I've been studying political-economy for about 14 years. And reading sources that are highly critical of the capitalist system, I've mainly focused on why it can't work. Because of this, I've made idle predictions of catastrophic failure a number of times, only to find that the system has such internal resiliency that it's managed to get up, shake itself off, and keep going.
So, ... will the latest crisis based on extreme corruption and a housing bubble sink the United States economy to the core? I honestly don't know. Real estate often seems to be the last refuge of excessive capital concentrations. As well, there are dangers to any strategies that the US government takes to alter the value of the dollar or to launch counter-cyclical economic policies. But I've been down this road before. I honestly don't know what'll happen.
You tell me:
David Lindorff:
Actually, it’s worse than that. As Michael Lewitt, a Florida-based money manager, wrote today in an opinionarticle in today’s New York Times, AIG is a key player in the $60 trillion (yes that’s trillion with a “T”!) credit swap default market, a huge, international and wholly unregulated field in which hedge funds play, and whose collapse would make the 1929 Great Crash look like a minor fender-bender.
So that’s what it’s coming down to. There are no Blue Chip refuges from the rolling disaster that is the US economy today. And there are no easy rescues—indeed according to one theory Treasury Secretary Henry Paulson let Lehman Brothers go bust because he knew he needed what funds the Treasury has left to try to keep AIG alive. It’s all a fragile, interconnected house of cards, propped up by a residual faith among ordinary investors who, at least so far, still think it has some kind of inherent structure to it.
Financial Post:
The hard line taken by U.S. Treasury secretary Hank Paulson is ultimately a positive for the markets in the long run because it is removing the moral hazard that it created by bailing out Bear Stearns and forcing the weakest players out of the market. Rather than lay motionless on federal life support, like so many Japanese banks did in the 90s, we are reaching a moment of pain and capitulation that will allow the US financial system to recover more quickly.
3 comments:
It's bad, but still not as bad as Black Monday in 1987.
Well, thanks goodness our gummint has been frugal in it's budgetary constraints, so this should all...wait, what? Oh fuck.
I-I thought Saddam was paying for all that crap in Iraq. What? Whaddayamean that's not even included in our deficits?
Well, at least we still have Social Security trust funds...No fuckin' way! That too?
Thwappy, I was gonna tell ya to get the guest bedroom ready for me, but I bet we're gonna pull your asses down with us. Race ya to the poorhouse!
"Race ya to the poorhouse!"
That's something I never thought I'd hear!
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