"What we are facing now if the beginning of the unraveling and collapse of the entire shadow financial system, a system of institutions (broker dealers, hedge funds, private equity funds, SIVs, conduits, etc.) that look like banks (as they borrow short, are highly leveraged and lend and invest long and in illiquid ways) and thus are highly vulnerable to bank like runs; but unlike banks they are not properly regulated and supervised, they don’t have access to deposit insurance and don’t have access to the lender of last resort support of the central bank (with now only a small group of them having access to the limited and conditional and thus fragile support of the Fed). So no wonder that this shadow banking system is now collapsing.(...) This is indeed the most severe financial crisis since the Great Depression and occurring at a time when the US is falling in a now severe consumer led recession. The vicious interaction between a systemic financial and banking crisis and a severe economic contraction will get much worse before there is any bottom to it. We are only in the third inning of a nine innings economic and financial crisis. And the only light at the end of the tunnel is the one of the incoming train wreck." Nouriel Roubini
"Ignored in Georgia and under attack by its closest allies in Iraq, Afghanistan, and Pakistan, the United States is somewhat unhappily entering the realities of the post-Cold War world, in which it has to play by new rules that it seems to find rather unpalatable." Immanuel Wallerstein
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The United State's biggest problem is not racism, creationism, the media, or even the economy... it is America's obsession with controlling everything, everywhere , all the time: tapping phones, invading countries, drones, spy satellites, giving lectures and sermons, leveling sanctions... and then not controlling that which needs to be controlled and which it could control.
In a country where a person can go to jail for possessing a minute quantity of cannabis or get fined for not mowing his lawn, the American financial system is going to damage the lives of millions of people in America and around the world for lack of sufficient regulation.
In short America's biggest problem is incoherent stupidity.
Now Americans are American enough to know that people who are not up to life's struggles are going to be left by the wayside... "owdada way, bud, comin' though" could be tacked right up there with "In God We Trust".
The world has no more patience than Americans do with losers.
The consolation is that the United States of America is so big, so well populated, with such productive agriculture, with so many natural resources and so far from dangerous neighbors, that it is basically unsinkable.
However, fatheaded hubris is going to take a severe hit in the years to come and Americans are going to want someone to blame it on. I think that they will blame it on whichever poor, helpless, sap wins the White House this year. DS
The United State's biggest problem is not racism, creationism, the media, or even the economy... it is America's obsession with controlling everything, everywhere , all the time: tapping phones, invading countries, drones, spy satellites, giving lectures and sermons, leveling sanctions... and then not controlling that which needs to be controlled and which it could control.
In a country where a person can go to jail for possessing a minute quantity of cannabis or get fined for not mowing his lawn, the American financial system is going to damage the lives of millions of people in America and around the world for lack of sufficient regulation.
In short America's biggest problem is incoherent stupidity.
Now Americans are American enough to know that people who are not up to life's struggles are going to be left by the wayside... "owdada way, bud, comin' though" could be tacked right up there with "In God We Trust".
The world has no more patience than Americans do with losers.
The consolation is that the United States of America is so big, so well populated, with such productive agriculture, with so many natural resources and so far from dangerous neighbors, that it is basically unsinkable.
However, fatheaded hubris is going to take a severe hit in the years to come and Americans are going to want someone to blame it on. I think that they will blame it on whichever poor, helpless, sap wins the White House this year. DS
14 comments:
I hope the day of reckoning comes before November! As a regular reader of your blog (and a French-born woman living in New York), I am familiar with your overall position that things have to get really bad if we hope to implement the drastic changes the US needs. But I think the US cannot afford a McCain presidency--he will get the country into serious, serious trouble, and we won't even make it to the hoped-for drastic changes. (Not to mention that seeing how the American electorate evolves, there is zero assurance that a progressive would be elected after McCain.)
As you point out in this post, America has become enamored of inconsistent control; under Pdt McCain I fear we'd only get more of the same.
As for America, the country itself may be "basically unsinkable," but millions and millions of people are extremely "sinkable," if not already drowning. Can we overlook this kind of suffering and call ourselves progressives/liberals?
the only thing i disagree with is the idea "incoherent stupidity" and the need for more "regulation" (whatever the hell that means). that's the whole idea of the free market isnt it? you cant control everything? bailing out firms like Lehman is a bad idea. even if it keeps the market from collapsing (which would be a good thing of course), it's a temporary solution at best.
dont know if you've read it already, but it's an interesting article.
http://www.newsweek.com/id/158752
Adam
"The consolation is that the United States of America is so big, so well populated, with such productive agriculture, with so many natural resources and so far from dangerous neighbors, that it is basically unsinkable."
Yeah. Like Bear Stearns, America is too big to be allowed to fail.
Elisabeth,
I agree that A McCain presidency could be dangerous. I think any POTUS is dangerous... that certainly includes Obama.
