging' quest wears his contraption between neck & penis during his diatribes on what he so emphatically calls an economic market when all i see is an open sewer

Posted by: remembereringgiap | Sep 15 2008 20:18 utc | 40

Apparently, a number of you have a dog in this show

gee ya think? in '29 how many americans had a dog in that show? although we are supposed to grasp the illusion wealth 'trickles down', doesn't it seem normal pain trickles too?

those for whom you allegedly advocate, the poor.

you mean the middle class? whoops, i guess it is the same thing.

True progressive leftists should be cheering right now

spoken like a true delusional conservative rightwinger. actually tho, w/ the inevitability we have all seem coming .... mcCain and the gang have been staving this off till after the election. did anyone see the video of him assuring the idiot base of his 'economy strong'' or whatever blathering. the la times had this to say about his gaffe.

From a purely political standpoint, one could imagine that the week could not have started any better for Democratic strategists.

rome's burning and they want the press to talk about her hairdu and awesome fashion sense.

It's interesting how knowledgeable so many of you are concerning matters of high finance.

not considering who's running the bar, and the original blogger (banker) responsible for the initial clientele.

Posted by: annie | Sep 15 2008 20:21 utc | 41

not considering who's running the bar, and the original blogger (banker) responsible for the initial clientele.

Oh yeah? Who's that? I see a guy with a pseudonym and a Bloomberg sub.

Posted by: B. Oliver McPhiddie | Sep 15 2008 20:31 utc | 42

never mind, i take that back.

Posted by: annie | Sep 15 2008 20:34 utc | 43

we're all just a bunch of dirty hippies.

Posted by: annie | Sep 15 2008 20:36 utc | 44

Further to what I posted yesterday about loss of faith in amerikan investment by those who hold the paper ie amerika's net trading creditors, The China Daily has an article discussing the same phenomenon.

China, which holds a fifth of its currency reserves in Fannie Mae and Freddie Mac debt, may cut the portion held in US dollars, according to China International Capital Corp (CICC), one of the nation's biggest investment banks. . . .
. . . China held $447.5 billion of US agency bonds as of June 2008, according to the CICC calculations using disclosures by the US Treasury. It is likely to reduce the portion of reserves in dollar assets from the current 60 percent by purchasing more non-dollar assets with new reserves, he said.

Countries in Asia have stockpiled foreign exchange reserves since the 1997-98 financial crisis to act as a cushion against a run on their exchange rates. That in turn has increased pressure on policymakers to ensure higher returns from more than $4 trillion in assets.


Remember amerikan economic dominance only continues because major creditors such as China find it convenient for it to do so. As discussed months back China's domestic market has become self-fulfilling, that is as each year of growth passed China became less dependant on exports and more dependeant on growth through it's domestic market. Even the recent downturn in world trade indicators hasn't greatly effected growth in China. The last forecast I read put China's estimated growth at average 9% over the next 4 quarters as opposed to earlier forecasts in the 12% vicinity. In other words a lot better than any previous post Olympics economy which normally experiences a couple of quarters of none or negative growth in the post boom hangover.

They can afford to do without amerika and will cut free from the amerikan economy, like they would from a rabid dog if the poison could seep into themselves.

A word to Allen of Vancouver. It will be no surprise to him or anyone else if I say I have no dog in any economic fight. All 'investment' style economic activity is just moneylending, pure usury and I have no time for it because one can only profit at the expense of another usually someone on the 'bones of their ass'. Still many people have been forced into such investment because otherwise they die old, broke, and hungry. I have decided to trust to fate but that's a risky business and I would never criticise another for being more sensible. If my kids get infected with 'the new selfishness' then I'm 'dog tucker' as they say in Australia.

Rabid capitalism at it's worst forces the powerless to buy into the game or die. Like most others I don't look forward to the collapse of western capitalism with any great relish though since every other time such things have happened it isn't the rich or the assholes who cop the shit but the same as always, the poor and powerless.
( a rousing chorus of "Ain't it all a bleeding shame,
It's the rich what gets the gravy and the poor what takes the blame"
)

The odds of the collapse of western capitalism leading to some great popular epiphany then taking us all down the road to socialist utopia are slimmer now than they have ever been in the last 200 years.

