How lovely that the political landscape seems to reflect the events yesterday and today in my faith, Judaism. Last night began Rosh Hashanah, the beginning of the Jewish New Year, and the first of the High Holy Days. We celebrate several things on this day, the creation of humankind, the beginning of the New Year, and we give thanks having had a good year. We also ask for forgiveness for sins against G-d (sins against fellow human beings must be worked out with them :) and finally to be inscribed in the Book of Life. (The Book of Life is not sealed until Yom Kippur, 10 days later, so we have a week to work with! lol. Some of us need the extra time!)
Here is a nice (and brief) explanation of the deeper meanings of Rosh Hashanah.
Worldly Day of Judgement
On the financial markets, it seems to me also a day of judgement. The markets are making radical corrections for all the excesses of the last 10 to 15 years. It's scary and painful, as these things usually are.
Unlike Reaganomics, the effects of this crisis truly can trickle down to the middle class. Losing that kind of asset volume in a single day is hard to comprehend (we lost $1.2 trillion in the 777 point dive the markets took yesterday) much less extrapolate to full effects and outcomes.
The most dire part of this to me is not the correction, however. It's that the complexity of the problem is so enormous, that even the very best minds ON THE PLANET can't seem to agree on one of the fundamentals of problem solving: defining the problem. They are struggling with defining the problem (although we can describe it, which is a start). Here is my arm chair quarterback attempt:
Banks are struggling with bad mortgages and other debt and can't figure out how much bad debt they are carrying overall, because valuation of these debts is tough in stable times, and nearly impossible when "the markets" are as crazy as they are now.
The value of the banks is tanking because the value of their assets are low and losing value.
People tend to want to get their money out of "failing" banks, even when their deposits are FDIC insured. (This is what happened with WaMu - they had a "stealth" run on the banks, over the last couple of weeks, and therefore they didn't have enough assets to support their debts, so the feds took them over and sold them.)
Failing banks makes the stock market tank, because the market depends on stability and there ain't none right now.
Once we have a better handle on the problem (which means, in part, determining how big is the problem) then we can chart a course. I'm all for taking the time to think this thru rather than having a shot-gun wedding.
In addition, if we are going to help save Wallstreet's bacon, we have to put some serious constraints on their behavior (also known as regulations) and a huge STOP on overblown executive compensation. In my world, when someone blows it, like these top execs have, then they get to suffer the consequences. Cut salaries and kill the golden parachutes. Or let them go out of business. (shrug)
As far as Main Street or the middle class, how is it that Congress is so dense about how to help? Once again they prove to have zero idea of what people need. Homeowners need time to get back on their feet, unemployed people need extended benefits, all taxpayers need a rebate so they can either save it (what a concept) or buy some essentials, like expensive gas! or repairs on their cars.
Small businesses could use a hand too. Again, some tax relief is the easiest way to help the most people quickly.
I hear people saying don't help either group, not Wallstreet or Mainstreet. This doesn't make sense to me. For one thing, it doesn't seem practical - since when does Congress sit around when there is an opportunity for grandstanding and partisan bickering?
Further, this is a real opportunity to change "business as usual" not only on Wall Street but in Congress. It's also a chance to rein in the Out of Control Administration (I'd personally like to hand them their head on a platter).
btw, I never thought that we should do nothing, and let the ship entirely sink. There is just no good reason to give Wallstreet and the Treasury a blank check and unlimited power, respectively.
The only thing that will work is a comprehensive fix - if we bail out investment banks, and do it right, we will also help Main Street - and that doesn't need to be implied or indirect assistance, but real changes.
Here is a brief article about why the bailout bill failed yesterday. Note that, if you listen to the 3 min audio, that the former head of the FDIC, William Issac, who also headed up the savings & loan bailout, has a low cost idea of how to fix this.
Now that would be some good news!
Here is Defazio's (Dem - Oregon, voted against the bailout) take on it. Check it out.
Just stuff that laundry behind the piano
2 days ago