The Obama phenomenon is so mysterious. Try to imagine a 47 year old white man, Asiatic or woman with a CV like that running for POTUS... absurd. I think that Barack Obama is a genius of Napoleonic proportions at self-promotion. If elected he will almost immediately seek to be reelected. His obsession will to not be seen as a wussy, he will have to prove he's tough. The next few years are going to be very humiliating and someone trying to prove that they are not a wussy is a sure formula for disaster.
Probably the best thing about McCain is that he won't ever have to prove he's tough... everybody already knows that he is tough, discretion as the better part of valor is at least an option for him.
David, I share your concerns about Obama. I do believe he's shown more skills at campaigning (basically a PR job) than at governing (a much less glamorous nuts-and-bolts job), and I'm extremely nervous about his messianic impulses (some of his hardcore followers are really scary).
That said, I'm not sure I agree with your fear that he'd show unnecessary firmness just to prove he's tough. McCain doesn't have anything to prove in that department and still he always takes the low road of agressivity and hot-tempered reaction instead of analysis and diplomacy. This is not an encouraging sign for his actions as president. I'm also concerned that he's a free-market believer and the current American situation shows that unfettered deregulation is a disaster.
Going back to primary time, I don't really like any of the choices much at all. I have tons of issues with McCain, but somehow I find him real. A lot of that reality I don't like at all, but he has three dimensions for me. Obama no, I think people are projecting their hopes and desires on him. If he were a performance artist I would find him very interesting, but as POTUS... with that CV?
The enthusiasm that Obama generates among his followers has me thinking that American "elites" are just as dumb as the Hockey moms and "bitter" villagers we all are laughing at.
Sure Obama is vapid and ephemeral. But he has enough sense to know that he had better listen to his Harvard fellow limousine liberals. In the United States there is a cultural taboo against African-Americans getting to be too uppity.
Again, I agree with your take on Obama, but not with the one on McCain, who clearly is renouncing whatever core values he once held in order to win in November.
I am no wide-eyed idealist (years in the French Socialist Party cured me of that) and generally in favor of realpolitik, but one has to have basic moral principles (which have nothing to do with religiosity, by the way) and McCain's caving in about everything from torture to tax breaks is more than dispiriting.
There’s no talking to the most glassy-eyed of the Obama supporters. It really is unnerving, and I have the impression that Obama is fully aware of the power he has over people and gets off on it. Which is true of all politicians, I suppose.
"I'm also concerned that he's a free-market believer and the current American situation shows that unfettered deregulation is a disaster."
Banking deregulation, in the form of the Financial Services Modernization Act, was passed under Bill Clinton.
I'm a Democrat and I'll vote for the Democrat. But I don't have any illusions.
When I say I find McCain "real", I don't mean "nice" or "honest", neither of which form a common part of any politician's skill sets. All I mean is that I see a 3D personality. With Obama I have the feeling I am looking at smoke, like a Hollywood stage set. I don't see any friends or long time associates who have stories to tell. No old girlfriends, nothing.
Bush too has a pretty real personality, no matter what we think of it, and it's never been a secret to anybody who paid attention. Yes, we know exactly who McCain is and, despite his constant obfuscations, where he stands. Sad to say, but this is a case where I will take my chance on the smoke and mirrors.
As for the Clinton financial regulations, they were a start at least. And haven't they been gutted and unenforced under Bush? Clinton also tightened up welfare, but oh, look at the Wall Street welfare queens beg for their handouts now…
Elisabeth,
I must disagree about Bush being real, being a horse's ass and being "real" are not the same thing. I get the feeling he is crazy, not at all stupid.
I worry that Obama suffers from "grandiosity", that like Bush, he is not really all there. That at the center there is a troubled mystery. That, just as Bush has invented his Aw Shucks, country boy shtick, that Obama has done something similar with his autobiography.
All I can say for McCain is that I don't think he is nuts and I'm not sure about Obama... that leaves Ralph Nader.
But David, everything you say about Obama, the whole smoke-and-mirrors thing, also applies to McCain as he campaigns: he contradicts his own previous positions from one day to another. One day he's against tax cuts, then he's for them; one day he's saying that the country's economic policy is on track, the next he says there needs to be more regulation; one day it's all about experience, the next he picks Sarah Palin. How can you tell what his character is--and whether it's "real"--based on what he says and does? Before the campaign I would have said that at least we knew where McCain stood, but now it's impossible.
I agree with both your reading of the problems that ail the US and what the long-term solutions are. Where we diverge is in what is the best option in November.
Elisabeth,
It is natural for politicians to lie and promise and change their positions when they are campaigning, it is hard to get any idea of who they are in such a process. But McCain has done many other things in life beside running for president. Good things and bad things, lots of things, some of them admirable and some quite unpleasant... he has three dimensions. For me that is the problem with Obama, its all talk and only his version of who he is.
You know that among painters they some times say that somebody "talks a good painting", but then the question is can they actually paint one. That is what I'm getting at. I would have voted for Hillary (holding my nose a bit) I would have happily voted for Al Gore if he had run. As to African-Americans, I think Colin Powell would make a fine president. What I can't see is voting for just a line of talk.
I think I'll just "go fishing".
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