More likely such a collapse will throw amerika and many of the societies closely allied to it into a long period of totalitarianism, misery and oppression. Only after that, once people relearn that working together is the only way to beat the greedy could a socialist state evolve. The price is too high to wish the reward on any humans you care for.

I'll be content if this collapse in amerikan economic credibility does just enough to force a certain 'trimming of the jib' and reduces the number of humans being bombed by flabby faced amerikan assholes lording up their Taco Belle lunches.

Posted by: Debs is dead | Sep 15 2008 20:42 utc | 45

incredibly stoned, quite wacked out, castenada reading, dirty hoippies - is what we are, alan

Posted by: | Sep 15 2008 20:54 utc | 46

Quite right, DiD, the Chinese are not going to wait too long before putting their money elsewhere. No reason for them to have feelings about supporting American Imperialism. Today was a turning point in the financial credibility of the US, the sort of turning point the US always told us was happening in Iraq, only in this case it was real.

Posted by: alex | Sep 15 2008 21:20 utc | 47

Alan @ 38 - You can't follow politics without following the money. Plus, if you've got a one dollar note you've got a dog in this show.

Annie @ 36 - The sale of Merrill is to be paid out as a ratio - example: 2 BoA shares for 5 Merrill shares. The media talks about the dollar figure as at the time the deal was announced, but that changes after the markets start trading. The announced ratio of shares does not.

Posted by: jeff65 | Sep 15 2008 21:24 utc | 48

Alan #38,

, Me,I don't have a dog in this show and like Tyler Durden, I await the collapse of Civilization.[snip]

It can't come soon enough.True progressive leftists should be cheering right now, but instead, I sense people here, not all perhaps, are outraged

Even if you're in an inland bunker, you're a bluffing pawn.

Posted by: plushtown | Sep 15 2008 22:13 utc | 49

Come on, guys, and gals, you're hoping it all comes crashing down, aren't you? Be honest with yourselves. We secretly root for the hurricanes to destroy this beast we've created, just as we secretly salivate for the markets to melt down, because we know we have no control over our miserable lives, and deep down, we want to live....really live, like primordial man was meant to live.

Posted by: Alan | Sep 15 2008 22:32 utc | 50

this collapse was destined to happen. history's dialectic is quite clear on that. sooner or later. & it appears to be happening sooner

Posted by: remembereringgiap | Sep 15 2008 22:46 utc | 51

problem is Alan, many of us are at an age where we would like to stop working and live for a little while on savings. to see that all get pissed away by runaway inflation is not something I can cheer about.

I was born poor and harbor no nostalgia for it. it just aint all that.

just because you can foresee something bad is going to happen does not mean that you enjoy it.

Posted by: dan of steele | Sep 15 2008 23:00 utc | 52

Alan, if the shoe fits, wear it. Don't get all hot air Drama Queen.

Is this what you mean to say?

I'm hoping it all comes crashing down, I'm honest with myself. I secretly root for the hurricanes to destroy this beast I've supported and created, I secretly salivate for the markets to melt down, because I know i have no control over my miserable life, and deep down, I want to live....really live, like primordial man was meant to live.

Hey guys, Alan thinks we're stupid.

Posted by: | Sep 15 2008 23:07 utc | 53

So, are you with Friedman, and by default, with the Demoratic Party, or do you see it like Amin? If you see it like Amin, yet have a dog in the show, meaning actively working the markets, or supporting an institution that does, or have your 401k, or defined benefit pension, invested in a the market, then you are supporting the "liberal virus" that is devouring the entire planet. You're trading perceived short-term security for the future of all mankind. And no, I don't think any of you are stupid, but I do agree with Debs, that we are trapped.


Now every true revolution has a scribe, someone who is able to channel the zeitgeist into a passionate, living chronicle that fuels the insurgency and propels it to its ultimate historical destiny. The French Revolution had Voltaire, the American had Thomas Paine. For the new capitalist revolution, there is New York Times columnist Thomas Friedman. I know this because as I walk through the business class cabin of my United Airlines flight, passing all the young legionnaires of the jet-set globalist contingent, I count four copies of his bestselling book, The World Is Flat, and that's just in the first three rows. Seeing the books reminds me that Friedman was the only major figure to refuse my interview request. It's a drag, because there is probably no other liberal who fits the description of a wolf in sheep's clothing than America's preeminent globalization advocate.

