Filed under: Democrats, Economy, Election 2008, National Life, Republicans
I by no means consider myself an economist. I haven’t taken economics and most of what I know comes from new analysis, professor analysis, and the help of my parents who work in the healthcare and insurance sector.
My Dad yesterday commented about how he was upset that the Democrats were breaking overwhelmingly in favor of the bailout bill while the Republicans are against he. He thought it was going to break the other way. Obviously, he didn’t quite understand the bill- he thought it was still Bush’s plan, rather than a bipartisan effort. Also, his old school conservative laissez-faire leanings were starting to come out.
Here’s a little explanation for my own understanding, my dad’s, and for everyone else (liberal leaning of course):
The calm version, courtesy of Steven Pearlstein:
The basic problem here is that too many people don’t understand the seriousness of the situation.Americans fail to understand that they are facing the real prospect of a decade of little or no economic growth because of the bursting of a credit bubble that they helped create and that now threatens to bring down the global financial system.
Politicians worry less about preventing a financial meltdown than about ideology, partisan posturing and teaching people a lesson. Financiers have yet to own up publicly to their own greed, arrogance and incompetence. And leaders of foreign governments still think that this is an American problem and that they have no need to mount similar rescue efforts in their own countries.
In the coming weeks and months, all of these people will come to understand how deep the hole really is and how we’re all in it together.
They’ll come to understand that the giant sucking sound they hear is of a massive deleveraging of the global economy and the global financial system as households, governments, businesses and investment funds adjust to living in a world with less debt and more inflation.
And they will come around, reluctantly, to the understanding that the only way to get out of these situations is to have governments all around the world borrow gobs of money and effectively nationalize large swaths of the financial system so it can be restructured, recapitalized, reformed and returned to private ownership once the crisis has passed and the economy has gotten back on its feet.
In the next few weeks, the center of attention here in the United States will shift from the Congress and an exhausted Treasury to the Federal Deposit Insurance Corp., which will now have to rescue any number of failing banks, either by taking them over directly or managing their transfer into stronger hands. It will also shift back to the Federal Reserve and other central banks, which will have to step up their efforts to maintain liquidity in money markets and prevent the credit crunch from taking down hedge funds, businesses, and state and local governments.
These will, alas, be only holding actions. Restoring real stability to financial markets will require the kind of systemic approach and extraordinary government interventions that the public has refused to authorize and finance. In better times, the public might have put aside its reluctance in response to the strong and unified recommendation of political and business leaders. But it is a measure of how little trust remains in both Washington and Wall Street that voters are willing to risk a serious hit to their wealth and income rather than follow their lead.
The…erm…less calm version from Kevin Drum:
I spent most of the day feeling about the same way I did on 9/11, consumed with a debilitating combination of fury and despair. I don’t feel much better tonight, but here are a few thoughts on the failure of the bailout bill anyway:
- The Republican Party Is Now Officially Hostage To A Band Of Primitive Conservative Ideologues Whose Knowledge Of Economics Was Already Outdated When Christians Were Being Fed To Lions. They Are Simply Beyond Belief.
- I’m Not Much Happier With The Jello-Like Support The Bailout Bill Got From Many Of Our Leading Liberals. Unfortunately, I Include Brad DeLong In This Group, But He’s Certainly Right When He Says, “This Republican Party Needs To Be Burned, Razed To The Ground, And The Furrows Sown With Salt…”
- John McCain Deserves To Be Tarred And Feathered. His Behavior Over The Past Week Has Been Almost Unbearably Craven.
- Barack Obama’s Behavior Has Been A Little Better. But Only A Little. He Hasn’t Exactly Displayed A Backbone Of Steel On This Issue.
- An Awful Lot Of People Really, Really Still Don’t Get It. I Swear, If I Hear One More Blogger Or Pundit Suggesting That Maybe It’s Actually A Good Thing The Bailout Bill Failed Because Now We Have A Chance To Pass An Even Better Bill, I’m Going To Scream.
- After The Failure Of The Bill, The GOP Leadership Invented A Fairy Tale About Nancy Pelosi Being At Fault For The Vote Debacle Because She Gave A Partisan Speech On The Floor Of The House. The Press Is Almost Unanimously Reporting This Seriously. If Republicans Had Blamed It On Santa Claus, I Guess They Would Have Reported That Seriously Too.
- Do You Know The Old Saying About Credit? “It’s Like Oxygen. You Don’t Know How Much You Need It Until It’s Gone.” We’re About To Go Into Financial Hypoxia, And It’s Not The Millionaires Who Are Going To Suffer Most From This.
- There Are Many Of You Who Probably Think I’m Overreacting. I Hope You’re Right.
And if you think this post is too caustic and bleak well, you should have seen the first draft that Windows ate. This is the toned down version.
