Sunday, September 28, 2008

The Bail Out

I don't know enough about the fine details of the economy to have an intelligent opinion on whether we need a bail out or not. It's complicated and I don't feel like doing that much research.

All I know is that when you and me and people we know were losing homes and declaring bankruptcy, all the concern we mustered from Washington was "Hey, it's a Free Market. That's what makes America great! You made stupid decisions that made me and my buddies rich, so now you have to pay the price. Sucks to be you."

But when the Fat Cats stood to lose a measurable percentage of THEIR money, it's all "OMFG, OMFG! MELTDOWN! I COULD LOSE A HOME IN THE HAMPTONS! MAYDAY, MAYDAY! BAIL OUT!" The solution? Saddle the same people they just told to go fuck themselves with the debt burden that made them all billionaires.

See, the thing is, if we don't do a bail out, if we just let shit happen, all of those rich people will still be rich. They might go from being a billionaire to a millionaire. They might go from 18 homes to just 4 homes. But they will still be fucking rich!

On the other hand, those same, complicated securities, largely made up of bundled mortgages, that led to this crises are also the same ones funding your retirement accounts. So if we don't do the $700 billion dollar bail out, then almost every American will find themselves with a foreclosed home, renting an apartment, living paycheck to paycheck, with no retirement and completely dependant on Social Security.

So much for The American Dream.

Another economic issue that I know even less about is the involvement of China in the American Bond Market. From what I understand, China holds the majority of U.S. debt in the form of Bonds. China is funding our war spending through the daily purchase of billions of dollars in U.S. Bonds.

They buy our Bonds because they view them as safe, stable investments that are guaranteed to return their investment plus interest.

But what if China loses confidence in the long term viability of the American economy as a result of this financial crises and they quit buying our Bonds. Essentially, the American Government quits getting a paycheck and can't pay the bills.

Worse yet, what if China sees us in a weakened position, decide they are kind of sick of our shit and decide to deal our economy a death blow by selling off all of the Bonds they hold?

Asia is playing us like a puppet right now. We are no longer the masters of our own fate. We haven't been for a very long time. The legendary strength of the American Economy is as much of a paper tiger today as the strength of the Soviet Military was during the Cold War.

We are in a very, very fragile economic predicament and we don't have a lot of good will with the rest of the world thanks to our arrogant, blustering, rhetoric and our heavy-handed military shenanigans. Every time our president opens his mouth and says something, our prospects for survival become more precarious. He really needs to just shut the fuck up.

In fact, there is a conspiratorial element that thinks this whole fucking financial mess is a master strategy of Karl Rove and Dick Cheney to drive the United States so far into debt that President Obama won't be able to do a goddamn thing except pay the bills he inherited from them. Then he won't be able to deliver on any of his promises because he doesn't have any money to spend and the Republicans take back the White House in 2012.

I probably have a lot of this stuff wrong. I'm no economist.

So I don't know. What do you think?


m.v. said...

Wow, Obama is not the president yet but he already has an excuse for his potential failure. I wonder if the bailout actually works a year or twofrom now (fat chance)will he take the credit.
It was known for a long time that China owns us, however, it's not in their interest to crush out economy since we buy large part of their cheap crap. So I don't expect them doing anything drastic. They will not hesitate to use their influence though.

Midtown Miscreant said...

" So if we don't do the $700 billion dollar bail out, then almost every American will find themselves , renting an apartment, living paycheck to paycheck, with no retirement and completely dependant on Social Security."

You just described a very large portion of americans. Myself included. Oh, and dont forget we are bailing out the auto industry too. Cant leave out the folks who mass produce shit cars, while drawing fAT checks and pensions for screwing the same 3 bolts over and over.

Xavier Onassis said...

mm - I'm describing myself as well. I sold my house and started renting years ago. I pulled out all of my 401k money and spent it on immediate needs. I live paycheck to paycheck with NO safety cushion. I have no investment in the future at all. I am 100%, balls to the wall commited to living day by day. I'm one paycheck away from total financial Armegeddon. So I have largely vaccinated myself from our current financial collapse. I'm already here, but I got here on my own terms.

Dexter Colt said...

I too am an apartment dweller living in here and now.

The bailout is a damned if you do, damned if you don't endeavor. A lose-lose game.

I'm no economist, but I figure we're going to go through a decade of inflation that is going to keep me in exactly the same position I am in now. Which is neither desperate nor protected. I'd rather not have seen a bailout. I'm with Ron Paul...let the market correct itself. Why prop it up?

Anonymous said...

If there is one thing Americans are full of, it is large amounts of shit.

Park these CEOs in a public toilet, and let the lot of us take shits all over them. They'll know what it has felt like for the past thirty years.

That seven-hundred billion dollars will sure go a long way to helping Americans keep their houses. Let the billionaires fix their own fuck-ups.

This may sound like a crazy notion, but how about requiring them to actually have physical assets to back up their paper?

Being from the Beavis and Butthead generation, I've seen the episode where they passed the same dollar bill back and forth and consumed forty bucks worth of candy bars.

Can't say that I am surprised though. Just one more fuck-up to add to the pile of a mountain of fuck-ups we've swallowed.

travel said...

Everybody wanted instant gratification from the homeowners who bought what they couldn't afford to the fat cats on wall street.

Just a few years ago, a person needed to have a minimum of 10%, more likely 20% down to even buy a house - any house. But then some bone headed do-gooders (democrats) told the lenders that if they didn't lend in red-line areas, they'd be closed down. Their whip was Fannie Mae and Freddie Mac who used their club to "encourage" creative financing schemes anybody could afford. Fannie and Freddie bought off nearly the whole friggin congress to insulate themselves from investigation and regulation, and guess who they paid the most to keep their mouth shut - Chris Dodd and Barack Obama !

And, of course, the greed didn't stop there. Fat cat wall street execs cooked their books as well and the republicans let them run wild without oversight and now all of them stand with their hand out to you and me.

Part of me wants the whole thing to go down in flames and let the chips fall where they may but being a realist I know that you and I are going to have to suck it up or DLC is going to be posting about which Kansas City soup line serves the best gruel de jour.

Obama's economic plan is going to go down in flames and McCain's war is going to be ended sooner than later and you can be sure of something else too and that is George Soros is going to get richer as a result of all this.

m.v. said...

I read statistics about Obama being 2nd largest recipient of Fannie and Freddie contributions but in all fairness $126K is not really significant knowing his total fundraising amounts, they probably spend more on in-room porn in a month.Also some nice illustration to this post found on a Russian site.

Leigh Ann said...

I'm a student of the Brad Spangler school of Counter Economics. Since the 1990s my motto has been, "Please Don't Feed the Machine."

All the same, I have faith in the market's ability to correct itself, and don't believe a word of Bush's doomsday scenario. Let's just see what happens over the holiday. I'll bet the world doesn't blow up after all. Let this corrupt system die, or at least let it purge itself of several layers of waste and malfeasance. Our world, for the moment, has all the resources we need. We can survive even if there are fewer corporations. The only people who will be losing in this are those who threw their lots into and pinned their hopes on corporatism. The rest of us will manage.

Joshua Xalpharis said...

I am all for letting it burn. If they love the free market so much, they can stick with that sinking ship as it settles on the bottom.

I suppose I am a bad capitalist. Instead of borrowing that trillion dollars from China, I'd rather see those spoiled billionaires have their assets seized and re-appropriated.

Joe said...

I'm not an economist by any means, but I'm for letting it all burn to the ground. In 10 years or so the stock market will have recovered and all will be well. But what a 10year stretch we'll have.

JW said...

It's rigged to blow either way.
You're on your own.