Friedman was one of the first A-list liberals to peddle the idea that Iraqis would treat American soldiers as liberators. He believed the overthrow of Saddam Hussein represented the very best aspects of American liberalism. Six months after the invasion -- the same week I was interviewing Sgt. Hollis in Samarra -- Friedman declared, "This is the most radical-liberal revolutionary war the U.S. has ever launched -- a war of choice to install some democracy in the heart of the Arab-Muslim world." Like so many of his other liberal peers, Friedman denied there was economic dimension to the conflict. This war was different from past wars that their generation had protested. "U.S. power is not being used in Iraq for oil, or imperialism, or to shore up a corrupt status quo, as it was in Vietnam and elsewhere in the Arab world during the cold war," wrote Friedman in his column.

And yet, as many Iraqis told me during my time in-country, the imposition of democracy from a foreign power seemed to contradict the very essence of political freedom. Especially when the Americans were doing everything in their power to control the new system. Overwhelmingly, Iraqis seemed to believe that the creation of an authentic democratic structure would mean adoption of Islamic (sharia) law, which a great majority of them want. But for American liberals like Thomas Friedman, sharia represents a major failure; it would mean having spent billions to liberate a society only to see it retreat from the secular freedoms imposed by its former dictator.

To protect itself from this outcome, the United States stacked the newly liberated nation's political deck with as many pro-Western Iraqis as possible. But this only strengthened the convictions of many who saw the invasion and its promise of delivering true freedom as a wedge to open Iraq for U.S. corporate and military goals. A few days before leaving Baghdad, I listened to Rana al Aiouby, a young Iraqi translator, argue over tea with Hesham Barbary, an Egyptian businessman who had come to cash in on the new reconstruction contracts.

"So the Americans came here to save the Iraqi people?" al Aiouby asked incredulously.

"Partially," Barbary replied.

"They didn't come here to help the Iraqis. Everyone knows why the American came here ... because their economic system just collapsed. So they have to help themselves, and even if they'll make a disaster for the others, just, they want to survive. That's it."

Voices like Rana al Aiouby's are not present in Thomas Friedman's real-time history of globalization. They can't be. Prowar liberals like Friedman, architects of the new millennial liberal project, cannot afford to second-guess the motives driving America's War on Terror. From the outset, Friedman believed implicitly that Bush's Iraq War plan was a high-stakes gamble based on ideological motives, "the greatest shake of the dice any president has voluntarily engaged in since Harry Truman dropped the bomb on Japan." Others echoed the sentiment -- "This is Texas Poker," as arch-conservative Robert Novak put it -- pushing the idea that Bush had risked billions of dollars and thousands of lives like some Vegas roller. The analogy is instructive. Who bets the house on an abstraction? No one. So we're to believe that Bush and Cheney went for broke to bring democracy to Iraq? That's insanity. This is an administration so mired in cronyism and conflicts of interest that to believe they would take such a huge bet on a political ideal is delusional. And yet that is exactly what the pro-war liberals have done. The question is: why?

In Friedman's case, I believe it is because he implicitly understands that America is facing an insurmountable challenge to its global economic hegemony. His research for The World Is Flat brought him around the world to investigate the new paradigm emerging in transnational business. What he finds is that the old vertical ("command and control") systems are being replaced by horizontal ("connect and collaborate") ones and, in the process, blowing away walls and ceilings that were once integral to the rigid hierarchical structure of global commerce. He first made this discovery in Bangalore, India, where menial data entry and phone operator jobs in the accounting and banking fields are now being performed by English-speaking workers. This has been going on for years but, as Friedman explains, he was too busy covering the War on Terror to notice. It's not until Nandan Nilekani, the CEO of Infosys -- India's equivalent to Microsoft -- tells him "the playing field is being leveled," that Friedman realizes what he has stumbled upon.

Over and over again he exclaims: the world is flat, the world is flat, the world is flat! Capitalism is undergoing its new revolution, one that will be as transformative as "Gutenberg's invention of the printing press, the rise of the nation-state, or the Industrial Revolution."

