Thanks for your support.

In the long run, we're all dead. John Maynard Keynes

What we could do with the level of funds behind the prop-up!  Beginning with wind and solar, there's enough work and positive effect to society in general we could already be working our way out of this pit the bankers threw us in.

Potshots at Germany's stable banking system indeed.  Arschloch.

Skennah Kowa

Europe to U.S.: You messed up the rescue, too

PARIS (Fortune) -- First you mess up the world's financial system. Then you blow the rescue of it. Now let's show you how to do it properly.

That, in a nutshell, is the less-than-flattering message European governments are sending to the U.S. as they mount their own gigantic bank bailout. The plans, announced Monday after two weeks of dithering, involve Britain, Germany, France and some others recapitalizing national banks that require help, and providing state guarantees and other measures to kick-start the stalled credit market. The details are strikingly different from the U.S. approach adopted by U.S. Treasury Secretary Hank Paulson and the Federal Reserve Board. And there's a big reason for that: The Europeans think Paulson got it badly wrong, and have watched aghast as he failed to restore confidence in the world's financial system.

Sadly, that article also has this rewriting of history:

Stock markets for the moment are applauding the concerted European response. Only time will tell whether they're getting it right. It puts a huge onus on governments to fix the system, and the track record there is mixed. France nationalized its banks in the 1980s under President Francois Mitterrand for ideological reasons, but made such a mess of the job that it privatized them again.

French banks were nationalised (those that were not already public then) because, just like a number of the other companies that were nationalised, they were severely undercapitalised. They were sold off in much better shape than they were when bought, and for a substantial profit, not because they were "such a mess."

But of course writing such lies is part of the propaganda war being waged right now.

In the long run, we're all dead. John Maynard Keynes

While there is of course the obvious issue that public debt was bad to finance health, education, public infrastructure and so on but is suddenly good to bail out banks, there is also another issue:

If the states get buried in debt, and the system is not corrected to stop the credit binge (and accumulation of wealth at the top) who will save us in the next crisis? god?

To put it in another way: Are we creating the last possible bubble?

Of all forms of caution, caution in love is perhaps the most fatal to true happiness - Bertrand Russell

Dear Sirs,

Over the past few months, the very people that for decades have explained to us that governments were incompetent and had to be shrunk had no recourse but to go to the government for money, guarantees and action when they drowned in a mess of their own making. From this, it would appear obvious that (i) governments play a valuable role and thus cannot be continually deprived of the resources they need to fulfil those functions, and (ii) those that consistently pushed an across-the-board anti-government agenda should perhaps now be recognised as shill extremists, rather than serious and worthy participants in the public discourse.

Further, it would be worthwhile to ponder what could be done with an investment of a trillion or so euros of public money in things like energy efficiency, public transportation, housing or poverty reduction. All of these things create massive positive externalities that benefit society as a whole, and would be especially helpful as we face the banker-caused economic downturn, collapsing real estate sector and high energy prices. If we can justify sending a trillion € down the rabbit hole to chase incompetent bankers that threaten to take us down with them as "investment", then we surely can actually invest in the economy in ways that will benefit all and not just a greedy few.

With regards,
[signed, etc.]

- Jake

Ceterum censeo Chicago esse delendam

Money to build and generously equip thousands and thousands of new schools, with well-paid, exquisitely trained teachers, small teacher-pupil ratios, a full range of enriching and inspiring programs.

Money to revitalize the nation's crumbling inner cities, making them safe and vibrant places for businesses and families and communities to grow.

Money to provide decent, affordable and accessible health care to every citizen, to provide dignity and comfort to the elderly, and protection and humane treatment for the mentally ill.

Money to provide affordable higher education to everyone who wanted it and could qualify for it. Money to help establish and sustain local businesses and family farms, centered in and on the local community, driven by the needs and knowledge of the people in the area, and not by the dictates of distant corporations.

Money to strengthen crumbling infrastructure, to repair bridges, shore up levies, maintain roads and electric grids and sewage systems.

Money for affordable, workable public transport systems, for the pursuit of alternative sources of energy, for sustainable, sensible development, for environmental restoration.

Money to support free inquiry in science, technology, health and other areas -- research unfettered from the war machine and the drive for corporate profit, and instead devoted to the betterment of human life.

Money to support culture, learning, continuing education, libraries, theater, music and the endless manifestations of the human quest to gain more meaning, more understanding, more enlightenment, a deeper, spiritually richer life.
The money for all of this -- and much, much more -- was there, all along. When they said we couldn't have these things, they were lying -- or else allowing themselves to be profitably duped by the high priests of the market cult. When they wanted a trillion dollars -- or three trillion dollars -- to wage a war of aggression in Iraq, they found it. Now, when they want trillions of dollars to save the speculators, fraudsters and profiteers of greed in the global market, they suddenly have it.

