So -- the financial markets, the incoming administration, Thanksgiving. What do you think?
If you follow the markets at all -- and how is it possible not to? -- it's hard to find any comfort. The Dow down 6,000 points in a year -- 45 percent. Investors holding paper losses of $9 trillion. Profits plummeting. Cutbacks. Layoffs. Companies (the U.S. auto companies?) going toes-up. The dread R and D words -- recession, deflation, depression. Many people are wiped out, and find me someone -- anyone -- who isn't worried.
But hey, the government is coming to the rescue . . .
In the contemporary cliche, that may be more part of the problem than part of the solution. To quote from a recent news account, "In little more than six months, the government has put a federal guarantee behind the biggest Wall Street firms, taken over half the $11 trillion mortgage market, gained ownership of the world's largest insurance company, enacted the biggest financial bailout in history, and (become) the lender of last resort for corporate America."
And you're not happy about that?
It's all being done in the name of stabilizing the markets and the financial system -- to build both liquidity and confidence. Yet much of it is mere nibbling around the edges. The best way to stabilize the financial system is to stabilize the dollar. The current infusions and regulatory Band-Aids may help bring a short-term fix, but they will not prevent future liquidity and confidence crises.
Insufficient regulation brought us to this point. That, and the 1999 Gramm-Leach-Bliley Act that repealed the 1933 Glass-Steagall Act separating commercial and investment banking.
You're mouthing the Obama campaign line -- wherein he and his brain trust, recently empowered further by Alan Greenspan's bizarre "confession" about the failure of free-market economics, are blaming the subprime lending crisis that cascaded into the financial collapse that morphed into the recession on . . . deregulation. It's baloney.
But the financial people around Obama -- his new team -- are brilliant. They've got the answers.
Many of them are not new but Clintonian retreads -- so much for Obama's "change" mantra on that front. And their answer seems to boil down to more intrusion, more regulation, and more redistribution. Throwing more taxpayer money at every unproductive entity with its hand out. They're wildly supported in all this by the increasing Democratic cohort in Congress, many of whose members (most notably -- regarding for instance Fannie Mae and Freddie Mac -- Barney Frank and Chris Dodd) have contributed hugely to crushing the economy.
At least we can hope they'll do the right things.
Ross Mackenzie lives with his wife and Labrador retriever in the woods west of Richmond, Virginia. They have two grown sons, both Naval officers.
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