But, like all revolutions, this one will have its winners and losers. Of the former, most obvious are corporate CEOs who will fatten their bottom line by tapping into the vast reservoir of cheap foreign labor. On the other side is Joe Six Pack, who will suffer from a net loss in American jobs. Much of the success of Friedman's book lies in his dire warnings to Americans that they are on the verge of a major crisis. Not only are hard-working, low-wage Indian workers stealing their jobs, but hard-working, tech-savvy Chinese students are increasingly taking seats in top undergrad and graduate college programs. And, Friedman frets, if America doesn't wake up, it will face a potentially disastrous decline: Or, as Infosys's CEO Nilekani later explains, the American middle class "has not yet grasped the competitive intensity of the future. Unless they [do], they will not make the investments in reskilling themselves, and you will end up with a lot of people stranded on an island."

So what does his support of the invasion of Iraq have to do with his The World Is Flat thesis? Everything. Like any good writer, Friedman understands that America loves a disaster movie, but only if it has a happy ending. So while the outlook may be grim for average workers, he is careful to paint a picture that is ultimately reassuring. The coming storm, he explains, will catalyze the transformation of America. "Each of us as an individual, will have to work a little harder and run a little faster to keep our standard of living rising." But this is never applied to the realm of U.S. foreign policy and how it might be shaped by these new threats to U.S. supremacy. Instead, a sort of delusional picture of globalization is presented, one in which the government plays no role whatsoever. And in this omission, in his obscuring of such an obvious force in world finance, we are given a hint at the lengths to which Friedman will go to deny the truth. Placing his Iraq coverage side by side with The World Is Flat, the message is that government is driven by a mission to liberate and democratize the world, the vast majority of whom will, like the post-Saddam Iraqis, joyfully embrace American-style capitalism. Not only is this a verifiably distorted vision of reality, it is a dangerous one. Because it keeps the millions of readers who bought Friedman's book from understanding why so much of the world has turned against America. And how dire the consequences of this ignorance will prove to be.

Pox Americana

Slipping into my window seat, I smile to myself. There, in the adjacent seat pocket, with a gold sticker shouting its status as "the bestselling nonfiction book in the world today," is another copy of The World Is Flat. I nod hello to the young female executive sitting next to me and pull out the book I have brought along. It's a thin essay by the 75-year-old Marxist intellectual Samir Amin that issues its own grim warnings about the future of our globalized world. Titled The Liberal Virus: Permanent War and the Americanization of the World, the cover photo shows a Chinese kid dressed in army fatigues, standing on the Wall of China holding a Coke can.

If Thomas Friedman is the prophet of 21st century capitalism, then Samir Amin is his anti-Christ. But to hear Amin tell it, Friedman is the only one leading humankind into the depths of Hell. Writing from Dakar, Senegal, where he runs the Third World Forum, Amin's thesis is essentially that liberalism, if allowed to continue on its path of creative destruction, will lead to an apocalyptic end. He likens the globalizing force of liberalism to a virus that has destroyed all ideological competitors and that is now making its final assault on its host species. According to Amin, the ethic of liberalism -- "Long live competition, may the strong win" -- is now ravaging societies of the Third World, causing further "social alienation and pauperization of urban classes."

It's nothing new from the far, far left. There are shelves full of books by anti-globalization writers from the developing world. What made me pick up Samir Amin's essay, though, was the striking specificity of his warning. In Liberal Virus, he argues that liberalism's most decisive effect will be to divide the world into an apartheid system that sees 3 billion peasant farmers pushed from their land and forced into the cities where they will die. This, he explains, will result from the implementation of a 2001 World Trade Organization (WTO) mandate that all agricultural markets be opened to the expansion of commercial agribusiness producers. Without the ability to make a subsistence living from their own land, half the world's population will have to migrate to the urban centers where there is no work for them. And thus, he concludes, they will be trapped in an "organized system of apartheid" on a global scale.

