A ponzi scheme that would make Charles Ponzi blush.

If socialism is the ideology of redistributing the wealth from the few to the many - then Obama can be called a kind backward socialist. The Obama banking plan takes the debt of the few and makes it the debt of the many. James Galibriath, who carries an intellect and pedigree that few can match, said this: The plan is extremely dangerous.

The massive debt the banks are now holding will be transferred to you and me and everyone we know, and for that matter, every American we don't know. Even Charles Ponzi would not have the balls to try a stunt like this.

I see no real reason to believe that banks will start making bad loans again. That is what fueled the economy for the past 7 years. That is not coming back. All of us need to ingest that little nugget. The era of easy credit is - and should be - over.

Do I think Geithner is a bad man? No. But this cannot be stated enough: Obama, after slapping us silly with "hope and change" for over a year, went out and hired the people who created the problem to be his closest economic advisers. They were never going to come to a solution that punished the bad players (the bankers who bought this crap) and saved the innocent (most of us, who did not take out sub prime mortgages on houses we could not afford) from all but the most unavoidable damage.

My sense is that Obama and his team think this is a good and fair plan. In the culture that these men move in - this "corporate socialism" seems equatable. They are financiers - committed to the idea that THEY run the world. If they are safe - all will work out for the rest of us. Another trillion in debt lathered on top of the "little people" is a small price to pay. The financiers will get back to lending, and the wealth will roll out...in other words the ponzi scheme that has been the American economy since the 1970s will kick back in. The bankers will inflate another bubble- which will last until November of 2012 - they hope.

Simply because the government (you and me) now owns this mountain of crap does not mean that is is suddenly not a mountain of crap. It is. The difference is that now WE will own it all. The intention is to have us pay 100 cents on the dollar for bundled mortgage feces that is worth 30 cents on the dollar. If that.

The more I read about this, the more I am convinced that the right thing to do was either to nationalize the bad banks for one year, clean them up and rewrite the rules for the entire sector so that never again would any one entity like AIG be able to hold us hostage.

Or to let them fail, and to take our damn cod liver oil. We will have to take it regardless. And now I fear the swallowing will take a generation.

President Chuckle's plan gives the bankers a pass - and passes the pain on to us and our descendants. Anyone who still believes that Obama is anything but an errand boy, sent by grocery clerks, to collect a bill - is in a coma. The bill was presented on Monday.

For further insight please read Orlov's post called Welcome to Fluffland!

As Things Fall Apart.

First music. It is a holiday shortened week - we need to set priorites.
Yesterday the Gypsy Kings version - today the orginal:


The information in the article linked below is so thick it makes my head hurt. ( I am writing this at night and posting it in the morning - as there will be no heavy lifting by my brain before noon.)
It's no coincidence that AIG, Fannie and Freddie, Lehman Bros, General Motors, General Electric have all fallen off a cliff at the very same time. They are all victims of the same low interest, easy money finance swindle which allowed them to roll over huge amounts of short-term debt at artificially low cost...

I think that means that we've been snookered. Or is it a ponzi scheme? One in which most of us have - driven by blind desire to consume more and more- have been unwitting (witless?) participants. As national crisies go I'd say we are in the midst of a CAT 5. (Forgive my maleable use of metaphors - I was stoned during English in high school.Then got a degree in theater - which hardly helped matters.) While not as abrupt as Pearl Harbor or 9/11 the pain will end up worse for the society but of a diffenent nature.

My natural pessimism springs from a desire to be optimistic. While trying to comprhend what is happening in the econmy I keep atempting to see the silver lining without fantisizing.

So far. So bad.

I really DON'T get it. But I'll try:
The market has fallen 2000 points since Obama won the election and Paulson handed out billions in mystical money. The "they" that does this stuff is, with ever increasing failure, trying to recreate an economy, that was false to begin with, by dumping mystical currency into the system. Gasoline on fire. As they burn, the pretend dollars being dumped are making the fire brighter and hotter. Sadly, Obama's best and brightest are going to pour more on to the fire. This may work in the short run. Things working in the short run IS the problem in the long run.

(Example: Houses are not falling in value - they were never worth that much to begin with. Anyone with half a brain knew this. But if we've learned anything this year we've learned this - I pray-: Fantasies are powerful. Even so the faux wealth created by the faux value of the real estate did give the illusion of real wealth - in the short run.)

Trillions in conjured "wealth" has evaporated. At some point that wealth butts up against reality. Bluntly put: people lose jobs. A lot of them. We'll be lucky if the unemplyment rate is 10% in a year. I think that is optimistic. Then again, as I've said, I'm no ecnomist - just a guy who feels like he has a front row seat to the end of an era. Pass the popcorn - if we can afford it.

George W Bush and his remaining court jesters are incompetent. (Then again, maybe not - W's cabal will probably survive just fine.) On January 20th, with all sorts of fanfare, Obama and his court get the booby prize.

The silver lining? In 10 years we may land back in a nation that has real wealth based on real labor and real manufacturing-not A.R.M.s and houses used as credit cards. But the capucino liberals and the NASCAR conservatives may not take such a romantic view as things fall apart.