I'll get to the point right now.
I don't see the attempt to bail out that which is too big to bail ending anywhere but in the complete insolvency of the U.S. Treasury, and it's deeply troubling that no one has broached this possibility, amidst the panic that ensued last week.
It's sad and sickening that our financial and government leaders are trying so hard to spin the total collapse of our financial system as merely a problem of "confidence", as if trillions of dollars worth of loans that can never be repaid and the derivatives based on them in insane ratios, can be made manageable merely by belief that the system can be kept going on its own terms....merely by belief.
And just as Paulson told us only a few short weeks ago that the economy is in good shape and that the financial system is fundamentally sound, he and the rest of our political leaders are pretending that if we just toss a few trillion more in taxpayers money into the system, that things will return to "normal", by which I imagine they mean that our financiers can go back to writing the Pay Option ARM and IO and NINJA loans and other worthless crap from which they were able to draw salaries and bonuses in the hundreds of millions of dollars.
Insolvency will mean our government is totally unable to meet its obligations, and that the United States will become the largest IMF client state. It will mean that we might no longer be able to adequately fund our military at the "stretch" level we currently are. It might mean that social security will be endangered for current recipeints, and possibly forever, at a time when millions of people are losing massive equity in their 401K plans and pensions, on the eve of their retirements, and that everything that is the legitimate responsibility of the government, such as our aging and badly deteriorated water and road infrastructure, as well as essential services and infrastructure at the local levels, as cash-starved local authorities are pressed to make further cuts as less money comes from Washington and more must be raised at the local level.
Government insolvancy will mean that the value of both government and non-government debt tanks completely, and that no one will be able to raise money in either the public or private sector for business formation or expansion, for the repair of failing bridges and collapsing roads, for public health programs such as immunizations for flue and other infectiuos diseases, or for disaster preparedness.
It would also most likely mean that oil will cease to be denominated in U.S. dollars, which would mean a disastrous runup in oil prices, as our currency totally craters in value. Note that oil today had the biggest one-day runup (to over $109 a barrel) in history. Winter lies just ahead, and the gas and fuel oil orders haven't come in yet, but we needn't expect any relief in prices when they do.
We have a choice between catastrophic- the failure of our financial system that looks to happen no matter what; or worse- the collapse of our financial system and of the U.S. Treasury, the very last backup.
Just as our leadership did not consider the current steamrolling disaster to be within the realm of possibility three months ago even though it was clear that almost every major institution was leveraged beyond sanity and confronting massive "liquidity" (i.e. solvency) problems; no one now is discussing the possibility of the ultimate failure.
This means we have no leadership that can possibly shepard us through the mother of all collapses, and we are on our own. I don't feel ready for it, and I'm sure no one else does, either, but we had all better be prepared to deal- with job loss, no unemployment, the loss of our homes, spotty or nonexistant services both public and private, and chronic shortages of basic goods essential to our day-to-day lives.
I don't see the attempt to bail out that which is too big to bail ending anywhere but in the complete insolvency of the U.S. Treasury, and it's deeply troubling that no one has broached this possibility, amidst the panic that ensued last week.
It's sad and sickening that our financial and government leaders are trying so hard to spin the total collapse of our financial system as merely a problem of "confidence", as if trillions of dollars worth of loans that can never be repaid and the derivatives based on them in insane ratios, can be made manageable merely by belief that the system can be kept going on its own terms....merely by belief.
And just as Paulson told us only a few short weeks ago that the economy is in good shape and that the financial system is fundamentally sound, he and the rest of our political leaders are pretending that if we just toss a few trillion more in taxpayers money into the system, that things will return to "normal", by which I imagine they mean that our financiers can go back to writing the Pay Option ARM and IO and NINJA loans and other worthless crap from which they were able to draw salaries and bonuses in the hundreds of millions of dollars.
Insolvency will mean our government is totally unable to meet its obligations, and that the United States will become the largest IMF client state. It will mean that we might no longer be able to adequately fund our military at the "stretch" level we currently are. It might mean that social security will be endangered for current recipeints, and possibly forever, at a time when millions of people are losing massive equity in their 401K plans and pensions, on the eve of their retirements, and that everything that is the legitimate responsibility of the government, such as our aging and badly deteriorated water and road infrastructure, as well as essential services and infrastructure at the local levels, as cash-starved local authorities are pressed to make further cuts as less money comes from Washington and more must be raised at the local level.
Government insolvancy will mean that the value of both government and non-government debt tanks completely, and that no one will be able to raise money in either the public or private sector for business formation or expansion, for the repair of failing bridges and collapsing roads, for public health programs such as immunizations for flue and other infectiuos diseases, or for disaster preparedness.
It would also most likely mean that oil will cease to be denominated in U.S. dollars, which would mean a disastrous runup in oil prices, as our currency totally craters in value. Note that oil today had the biggest one-day runup (to over $109 a barrel) in history. Winter lies just ahead, and the gas and fuel oil orders haven't come in yet, but we needn't expect any relief in prices when they do.
We have a choice between catastrophic- the failure of our financial system that looks to happen no matter what; or worse- the collapse of our financial system and of the U.S. Treasury, the very last backup.
Just as our leadership did not consider the current steamrolling disaster to be within the realm of possibility three months ago even though it was clear that almost every major institution was leveraged beyond sanity and confronting massive "liquidity" (i.e. solvency) problems; no one now is discussing the possibility of the ultimate failure.
This means we have no leadership that can possibly shepard us through the mother of all collapses, and we are on our own. I don't feel ready for it, and I'm sure no one else does, either, but we had all better be prepared to deal- with job loss, no unemployment, the loss of our homes, spotty or nonexistant services both public and private, and chronic shortages of basic goods essential to our day-to-day lives.
1 comment:
It's all very scary, to say the least.
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