The other shoes keep dropping. Today the Dow lost 500 points, Bank of America bought Merrill Lynch at fire sale terms and Lehman Brothers filed for bankruptcy. This all follows a $150 billion stimulus package, the forced takeover of Bear Stearns and federal bailouts of Fannie Mae and Freddie Mac--all of which appear to have accomplished little more than to put bandaids on the metastasizing tumors that currently riddle the American financial system.
In other news, John McCain declared the economy "fundamentally strong." His economic plan remains a mix of the George W. Bush tax policies that exploded the deficit, the Phil Gramm deregulation scheme that led to the mortgage meltdown and the Alan Greenspan liquidity mantra that has allowed financial institutions to leverage themselves into the houses of cards we now see going down.
Despite the supposed strong fundamentals the Arizona Senator also called the economic situation "a crisis" that can only be solved by sending the 26-year capitol veteran back again to "clean up Washington" as only an "outsider" and "maverick" like himself can accomplish. This comical formulation led Hillary Clinton, campaigning for Barack Obama in Florida, to quip that putting McCain and the rest of the Republicans back in power to fix the economy is, "like sending the iceberg to rescue the Titanic."
For the best concise summation I've seen in a good long while of where things stand and what's at stake, take a look at what Thomas Friedman had to say today.
1 comment:
It seems to me that capitalism only works if the underlying force of "risk" is not tinkered with.
If the government continues to mitigate downside risk, it seems that the endless cycle of tax-payer bail-outs will continue forever!
I wonder what kind of standard of living the CEO's and CFO's of these bailed out companies will enjoy when it is all said and done?
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