We have lost control. We cannot stabilize the dollar. We cannot control commodity prices.-- BEN BERNANKEWhile as an American taxpayer I am extremely proud to now own an insurance company and plan to lower everyone's rates just as soon as I have a chance, the ongoing economic crisis has a different -- and decidedly creepy -- feel to it than those in the recent past.
Perhaps the last eight years of deregulation, rampant greed and an epidemic of book cooking has bludgeoned my faith in our financial institutions to such a point that I can't see straight. But what is happening on Wall Street and has spread globally just doesn't have the feel of the 1987 crash, the dot-com bubble kaboom or the post-9/11 plop.
In each of those instances it felt like the ship would right itself, and it did. But this time I get the feeling that things won't ever be quite the same again and whatever adjustment occurs will be as inadequate as Washington's efforts to plug the gaping holes in the ship's hull. This intervention has consisted of throwing Hail Mary passes while not even beginning to deal with the underlying causes, let alone nailing the perps . . . er, managers whose malfeasance has led to the meltdown.
Isn't anyone curious as to why AIG, the largest insurance company in the US of A, ran out of dough? Does anyone care that once conservative bankers, seduced by the scent of easy money, have been acting like a bunch of hedge fund managers? Do you have a clue about what derivatives are? How about credit-default swaps? Now pat your butt. Is your wallet still back there?
My 401k plan took a dump in the dot-com bust, but I have the feeling -- not assuaged by the talking heads on my teevee -- that even bedrock stuff like Treasury bills may not be safe and commercial paper already is nearly worthless.
Meanwhile, the concept of corporate welfare has been redefined.
The companies that those perps trashed are now into me for $300 billion or so, money that surely could go to a third war somewhere, and Congress is angling to shoot the moon with The Mother of All Bailouts, hundreds of billions more for distressed mortgages that would be bought at deep discounts from banks and other ailing institutions.
With the Dow now lower than it was the day The Decider was sworn in, it's impossible to find anyone in government who has a clue about what to do beyond throwing ungodly sums of my money onto the fire. (Memo to McCain and Obama: With the mountains of debt that are piling up, read my lips: tax increases are inevitable.)
Even Federal Reserve chairman Ben Bernanke, as the shocking lead-in quote above reveals, seems at sea, while President Bush has so marginalized himself that news that he had canceled a fund-raising trip so he could be leadershippy was greeted with derision.
Don't expect any miracles until after the election, okay? And then don't expect any miracles.
One more question: Why did the Dow drop 400 points and then jump 400 points yesterday? Why did the Fed pour almost $300 billion into global credit markets and announced a plan to raise another $180 billion through the central banks of other countries?
There is only one explanation: Panic!
Also in line for a taxpayer bailout: Detroit automakers. And so not only will I be lowering your insurance rates, I'll be able to get you a great deal on a brand new gas guzzling Chebby pickmeup truck, say in a nice parachute gold. I'll talk to the sales manager to see if he'll throw in the undercoating for free.