October 2008
12 posts
Amend the Bailout of all Bailouts
Paulson’s taxpayer-financed bailout continues to put money into the wrong pockets. So another item Congress should get to as soon as it returns: amend the Bailout of All Bailouts (the so-called “Troubled Asset Recovery Program”) to force big banks to loan out at least 50 percent of the amounts they receive in cash from the government. In addition, because dollars are fungible...
The Lame-Duck Stimulus
When even the chairman of the Federal Reserve Board says Congress should pass a stimulus package we know we’re in trouble. The last stimulus of tax rebates stimulated lots of people to pay off some of their debts, which hardly stimulated the economy at all. The coming stimulus package could be even more nonsensical. It will be voted on by a lame-duck Congress, many of whose members will want...
If They're Too Big To Fail, They're Too Big Period
According to Treasury Secretary Hank Paulson, the biggest Wall Street banks now getting money from the government are just “too big to fail.” Fed Chairman Ben Bernanke uses a different euphemism – he calls them “systemically critical.” The point is that if any of them goes down, it could take the whole financial system with it. So we taxpayers have to keep them up. We’re hearing the same...
The Meltdown (Part IV)
The Dow is see-sawing but the reality is that the Bailout of All Bailouts isn’t working. Credit markets are largely still frozen. Despite all the money going directly to the big banks, despite all the government guarantees and loans and special tax breaks, despite the shot-gun weddings and bank mergers, despite the willingness of the Treasury and the Fed to do almost whatever the banks have...
Post-Meltdown Mythologies (I): Americans Have Been...
What brought on the economic meltdown of 2008? Besides the bursting of the housing bubble, Wall Street’s malfeasance and non-feasance, and Washington’s massive failure to oversee Wall Street, fingers are also being pointed at average Americans. Some of them took on mortgages they couldn’t afford, of course, but we’re also hearing a more basic theme that goes something like...
Deficit Shackles: Will January, 2009 Repeat...
Both presidential candidates have been criticized for failing to name any promises or plans they’re going to have to scrap because of the bailout and the failing economy. That criticism is unwarranted. The assumption that we are about to have a rerun of 1993 — when Bill Clinton, newly installed as president, was forced to jettison much of his agenda because of a surging budget deficit — may well...
The Meltdown (Part III)
What does it mean that the Dow closed below 10,000 today — returning to levels first seen nearly a decade ago, in early 1999? Many interpret it to mean that the stock market is finally reacting to the credit crisis. A more accurate assessment is that it’s finally catching up to the consumer crisis. After the market closed today, Bank of America announced a significant deterioration in...
The Meltdown (Part II)
The easy answer to why the bailout hasn’t worked is it hasn’t been implemented yet. But its purpose was largely psychological – to boost confidence that the government is doing something big to clear out bad debts that have been clogging the system. That psychological boost should have happened as soon as the bailout was enacted. Yet no one seems to believe that 700 billion dollars will make much...
The Meltdown (Part I)
Global capital markets have seized up. Confidence is evaporating. Put simply, no lender trusts any borrower to repay, fearing that that borrower won’t be able to rely on anyone else to honor obligations. Even banks are hoarding cash, unwilling to lend to other banks. Everyone with any savings is heading for the hills — for gold, for under the mattress, for wherever savings can be...
Early Boomers and the Economic Mess
The economic meltdown is hurting everyone. But if you’re an early baby boomer over the age of 55, you may be in particularly big trouble. In an economic crisis, many employers lay off older workers first because their seniority makes them more expensive. And studies document that older workers who lose their jobs face more difficulties finding new ones. That’s not the biggest problem you face. The...
Bailout Redux: The Real Choice Ahead
If the choice is between a lousy bailout bill and economic Armageddon, I’d vote for the lousy bailout bill. But make no mistake: This is a lousy bill. It doesn’t do the most important thing — help distressed homeowners avoid foreclosure (that role is given to the Treasury Department, which is the equivalent of putting it into the permanent circular file). It doesn’t make...
The New Deal, and the Era of Angry Populism
The Senate will vote tonight; the House is scheduled to vote tomorrow morning. Will the deal fly? Probably. Wall Street’s gyrations since Monday have scared the hell out of a number of holdouts, notwithstanding all the negative emails and phone calls they continue to receive from constituents. An important distinction here. While more Americans are coming around to “supporting”...
