Global Economic Collapse -- Part Deux

We heard the thump of the first shoe hitting, during the last week of Sept 2008.

And last week, and this week, perhaps we watch in horror at the approach of a shadow foretelling the drop of shoe number two. “The fear is that Greece and Portugal are just the appetizers,” said Lorraine Tan, director of equities research at Standard & Poor's in Singapore. “The concern is it is going to spread and have an impact on the financial system and ultimately on the economy.”

As trading opened in Europe, Britain's FTSE 100 shed 0.8 per cent, Germany's DAX lost 1.5 per cent and France's CAC-40 dropped 1.4 per cent. Wall Street futures pointed to more losses in the U.S. last Wednesday.

But looking back to the first economic collapse, as it hit Wall Street, there was much hope. An election was coming up, and surely the public was to be allowed the belief that if the Democratic party prevailed, then things would be different.

However on account of the October, Bush "BailOut" for the Too Big to Fail to Fall crowd, a new doctrine entered the lexicon of American life. If you were part of the American Wall Street forces, you were beyond reproach. You were "Too Big To Fail." The Wall Street forces had the right to exist, and Bailout Monies aplenty would be there to help. If much of this money was used to buy lobbyists to promote the notion that Wall Steet needed such a "Too Big to Fail" designation, the money was available for those lobbyists, in spades. For some strange reason, little of that money filtered out to the people on Main Street, or even to community banks. But despite the lack of money landing in a real community, newspapers and TV Talking Heads told us the recession was conquered.

So no need to worry. Various people were around to offer us reassurance. With Bernanke on hand to tell "Sixty Minutes" that when he created the accounts for the Big Players who needed to feed at the Government trough, it was nothing for us little average tax payers to worry about: he did not send them "actual money, but digitized money." Nothing to see here, pls move a long.

Meanwhile Geithner was called up to the Hill to talk to the House Government Oversight committee. He explained (perhaps lying through his teeth as he did so) that there had been no way around what had happened. the Wall Street Power Brokers had to be bailed out - if not, the economic collapse would have been worse.

Why this statement is suspect is this - Both Kucinich and Issa had offered up the notion that instead of giving the Big Banks and Wall Street firms so much dough, the nation might have looked to laws still on the books from the Savings and Loan collapse of the late eighties. With those laws as the blueprint, the money instead could have been channeled to state chartered banks in every region of the country, and handed over with tight stipulations stating that these monies had to be lent out to people on Main Street.

Apparently Geithner did not know this, or else he did know this and decided to lie. On several occasions, he referred to the power held by Washington DC as "your government." Not "our" government, but "your" government, was the insistent terminology of his discussions with Congress.

So who does Geithner work for? The IMF? The World Bank? Who is he really part of, and why this reluctance to consider The Federal Government his government as well as ours? In addition to the possibility that he lied when he said that the only model for handling the October 2008 collapse was the dubious one of handing over 14 trillion bucks to Wall Street, he also told Congress that he had never been an overseer of the banking world. That in fact he had never been employed in the banking world. So what does he think his role was when he headed up the Federal Reserve in New York? We may never know, as there are few email phone call/releases related to the scary interactions between the NY Fed and the Big Player of AIG and Goldman Sachs. But those that have been released are not favorable to Mr. Geithner.

As scary as Mr Geithner has been, one must also note Obama's "New Story." At a time when America needed a "New Deal," Obama came out in March and April of 2008 with his "New Story." He stated before the cameras that he had never spent much time considering the economy when he was running for President.

Where do these people come up with these things? We have a former head of the NY Fed saying he was never involved in the banking world, and we have a President who states that he didn't consider the economy all that much when running for the Presidency. Of course there are videos on YouTube showing Barack Obama in Wisconsin, Oct 2008 saying he totally understood the dangers in giving Wall Street such a Bailout and that if Wall Street did not offer some dough to Main Street, he would, during his first year, immediately establish rules and regulations to have that happen. So he was aware in Oct 2008 how nuts it was to give away the Bailout without any restrictions, stipulations etc - but had forgotten those speeches by late March 2009?

Anyway, President Obama explained away this faux pas by mentioning that he had spent so much time on the issues of Afghanistan and Iraq that he had not paid attention to the economic matters at the heart of most economic activity during 2008, the year he ran. Perhaps the President didn't pay much attention or understand much of the average American's angst during the spring, summer and fall of 2008. Those Americans were paying attention to the economy - their houses had tanked in value, their jobs were being lost, or hours cut back, and their homes were possibly in foreclosure. With the housing bubble lost, the ability to put one's lifestyle onto a plastic credit card also evaporated. And this was before the Scary Crash of Fall 2008.

So now we are here in Early May 2010. The other shoe may be dropping as I type this, as not only are European markets dicey, but Mother Nature is throwing a tantrum -- an oily act of revenge is throwing the ecological world in the USA and along with it, the price of oil, the price and survival of various fish species, and serious loss of tourism revenue to half a dozen states are now tragedies whose viewing is at hand.

Yet because of the establishment of the Bush/Obama doctrine of "Too Big To Fail" we may see yet again a total failure of the markets.

And the average politicians in Washington, ready to have some contributions to their political campaign, will be only too willing to hear that the only way out of Collapse Number Two is another Huge Bailout. (Certainly Middle America cannot afford to contribute much - in my neck of the woods, the only thriving store fronts are thrift shops and medical marijuana cooperatives.) News services have daily reports of how necessary this second round of BailOuts will be - "Remember Lehman Brothers and how that toppled giant almost spelled the end of Western civilization? It is not necessarily a great policy - but it is the only policy!"

So with the average politician not knowing or understanding much of anything, (if we take them at their word that they don't understand,) and their believing that the Big Bailout is a proven method as it has already "pulled us out of a recession" once, (or so they say) so too may they be deciding that the best move is Bailout Round Two.

And don't worry about any of this. We have elections coming up in Nov 2010. There is always such an admirable mix of progressive candidates (NOT!) that surely should they fail us once again, we can fail them too!

And Meanwhile Obama sends out as the new ambassador to Germany, the person who most recently headed Goldman Sachs in Germany. Perhaps our President doesn't understand the economy, but he certainly knows which companies he needs to keep happy.