- Lehman Brothers, the fourth largest investment bank with a history dating to the 1850's, filed for Chapter 11 bankruptcy protection.
- The US Government has taken an 80% equity stake in a huge global insurance company.
- Short selling has been banned for 799 financial sector stocks.
- The Treasury Department has announced plans to temporarily guarantee money market funds.
- And now the government is planning a massive intervention to buy illiquid assets (aka crappy mortgage loans) from financial institutions.
I appreciate the candor of Senator Shelby (R-AL) when, referring to the costs to the American taxpayers, he says:
We know $500 billion or $1 trillion, that's a lot of money.
I don't see this as a partisan issue. There may be some political gain for Obama in terms of the impulse to vote out the ruling party in times of economic distress, but this is a screw-up so massive that the pool of conspirators is wide and deep.
Still, there's something incoherent about fiscal conservatism these days. Recall the line from Reagan's 1981 inauguration adopted as a conservative rallying cry "...government is not the solution to our problem; government is the problem."
In 1980, the national debt was ~ $930 billion. Since George W. Bush took office in 2001, the national debt has grown by ~ $4 TRILLION and is expected to reach $10 trillion when the next President takes office. So under Bush's conservative fiscal leadership the debt grew by 69.6% while the GDP grew by 33.4%.
Maybe it's not so much that fiscal conservatism is incoherent, maybe it's just that there aren't any fiscal conservatives. But there are people who claim to be.
For example, John McCain, last seen touting lean government and open/competitve markets is now calling for the creation of a new federal agency.
To be clear, I'm not necessarily mocking the idea. I'm mocking him. This is all so weird...
4 comments:
Great,
I found myself in financial problems in 2005, did all the right things to get myself out trouble, without any help from the banks or government.
Now let me get this straight, after the bank told me they couldn't help me out. Now I’m bailing the banks out. What’s up with that?
Rich M
I hear ya. I don't feel sorry for the bankers. I don't feel sorry for the borrowers. What kind of idiot offers no money down mortgages to people without jobs? What kind of idiot buys a house without a job?
I feel sorry for everyone else because it looks like we're all on the hook for this mess.
Am I hopelessly old-fashioned and uncool by having a 80/20 mortgage?
Greed exploded
This is precisely why everyone who doesn't make over 5 millions dollars a year (according to Mccain) needs to vote for Barack Obama. The current Administration is quick to help those who own them, but will turn their cold shoulder to the American people in a heartbeat, and mislead them and lie to them so that innocent people will be pawns in their chess match.
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