It’s odd. The fact that I’ve been warning my friends about potential problems in our financial sector for nearly 2 years now didn’t make today any easier. In some ways it might have actually made it worse. Either way, well… yes, I am most definitely beginning to panic. This is very, very not good. I hope very much that I’m wrong on this, but I suspect things are about to go very far downhill very quickly.
UPDATE: Meanwhile, many on the left are gloating because they believe this now means we can get a “better bill.” Before I react to this, let me revise and extend my earlier remarks just a bit. When I wrote the first update to this post, I did not mean for it to in any way imply that I thought the collapse of the bill was a good thing. The “now that its failed, let’s make the bill more progressive” was an attempt to suggest a way to make lemonade out of lemons. In abstract, I prefer a more progressive bill. In reality, I would have very much preferred the bill pass as is. Now, with that out of the way…
The kids at MyDD and dKos are gloating tonight about the failure of this bill. They do not understand that they are playing with fire. For every day this crisis goes on, the resulting recession gets deeper and longer. Given that most if not all of these people hope for and expect an Obama administration, they ought to think carefully about the long term political implications of anything even remotely resembling an economic collapse. Moreover, if they are truly “progressive,” if they truly believe all of this “we are all in this together, so we must help one another in times of distress” rhetoric that they so often put forth, they need to start thinking about the very real pain that inaction is going to create.
I need to repeat myself here:
Please, please remember: the Great Depression didn’t happen overnight. It is not as if one morning everything was fine and the next it was not. History books might give that impression, but if they do they are wrong. Black Tuesday is a symbolic starting point for the Great Depression, nothing more. It did not “cause” the Depression any more than the assassination of an Archduke “caused” the First World War. Complex events always have complex causes. Always.
Financial catastrophes unfold over weeks and months. They do not happen in a single day. Yes, some days matter more than others, sometimes much more, but they are never alone in their importance. Never.
The loss of over $1 trillion in wealth today may be just the tip of the iceberg. I hope beyond hope that I am wrong about this, but I do not see any reason to believe that I am. The problem, as Pearlstein notes above, is that the full ramifications of today’s events won’t be felt for months, and in some cases even years. These things play out over time, and by the time their implications are obvious it is usually far, far too late to react.
History does not pause for us while we make up our minds.
The problems we face are enormous. They are not going to go away. Put aside your ideological dreams and get serious about this. Everything in our lives runs on credit. Everything.
Your checkcard? It is a form of credit.
Your bank account? That money isn’t in the bank. It has been lent to someone else on credit.
The gas station where you fill up your car? It buys from suppliers on credit.
Your car? No doubt you bought that on credit.
The grocery store? It buys that food you ate for dinner from its suppliers on credit.
The corner bar? It bought that beer you drank tonight from a supplier on credit.
Credit crises roll downhill. Once this thing gets going, it will reach you. You will not be able to avoid it.
I am not trying to cause a panic. I’m just trying to make you understand. Everything in America runs on credit. And credit is disappearing at a ridiculously alarming rate. It doesn’t really matter right at this moment how we got here. We’ve got to find a way out of this mess.
To repeat: This problem will not solve itself, and history will not pause and wait while we deliberate.
Filed under: Life
Usually I don’t post diary-like or personal details about intimate parts of my life on this blog. But I don’t know who reads this. Maybe the people that part of this is directed to will read it and figure it out. Here it goes:
This weekend was amazing. Crazy. Busy. Sleep-less. Saddness. Birthdays. Happiness. Full of friendship, more than friendship (?), Barack Obama, and questions.
Barack Obama. Debate Friday was great. Time to spend with friends. Time to get back to the true reasons why I want Barack Obama to be our next president. Time to watch one favorite totally in his element. Canvassing Saturday started off bad. Not bus, feeling sick, little sleep, wanting to be somewhere else. Reached Salem and everything changed. The hustle and bustle of campaigning came back to me. Working for change, doing what I was meant to do. Talking to voters, figuring out our turf, driving around, knocking on doors, commentating on politics with Abby and the rest. Fun times. The time of my lfie. My favorite thing to do.
Friends. Friday night dinner with my two best friends. Loved the fact that we went all the way to Verizon to get my phone fixed. We need to hang out more, sorry that Barack Obama owns my life. After the election, I swear, we will hang out all the time. Remember, I’m always here for you if you need me. Spending time together at the debate and while canvassing. My BU for Barack friends are becoming my life. What will happen when the election’s over? The surprise cake and dinner on Saturday. The shitting stuff from Dave. Starting at 7:30. My crazy OCD. Laughter and jokes. Watching your PDA made me want someone like that. Someone to share my birthday with. The presents and fun times. No dinner Sunday, but we’ll make it up, before the election. Get ready to get dressed up!
