My Senator, My Vote: Part II
The second part of my two-part documentary series is being broadcast today on the BBC World Service at 0906GMT, 1206GMT, 1906GMT and 0006GMT -- and available online after broadcast here.
It's the one in which I talk to two Arizona voters: one pro-McCain and one anti, like last week's when I did the same in Illinois with pro- and anti-Obama voters.
© MMIX~RS~q~RS~~RS~z~RS~30~RS~)
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Robin,
I tired to listen ... but I cannot separate myself from news of the wall street fiasco and what is being said in regards. I'd think your blog would be more active if the topics where related. So many aspects of what is occurring to be discussed.
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BBC interviewed the head of the RTC (Resolution Trust Corporation) last night. The RTC was created to resolve the last real estate fiasco related to Savings and Loans in the late 1980s, early 1990s. He said that if the US economy goes into free fall panic mode, it will take the entire world into a deep recession with it. This is not just a matter of dashed hopes for many hundreds of millions around the world who are trying to crawl their way out of poverty, it could spell death by starvation if the American farming industry collapses. High officials in the Anglican Church have suddenly become experts in economics and damned short sellers on the stock market but if the system of short selling, puts and calls, and futures markets didn't exist, farmers in the US who feed much of the world could not run their agrabusinesses either. Our modern markets could not work they way they do. The bible says the love of money is the route of all evil but it is also for many the pursuit of happiness which has created the modern world.
Anyway I've looked at it, the world is going to suffer the consequences of allowing people to loan vasts sums of money that can't be paid back and then selling that debt to others stupiid enough to buy it on trust or even lies. The FBI has started its investigation with four banking institutions but there will be many more and they will sooner or later get to the bond rating services like Moodys. I think while they will find isolated instances of people betting against their employers survival because of the bad loans they were making, on the whole this will boil down to unregulated incompetence, stupidity, and laziness. You don't hear bankers use the term "due dilligence" now very much. That phrase rings rather hollow.
The government is faced with two possibilities. One; do nothing and perhaps watch the economy go into free fall taking down the world with it. Two; one way or another printing lots of money which will cause an inflationary spiral and will allow paying off the debt with new easy to acquire cheap dollars. This will of course devalue the US dollar further, cause interest rates to rise, and crash the stock market for awhile. Those holding dollar demonimated debts such as foreign governments and banks will get paid back pennies on the dollar in terms of real buying power. The government should buy the mortgages first and then inflate the currency. The only ones who will get hurt in the US are those on fixed incomes not indexed to inflation. Congress will need to help these people. This will of course kill the US market for imports as prices will skyrocket. China and Europe are extremely vulnerable IMO in either scenario. In the first case though, if we do go into a deep recession or a depression, expect certain commodity prices such as oil to also go into free fall. We could see oil under $10 a barrel in that case. We may also see a lot of social upheaval around the world. There is going to be an economic tsunami rippling out from the US no matter what happens.
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Marcus,
Your comments worry me.
From the sound of it you are suggesting we are doomed if the US Government does act to buy up the Banks dud loans or we're damned if the US doesn't? If so, which scenario is worse and, if we're damned, should the US save the 700 billion dollars and wait for the tsunami to kick off first?
I particularly liked your comment about the Anglican Church Dignitaries suddenly becoming financial experts. I think they must have read somewhere about Jesus and the Money Lenders in the Great Temple and think they should follow in his steps. The problem is that money and borrowing/lending is what makes the world tick over and with no money the world's commerce will grind to a halt.
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Menedemus, I worry you? Have you listened to what the Chairman of the Federal Reserve, the Secretary of the Treasury, and the President of the United States have said would happen if this 700 billion dollar bailout isn't passed by Congress in the next few days? They said the economy of the United States would freeze up and collapase and take the rest of the world down with it. But much of America and congress is very angry about it and the inclination is to change it whether the President likes it or not. There are lots of suggestsions including starting out with just one or two hundred billion. I don't know what will happen, nobody does but you would be surprised how many people want to see the banks go broke. Personally, I don't think that would necessarily be a problem. We got out of the great depression long after the banks went broke. If the US government is going to create credit by printing money to pay for new debt, why does it need the intermediaries of the existing banks to distribute it, it can set up something like the RTC until new banks are organized or surviving banks expand. The rejection of the Administrations plan is coming from both Republicans and Democrats. Many of us think the Federal Reserve and the Treasury are trying to railroad us. It was after all the Federal Reserve's reckless de-regulation policies that created the mess in the first place. Because of them, the government was asleep at the switch.
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You worry me because you seem to be suggesting that the US has two choices and can see the other side of the coin that would envisage not taking action?
If the US were to not bail out the US Banking system, then your Chairman of the Federal Reserve, the Secretary of the Treasury, and the President of the United States all seem to suggest that the US and the world is facing meltdown, deep recessiona nd possibly another Great Depression.
On the other hand, going the root of the massive bail-out will produce, (to use your words) one way or another, the need to print lots of money which will cause an inflationary spiral and will allow paying off the debt with new easy to acquire cheap dollars. This will of course devalue the US dollar further, cause interest rates to rise, and crash the stock market for awhile.
If it were me, I'd go for the latter option.
Better to be damned than doomed!
Doomed might take 80 years to recover completely.
With damned, at least I can put off going to the hot place until sometime whenever. ;-)
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If you could hear my laughter, the contagiousness of it would render you ... silly as well. No more wondering why McCain's campaign didn't want reporters anywhere near Palin. The high-stakes shenanigans are over. I hope the American people, and the poor folks of Arizona, who have been made a mockery of by John McCain will give him his just deserves.
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Look at McCain cringe when she starts talking! lol
http://www.cbsnews.com/stories/2008/09/29/eveningnews/main4487826.shtml
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