"What is going to become of these billions of human beings, already for the most part, the poor among the poor?" Amin asks. You don't have to be a red-blooded socialist to intuit his answer. "Capitalism," he concludes, "has become barbaric, directly calling for genocide." In this drive to satisfy the insatiable hunger for new markets of its Western clients, the WTO is sanctioning a process that will "destroy -- in human terms -- entire societies." Writing in a style that starkly contradicts Friedman's cheery cartoon of the flat world, Amin paints an ominous image of capitalism as a force that is in constant need to consume itself and the communities that lie in its path. Through his eyes, the agents of globalization bear an eerie resemblance to the Borg that battle Star Trek's Jean Luc Picard and his Enterprise crew. American liberalism echoes the Borg with the claim that it only seeks to "improve the quality of life for all species" through the spread of democracy while simultaneously warning the world that "resistance is futile -- you will be assimilated." But that is not to say Amin views liberalism as the victor. Rather, he describes it as a "senile system" that ultimately cannot stop the horror of its destiny.

Again, it isn't hard to find doomsday prophecies about the evils of capitalism. But what is interesting about Amin's book is that he offers an explanation for the phenomenal success of Friedman's ideas. Expanding his metaphor, Amin describes the liberal virus as one that "pollutes contemporary social thought and eliminates the capacity to understand the world, let alone transform it." So there is a kind of delusional episode occurring within the mass American psyche, one that has obscured what Amin terms "really existing capitalism" and replaced it with a fictitious model based on an "imaginary capitalism." According to Amin, liberals like Thomas Friedman conjure the illusion of a system that is inherently just and self-regulating while, in reality, it only creates permanent instability and requires constant intervention and protection by the armored shield of the state. "The globalized 'liberal' economic order," he writes, "requires permanent war -- military interventions endlessly succeeding one another -- as the only means to submit the peoples of the periphery to its demands."

I started reading Amin's book a few weeks after finishing The World Is Flat. And what struck me was that his description of the forces driving globalization was far closer to that of Sgt. Hollis, the tank commander I met in Iraq, than to Thomas Friedman's. What's more, his theory about the impact of the liberal virus on our ability to interpret the world drove me back into Friedman's book, where I found a quote that basically mirrors Amin's. Just before the halfway mark, Friedman writes: "The perspective and predispositions that you carry around in your head are very important in shaping what you see and what you don't see." Of course, he's not applying this to himself. Rather, it's a blunt critique of the fearful, knee-jerk reactions that American politicians and union leaders have thrown up to "protect" the U.S. economy from a genuinely "open" market. But the point is that, as we well know, everyone is the captive of their perspective. It frames and defines our worldview. Hence, for Friedman, the liberal business columnist, globalization = good, while for Amin, the African Marxist intellectual, globalization = bad. And for millions of readers who aspire to be a part of the new capitalist revolution, Friedman's vision is far more appealing than Amin's. Who can blame them?

But what if he's wrong? What if Friedman is as short-sighted and ill-informed as the military and government leaders who claimed to have had no forewarning of the Sept. 11 attacks? Beyond the sheer tactical breakdown of that day, much of the blame for the failure rests in a kind of voluntary blindness assumed by a great majority of Americans. It was that myopia that prevented so many brilliant and influential foreign policy analysts, defense experts and journalists from foreseeing the coming threat. And they continued to ignore the messages being sent from the developing world, collectively evading the difficult work of questioning what aspects of American foreign policy might have brought on such an attack, even after thousands of Mexican soccer fans chanted "Osama" at a post-9/11 match against the United States. Proving how little he has learned from his worldly travels, Friedman repeats the hollow mantra in his book, describing the terrorists as "angry, frustrated and humiliated men and women." And not far behind them, in his estimation, are the anti-globalization protesters -- comprised mostly of Trotskyites, anarchists and old hippies -- who are influenced by a heavy dose of anti-Americanism and defined by their denial of the inevitable triumph of flatness, arguing over the moot point of "whether we globalize." Naturally, Samir Amin is one of these people.

And herein lies the most troubling aspect of Friedman's popularity. He, and his readers, assume that anyone who opposes globalization from the side of the developing world -- either violently or ideologically -- is driven by a deep sense of shame at their poverty and inability to keep up with the West. But, at least as it applies to Samir Amin, nothing could be further from the truth. What Amin is articulating is a detailed warning about the same globalized world for which Friedman is such a wide-eyed proponent. But Friedman, and the millions who buy his books, is immune to it, because from his perspective, the forces of liberalism have only left enriched and industrialized societies in their wake. And this is precisely the kind of shortsightedness that crippled the West's ability to understand, or indeed prevent, the 9/11 attacks. In the somber days after al Qaeda hit New York and Washington, D.C., Americans like Friedman were unwilling to identify the causal forces that had inspired the terrorists. "Why do they hate us?" Friedman rhetorically asked in his column. Because of our freedom, he answered. Because, the liberal answered, we are liberals.