Sadness. Paul Newman on Saturday. Ben’s update on Friday. Carolyn’s on Friday. Cancer defined my life for over a year and a half. College is supposed to be cancer-free, but I know that it will never escape me. There are nights where I cry myself to sleep. There’s nothing that I can do to protect you or the rest of our friends. It is a horrible disease and I can’t change anything. Sitting on the bus Saturday after having talked to Mom, all I wanted was for someone to hold me and tell me that everything would be okay in the end. Ben’s tests would come out negative. Carolyn’s too. We would reach the 5 year mark and everything would be fine. But somehow I know that none of that will be true. Somehow I can feel like I will be visiting Carolyn and Ben at Dana Farber. Aaron, you will be fine. I will do everything in my power to make sure that happens. I think that’s why I want you to come to BU, so I can keep an eye on you even when Mom can’t. I can’t wait to see you tomorrow. Seeing you will show me that you are still ok. You are my little brother and you are not sick anymore. Cancer took away my high school years and your childhood. It brought our family closer together. It will be around forever. No matter how many walls I build up, one simple call or caringbridge update can knock them down in an instance.
Questions. Was it my need to have what they have on my birthday weekend? Was it my need to feel comfort after all of the news of the day? What drove me to you? How do I feel? I hope it’s that things are starting to change. I want to give you the answer you would like to hear, but I’m really just not quite sure. A hopeless romantic down to the soul, I want someone strong and protective, nice and caring. Someone that will surprise me with something cute. Someone that will listen to me. Someone who I can hold interesting conversations with. I want to like you. I’m trying to give you a chance. You just need to surprise me and come out of your shell. Be assertive and do something adventurous. You take the next move, I know you want to. And you know secretly, if you do, I will be right there. All you have to do is call, text, or message. You decide where to go from here. Impress me. Show me how adorable and caring you can be. Be the person that you and I know you really are. Please.
That’s it. That was my weekend. Crazy, I know, but that’s my life. Let’s hope this week and next weekend bring some more adventures!
McCain was sure quick to jump on the “I-Saved-The-Economy-By-Suspending-My-Campaign” Bandwagon earlier today when it looked like the bailout bill was going to pass in the House:
I put my campaign on hold for a couple days last week to fight for a rescue plan that put you and your economic security first. I fought for a plan that protected taxpayers, homeowners, consumers and small business owners.
I went to Washington last week to make sure that the taxpayers of Ohio and across this great country were not left footing the bill for mistakes made on Wall Street and in Washington.
Some people have criticized my decision, but I will never, ever be a president who sits on the sidelines when this country faces a crisis. Some of you may have noticed, but it’s not my style to simply “phone it in.”
But when the bill failed, the Republican roll call was tabulated and 133 voted nay while only 65 vote aye. McCain obviously did not turn out his party rank-and-file to vote in favor of the bill. Should he be to blame for the bill’s failure?
Look for BU!
Filed under: Election 2008
Since when? Do we want all of our president’s to be dbags? That won’t exactly help our world image no will it.
Filed under: Life
September’s almost over, but in light of recent events, both good and bad, it has become necessary to get out the awareness and try to raise money to both fight cancer and help those afflicted.
Check out lovely Caroline and Larry on in a Boston Globe Photo Gallery designed to promote awareness.
And now the bad:
September has not been a good month for the children, parents, families, and family friends that I left behind mostly at CCMC 2J and MS8 in Connecticut as I headed back to school at the end of August.
To Beth and the rest of her family, stay strong (and really you don’t actually have to eat any of Mom’s cooking!).
Very importantly, to Ben. We love you buddy and everything will turn out ok in the end. You beat it once, you can do it again if need be. Plus, heading up to Dana Farber means that I can stop by and visit. Screw school work, I’m going to bring you some awesome treats. Get pumped!
Do you want to make a difference?
Check out these great links for ways that you can help children with cancer:
CCMC Hem / Onc (2J and MS8 = Baral family home November 2005 – August 2006, frequent visitor November 2005 – Present)
Thanks for helping these kids, kids who became my family and some of my best friends.
Filed under: Life
While not the biggest fan of Paul Newman as an actual person- the cold-shoulder grandfatherly type does not quite appeal to me – this man has done amazing things for me, my brother, my family, and people like us all over the world through his Association of Hole in the Wall Gang Camps. Paul Newman will be sorely missed by many, but his legacy will remain in all of the children who’s lives have been changed by going to the Hole in the Wall Gang Camps.
Thank you Paul Newman for all that you have done.
Tony Bennett’s birthday concert for the Hole in the Wall Gang Camp, November 2007:
Filed under: Election 2008
Via TPM, a CNN poll:
Thinking about the following characteristics and qualities, please say whether you think each one better described Barack Obama or John McCain during tonight’s debate:
• Was more intelligent: Obama 55%, McCain 30%
• Expressed his views more clearly: Obama 53%, McCain 36%
• Spent more time attacking his opponent: McCain 60%, Obama 23%
• Was more sincere and authentic: Obama 46%, McCain 38%
• Seemed to be the stronger leader: Obama 49%, McCain 43%
• Was more likeable: Obama 61%, McCain 26%
• Was more in touch with the needs and problems of people like you: Obama 62%, McCain 32%