04-10-2008, 06:02 PM
David Malone Wrote:What is the bail out bill for? I know it seems like a stupid question. But everyone I know and read is of the opinion that it cannot work.
Welcome David. I am far from an economist (thankfully I say), but my guess is that we're seeing a small number of different strategies taking place here.
On the one hand I think it likely that the current crisis is a larger replica of the 1980's Savings & Loan crisis which, curiously, came to a head during the Administration of Poppy Bush. This turned out to be a more sophisticated version of the old mafia scam - a bank heist, albeit a multiple bank heist (over 700 of them in fact). Using a failing memory I seem to remember that that rescue figure was around $300-500 billion at the time, although the eventual net cost was somewhat lower. One of the key players in this decade-long affair was Silverado Savings & Loan which collapsed with debts in access of $1 billion. Neil Bush was a director of Silverado at the time.
I have grave doubts that the period of exceptional illiquidity that gave rise to this crisis was accidental or even (as some have opined) a "perfect storm." I think that in the months and years to come information will filter out to indicate that the unparalleled seizing up of the interbank market was a coordinated strategy. I may, of course, be proven wrong on this.
If our governments wished to curb this monster once and for all, they could simply enact legislation to completely restrict/outlaw or indeed separate the casino side of banking from the service side of banking. That they never do even think to do this speaks volumes, I think.
Finally, I have a suspicion that we probably will see this whole matter slowly begin to fade from the public mind over the coming months - which was the way things happened on the S & L crisis. I think that has been factored into the rescue plan.
One key will be whether the interbank market begins functioning again as it always has done until this year. Being a hardcore cynic I see no good reason for it to have seized up to begin with, so I expect it to start greasing the wheels of greed once more in the near future.
Another indicator will be if Chinese follow their threats and offload their dollar assets. They threaten to do this from time to time, but haven't yet -- and it is a rare thing for a sovereign to announce in advance their real strategy as the market immediately discounts it in their pricing. For the Chinese this would damage the value of their US Treasury assets.
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The shadow is a moral problem that challenges the whole ego-personality, for no one can become conscious of the shadow without considerable moral effort. To become conscious of it involves recognizing the dark aspects of the personality as present and real. This act is the essential condition for any kind of self-knowledge.
Carl Jung - Aion (1951). CW 9, Part II: P.14