It would be easy to attribute Friedman's blockbuster sales to his orgiastic, gee-whiz, look-ma-no-hands celebration of all things corporate -- he never fails to name-drop his favorite brand names, from eating a Cinnabon while waiting to board a Southwest Airlines flight on the way to see his daughter at Yale to the 3M logo'd cap being worn by the caddy of an Indian executive who uses a distant HP skyscraper as a tee-off marker. Or to the fact that it is easy and very profitable to scare the shit out of an entire generation of Baby Boomers by essentially telling them their kids are in a neck-and-neck race to the top of the global food chain and, guess what, they're losing. In those respects, the book is a brilliant and well-conceived product. But I believe there is a much deeper significance to Friedman's success. And it has to do with the fact that America has reached a stage in its quest for global dominance in which it has no choice but to aggressively and openly tap these impoverished countries for cheap labor. And Thomas Friedman has come to put a lipstick smile on that old, twisted visage.

Scribbling notes on a drink coaster as the plane climbs past 10,000 feet, I think of Thomas Friedman writing his book in his own spacious business class seat on Lufthansa. Looking out of my window, I suddenly realize how he came so easily to his revelation. There, below me, the dark blue Atlantic Ocean stretches west for 1,000 miles and darned if it doesn't look flat. I wonder how much of Friedman's worldview has been shaped by the rarefied company of billionaire CEOs he keeps. Perhaps he has fooled himself into thinking that the invisible hand of liberal economics still softens to caress the weary shoulders of the poor, offering the opportunity for all people to reach the heights of corporate domination. We'll never know. What we do know is that it's been a long time since the champions of free market capitalism pretended to have any priority other than their quarterly profits and year-end bonuses. Of course, many of them have started making noises about the environment and poverty, but never in a way that will actually bring them to analyze root causes of these global ills. Until that happens, we can assume that it's mostly PR. And in this regard, Friedman plays a very important role as a kind of useful idiot. If capitalism is the sport of wolves, then the kind of happy-go-lucky globalization heralded by Thomas Friedman is the sheep's clothing. It's a sheath to cover the glint of their blade.

http://www.alternet.org/story/55418/?page=entire>Link To Article Here

http://www.amazon.com/review/product/1932857427/ref=cm_cr_dp_all_helpful?%5Fencoding=UTF8&coliid=&showViewpoints=1&colid=&sortBy=bySubmissionDateDescending>Wolves in Sheep's Clothing: The New Liberal Menace in America by Stephen Marshall

Posted by: Alan | Sep 15 2008 23:42 utc | 54

Via Inner City Press, it seems to get the BAC/MER deal happening, laws need to be broken.

NEW YORK, September 12 -- Amid some gushing about Bank of America stepping in to scoop up subprime-damaged Merrill Lynch for $50 billion, an issue that has scarcely been raised is the law. In 1994 Congress said that no one bank should control over 10% of insured deposits in the United States. Bank of America has been at and over that deposit cap for years now. Merrill Lynch Bank USA, based in Utah, has $57 billion in deposits. But in the subprime meltdown Bank of America's regulators, most prominently the Federal Reserve Board, allow it to skirt the law, by defining all of the deposits it buys as, well, non-deposits...
I get the idea that BoA is factually an arm of the US government.

Posted by: Juan Moment | Sep 15 2008 23:44 utc | 55

I am not the Alan of #38. I have a small pension set aside which just got smaller. There will be no retirement for me when I turn 65 in a few months. My dog in the game is looking more scruffy and mangy every week.

Posted by: Allen/Vancouver | Sep 16 2008 1:40 utc | 56

I am sorry to have confused you with Alan, Allen, my sincere apologies especially since you are of an age that can remember the same tales of misery from the depression that I heard as a child.

My mother lost her 2 eldest brothers and favourite uncle in the mud of France in WW1, her ne'er do well husband was away flying off aircraft carriers from 1939-45, and her closest sister lost her husband, who died building a railroad for the Japanese in 1945.