Who then can believe that these governments could not have found the money for good schools, health care, and all the rest, that they could not have enhanced the well-being and livelihood of millions of ordinary citizens, and helped create a more just and equitable and stable world -- if they had wanted to?

This is one of the main facts that ordinary citizens around the world should take away from this crisis: the money to maintain, secure and improve the lives of their families and communities was always there -- but their governments, and their political parties, made a deliberate, unforced choice not to use it for the common good. Instead, they subjugated the well-being of the world to the dictates of an extremist cult. A cult of greed and privilege, that preached iron discipline to the poor and the middle-class, but released the rich and powerful from all restrictions, and all responsibility for their actions.

On October 7  John Greenwood reported in The Financial Post, (Canada,) that  grain shipments were backing up at ports in the US due to buyers being unable to obtain letters of credit acceptable to sellers due to fear of institution risk,  i. e.,  fear of the lending institution going out of business before the letter is cashed.  Bill Gary, president of Commodity Information Systems in Oklahoma City cited this problem.  Such a problem can quickly bring all international sales of bulk goods to a halt and clog railroads and waterways with car and barge loads of goods.  This sets the stage for the collapse of agriculture in the U.S and for famine abroad.  Add this to the lack of availability of affordable commercial paper for industry, student loans, new mortgages, consumer credit, etc. and the whole society can seize.

The Federal Reserve can try to step into the breach, but it is not equipped to perform due diligence on all of these additional transactions and doing so would put it into an inherent conflict with its mission of  supervising banks, as it cannot properly supervise its own new banking activities without conflicts of interest and mission.  The latest plan is to try to shore up existing banks by injecting new capital.  This is almost certain to fail.  Were the food supply contaminated with deadly poisons only the Bush FDA might propose a remedy which consisted of adding a small amount of known good food to that supply.  Foreign buyers don't know which institutions can be trusted and which cannot.  With potential derivative liabilities leveraged at 30 to 1 overlaying 40% declines in real estate values backing mortgages, who can blame them?

If even a fraction of the $700 Billion being proposed for a Wall Street bail out were used to provide equity capital for new, untainted banks, we could "thaw" the financial system.  These banks should be required to operate under 1970s style banking regulations.  As banks typically hold a 3% capital reserve, $269 Billion would back over $8.96 trillion of new loans.   That should get the economy functioning again.  Use the money to establish 538 banks, one for each electoral vote, each with $16.66 billion loan capability, each located in the area represented by the vote.  There should be plenty of sadder but wiser bankers available to staff these institutions.  These new banks would be  free of the  taint of contamination from previous bad practices.  They could in time be acquired by private interests on the same terms as formerly used to determine the price for private financial institutions.  Or not.

Exporters could get letters of credit, businesses and local governments could get operating capital, consumers could finance purchases,  people could get home loans.   Let Schumpeter's "creative destruction of capitalism" go to work on Wall Street.  The economy would no longer be held hostage to Wall Street.  This will be opposed by the financial services industry.  They want the money, even if there is not enough to solve the problem.  It will be opposed by the Bush Administration.  It contradicts their ideology.  It would be like a hostage taker releasing their hostages before securing their demands.  But time is up for ideology and special interests.  The time is long past for us to start acting to protect the real economy and let high finance take care of its own problems.  We should be trying to get money back from these crooks, not be giving them more.  Make certain at least some of this money is used in a way that can actually solve the problem.

I'm pretty sure someone Serious publicly proclaimed that it is IMPORTANT that "taxpayers" understand the JPM-BSC guaranty is not a "bailout." That remark caught my eye, because I wrote an article the week the merger was announced. I'm still looking for the link on my HD.

I should have started a bookmark directory titled "Pelosi Opens Damn Mouth Again", when she announce during the summer of '06 that impeachment was off the table. She was not yet elected speaker. And I didn't. She continues though to telegraph reliably House consensus, regardless of caucus bias, on its activities prior to enrollment of any legislation as well as US allied policy implementation. Consider this PR placement following House rejection of EESA and prior to its amendment to H.R. 3997 (29 Sep) --THEN-- amendment of H.R. 1424 to the senate "conference" bill (1 Oct) which engrossed mark-up language (emendments to EESA) and pork.

It's not a bailout, it's a buy-in | LA Times | 28 Sep 2008

House Speaker Nancy Pelosi, evidently with a straight face: "This is not about a bailout of Wall Street. It's a buy-in so we can turn our economy around" and protect the assets of ordinary Americans. Well, now I feel so much better about it. I'm buying in! I'm getting a piece of financial products that are so worthless that there's no market for them.

Viles runs a blog dedicated to tracking Orange County, CA real estate marketing.

Diversity is the key to economic and political evolution.