Ten Days That Shook Capitalism
'The past 10 days will be remembered as the time the U.S. government discarded a half-century of rules to save American financial capitalism from collapse. On the Richter scale of government activism, the government's recent actions don't (yet) register at FDR levels. They are shrouded in technicalities and buried in a pile of new acronyms. But something big just happened. It happened without an explicit vote by Congress. And, though the Treasury hasn't cut any checks for housing or Wall Street rescues, billions of dollars of taxpayer money were put at risk. A Republican administration, not eager to be viewed as the second coming of the Hoover administration, showed it no longer believes the market can sort out the mess.'
--from David Wessel's gripping front-page article in the Wall Street Journal last week. It vividly cut to the heart of the real issues involved in the Fed bailout of Bear Sterns, and did by far the best job of highlighting what it all means than anything else published or broadcast anywhere that I saw. It proves once again why the WSJ is such a unique journalistic jewel, and why serious people remain so concerned about the fact that the Australian shark Rupert Murdoch now owns it.
9 Comments:
John,
I agree about the WSJ's it is one of most interesting paper to read. It is actually a requirement for most business classes at BW.
On a personal note, I am hopeful that our economy can be rescue but I do not think that it will happen without huge sacrifices on the middle class. Someone in government finally woke up and said enough politics, we have to do something.
Are more controls necessary? Not sure but as a populist, I feel that the latest actions taken show that corporations are still running the show and that a government who is based only on capitalist values will be doomed to failure in this new world.
Thanks for this link, John.
We don't know how much damage the Republicans and Bush have done to America.
I think most of us are just beginning to feel the magnitude.
People who hate government should never be governing.
At least when you are being told "the sky is falling," the WSJ has the courtesy to do it in fine literary style. No blog today, John. Were you out reconsidering your investments?
Yes Craig (a first time commenter, I think?), I spent the entire day repositioning my net worth to offshore accounts. It was time-consuming, but had to be done. Actually, just too many real writing deadlines to tend to, but I'll return tomorrow.
Jeanne, I certainly think we need plenty of additional regulation. This latest meltdown is a direct result of the Congress' atrocious decision to do away with the Glass-Steagall Act, a Great Depression-era law that prevented banks from getting into risky investments. This problem followed that deregulation as night follows the day.
Roldo, it is eerie how we're reliving deregulatory disasters from the Reagan era. I'm reading a book now on that presidency, a withering catalogue of mistakes and raiding of the public welfare, and it all sounds like Round One of the Bush 43 mistakes. We never seem to learn.
Having just spent the past couple of years writing a novel that explores the American obsession of homeownership, I've perhaps become overly sensitive to the way politicians at every level continue to respond to the mortgage crisis, while ignoring and exacerbating the housing crisis of affordability. As the cost of housing soared during the boom, few people in positions of power said a word about the many members of the middle class who were being priced out of the market. And, despite the drastic drops in housing costs, those people continue to be priced out in many areas, primarily major metropolitan areas. Changes to the lending industry are overdue, to be sure, but, by tightening the purse strings, yet another barrier to homeownership is being erected for many in the middle class.
Once it was clear homeowners who bought more house than they could afford were in danger, both parties were falling all over themselves to cooperate in pursuit of a solution. Of course, no one bothered to take note of this while it was happening. Chicken-Little labels were applied to those who bothered to ask questions like: "How can THEY afford a house like that when WE make more money and WE can't afford it?" Where were all these people with all this money coming from? How were they able to keep paying more and more for these houses? Who cared? Nobody important, I guess, as long as Wall Street was happy.
Of course the crisis is far more complicated than this, but it's also more complicated than the politicians seem to realize. Too little is being said about the millions of middle class workers who are going to flounder in their pursuit of homeownership for untold years as a result of this.
Once again, homeowners get attention because they are considered "likely voters," and renters aren't. It's a very sad circumstance indeed.
Interesting perspective, TJ, as always. The McMansion crowd is certainly an interesting cohort group.
Don't know if you check your old strings, but I saw your Lincoln article and was happy to see one of my favorite characters back in the news. Wanted to see what else you had written, and if there is a cache of your accumulated work I could access. Articles of similar historic or general interest working their way through your brain's internal machinery?
Dang it! Hit wrong key before finished signing name, since you noticed me as new blogger.
Craig, thanks for the question. In fact, I did publish another article on Lincoln just a couple of months ago, about his round trip visits through Cleveland. But it's not online, and so I'll have to just post the PDF here sometime (I'll be happy to email it to you if you send me an email at john.ettorre@gmail.com).
I am long overdue in putting up an archive of my published writing. It's eluded me in part because of the scope of it. After 20 plus years there's just so much of it that I haven't known where to begin. But I'll redouble my efforts soon to get at least some of the more worthwhile stuff up. But again, thanks for your interest, and for commenting too.
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