All that horror from war yet the thing she used say was the worst time to live through wasn't ww1 or ww2. It was the "great depression" of 1929 to 193?.

She said the despair was ubiquitous, palpable and seeming without end. Wars eventually end either in the blaze of victory, the thump of defeat or just plain peter out as everyone loses interest. The depression seemed to be without end. No one could see how it could be ended.

So I apologise again Allen for mistaking you for the ninny who appears to revel in the world's misery.

I haven't read any other posts past mine yet so if we are all piling upon the Alan who did make that intemperate remark, I'm not happy to be part of a 'net mugging' but I'm also not content to let someone infer that we all want to see that sort of misery take over humanity again.

Posted by: debs is dead | Sep 16 2008 3:13 utc | 57

i really don't want to say this, but Alan is expressing a sentiment that actually does exist across different strata of, at least, the amerikan population. and it's not just evangelicals praying for rapture. there is a growing collective sense that we can't keep this going for much longer, and because the majority of us are disenfranchised powerless cogs in a heartless system, many of us unconsciously or consciously hope external events will cause a cataclysm we can't ignore.

I'll be 30 in a couple of days, and i only say that to highlight my generational ignorance. people from my age group and socio-economic background have no concept of sacrifice and hardship. i came of age during the 90's, in a suburban landscape of privilege and green lawns, bolstered by tech-bubbles and oblivious to the now obvious consequences of empire. the GREAT DEPRESSION for me was a history lesson i never expected to see repeated in my lifetime.

i've woken up enough to realize how skewed and stunted my traditional education has been, and because i detest how ignorant i have been/am, i'm trying really hard to make sense of what's going on right now.

whatever happens, the fix isn't more of the same, so to that extent i say goodbye and good riddance to Lehman Bros and the rest of them. there is so much creativity and innovation waiting for recognition/support/funding that could help fuel the "change" the corporate shills are selected and groomed to suppress, but it won't happen until our paradigm shifts.

tomorrow my son will be exactly one month old. what is this world going to look like when he's my age?

we have this window of opportunity right now, but there are so many counter productive forces at work actively suppressing a shift in consciousness that IS POSSIBLE it's easy to revert to expressions of impotent rage.

if it wasn't for the artistic impulse that exemplifies the human spirit i'd say our viral behavior and cancerous existence as a species isn't worth it.

but it is. we are.

Posted by: Lizard | Sep 16 2008 5:22 utc | 58

The pension fund mess I wrote about in @22 starts to bubble up: Florida pension fund, Citizens hold Lehman securities

The bankruptcy of Lehman Brothers, a prestigious Wall Street firm, will touch Florida's pension funds and the state-run insurer because both hold its securities.

The State Board of Administration holds $322 million in Lehman stock and bonds. The SBA manages the state's employee fund and more than two dozen other funds, including assets for the Florida Hurricane Catastrophe Fund and the Florida Prepaid College Plan.

Posted by: b | Sep 16 2008 5:56 utc | 59

Had an out-of-the-ordinary opportunity to stop and talk with a couple construction workers like myself today, one a retired Nam vet, the other his son with two young grandkids. I missed Nam and have two older kids, so we pretty well covered the last fifty years or so of US economic history among ourselves, from clear back to blue suede shoes and bobby socks, to the Mars Lander searching for life in your wallet.

What surprised me most after we'd hunkered down and scratched the dirt, chewed on matchsticks and stared off in opposite directions, was how similar our stories were:

The Nam vet had a good long lick of work for a good wage, still had some benefits carrying into retirement, and didn't seem concerned after working 40 years.

I'd had some good slugs of work in between some dry spells, each one with few if any benefits, and will have to scratch it out well into my late-60's, a work span of nearly 55 years, with no retirement other than what I can scrimp on my own.

That young guy, wow, that's when you have to stare off in opposite directions to keep from crying. Guess he had his old man, and get the house one day, but damn!
I mean, hand to mouth, work but maybe not get paid, still proud and self-reliant.

The grandkids just looked at us talking their futures, and bawled their eyes out.

