September 2008

Palin on Pakistan

The Devil We Know...

WaMu was wiped out with an electronic bank run. There is panic in the world of banking, and although the whole idea of spending as much money as was spent on five years of war in Iraq at a stroke to rescue the credit markets makes reason stare and stomachs turn, it must be done.

If that panic isn't halted, WaMu's failure will pale in the face of business closures due to an inability on their part to secure financing for day-to-day operations. Banks have suspended lending to each other and they need a sign from Washington that there is something substantial propping up the system.

Yes, these are guys that serve Mammon, not God. We want to see them burn for their sins. But if we don't move to prop up the market now, they'll take us all down to hell with us.

I would say this episode shows the bankruptcy of unregulated free-market capitalism. It's as pollyanna as notions of socialist workers' paradises. We live in a world with evil men afoot, and no pure system is going to succeed once they latch on to it for fun and profit. Better to have the annual growth rates slashed a percent or two and have a smoother climb up than risk an unregulated crash into the ground.

JP Morgan and the US Government

Why is it a bank that had connections to the WorldCom fraud and the Enron scandal allowed to take up deals to pick up assets from Bear Stearns and Washington Mutual? JP Morgan Chase has just picked up its second cherry in the US banking/finance collapse, thanks to the federal government.

But wait - there's more! Henry Paulson, the US Treasury Secretary, is a former CEO of Goldman Sachs, and his proposed bailout plan would not wipe out the share values of that company's stock. It'll boost it, in fact.

The chaos in the Russian government and economy in the early 90's led to kleptocracy there. Are we witnessing a similar situation here?

EDIT: On the debates, McCain just said, "Iran has a terrible government, so they have a terrible economy." Oh McCain! Judge another nation not, lest thy nation be judged by the same measure...