Posted by: Shah Loam | Sep 16 2008 6:57 utc | 60


Derek Shearer talks to Lateline

So I think that the longer question is, if it continues does it become the issue in the campaign? Because the necessary reforms are not going to be taken by the current lame duck government, but it'll be taken by the next president, whether it's Obama or McCain.

Will this now be the deciding factor, how these men respond? Two or three days ago, you wouldn't have said that. It would have been what do we think of governor Palin of Alaska?

Now suddenly, she's going to disappear. I think she thinks Lehman Brothers are two guys that might have visited Alaska. But, you know, now it's going to have to come down to the two candidates who have to respond, and they've made statements already.

Posted by: vbo | Sep 16 2008 8:30 utc | 61

A little help for the financially illiterate.
They intentionally did it, didn't they?
I mean where is all the money from the tax payers and the state going to go?


Posted by: fool | Sep 16 2008 9:43 utc | 62

So I apologise again Allen for mistaking you for the ninny who appears to revel in the world's misery.

Yeah, maybe you should read further you 1st World Wanker. You, and all those who are protecting their little Nest Egg, rather than changing the world for the better, are reveling in the World's Misery as we speak. You speak from a position of privilege that looks at the majority of the world and says "there but for the grace of God go I." Pathetic. Talk about Pot Calling Kettle Black.

Kudos to Lizard for getting it. Of course, I knew he would. He has an amazing depth for someone of only 30 years.

Internet Pile-Ons are all the rage. Even at a place like this, which is more open-minded than most, people can't resist the Pile-On. But that's who we are. The hive mentality. Look and see how everyone else is reacting to controversial, challenging and disconfirming information presnted by an unknown, unvetted and initiated poster, and act the way the crowd does, because it must be the right thing to do if everyone else is doing it.

Posted by: Alan | Sep 16 2008 12:14 utc | 63

Listen, Alan, why don't you drop the 1st World Wanker bit and bring something interesting for us to chew on.

This is a civilized place and we try to give a bit more than 'burn, baby, burn' to our conversations. Doesn't mean we aren't saying it out in the 3-d world. If you want to make some noise by all means do so if it's even slightly collaborative and not knee-jerk confrontational.

Personally I'm figuring out my own position. I'm 13 years older than Lizard and my political instincts were forged by the Situationalists and people like Joe Strummer (from my old neighbourhood). I'm trying to walk away from the burning wreckage of my own financial immolation with two fingers held high, into a future my family and I can live with ethically and morally and with our heads up. It's not easy but you've got to fucking do it, innit? I've got my own little King Mob going inside my skull and it keeps me more or less sane, as does the intelligence and sometimes worryingly oracular vision of the posters here.

There's a pint on the bar if you're interested.

Posted by: Tantalus | Sep 16 2008 12:54 utc | 64

at-Largely on Lehman Bros:

Lehman Brothers was founded in 1850. The firm managed to get through the Civil War, WWI, and WWII, the Great Depression, and the attacks of September 11, 2001. Yet after hiring Jeb Bush in late August of 2007, the firm suddenly goes belly up in a year. It also should be noted that in 2006, George H. Walker IV was also hired by Lehman Brothers.

Now, let's take a walk down memory lane, shall we?

Neil Bush: The brother of the current president, son of the elder Bush, and another do-nothing embezzler was part of yet another huge financial meltdown. This was known as the Savings and Loan scandal (S&L). From Salon:

"Long before that, in the late 1980s, Neil Bush made bigger news for his controversial role as a director of Silverado Savings and Loan, which collapsed and cost taxpayers roughly $1 billion. (Federal regulators accused Bush of various conflicts of interests, but he was never charged. A civil suit against Bush and other Silverado officers was later settled for $26.5 million.)"

Also from WaPo, a great summary of Neil's sleazy life, including the S&L scandal:

"In the late '80s and early '90s, Bush embarrassed his father, George H.W. Bush, with his shady dealings as a board member of the infamous Silverado Savings and Loan, whose collapse cost taxpayers $1 billion."

Now back to Jeb:

From Mother Jones: Early Years, Medicaid fraud, his own S&L, and allegations of drugs:


http://www.atlargely.com/2008/09/what-is-jeb-bus.html>link

Posted by: plushtown | Sep 16 2008 15:12 utc | 65

The comments to this entry are closed.