this economic boondoggle MAY have a good side

[nadinbrzezinski]

There are several ways to rebuild the economy

One of them is classic chicago school, disaster capitalism, and you can count your sweet ass on the chicago boys chomping at the bit. If they do, things will get MUCH... and I mean this MUCH worst

The other is to bring back factories, rebuild our infrastructure, reestablish regulations, such as Steel Stigman... and the return to tariffs and the end of globalization, at least as it stands right now.

For the moment, hold on to your horses... WAMU is also on the block, and this is just getting uglier.

By the way... this SHOULD change this election. This SHOULD be an election changer... and it is time to start calling McCain Hoover II

Oh and add Morgan Stanley too

Oh and the feds will accept equities as collateral... oh god

[madrchsod]

1. "the only thing we have to fear,is fear itself"

will obama be the fdr of our generation?

[nadinbrzezinski]

2. He may be forced to

but one thing is for sure... The Pubs steal it... Hoover two is McCain

[TheWatcher]

18. If they steal it again, there won't be a country for McCain to Hoover.

It will be the end for this 232 Year Experiment. :(

[rwheeler31]

3. Mc hoover and painland?

[nadinbrzezinski]

4. Time to use that meme... neither has a clue about the economy

[slipslidingaway]

5. Fed Plans Expanded Lending Facilities

http://online.wsj.com/article/SB122143939332934501.html?mod=special_coverage

"The Federal Reserve is expected to expand its lending facilities in the wake of the likely demise of Lehman Brothers, taking a wider array of securities, including equities, as collateral for its loans, say people familiar with the matter.

The moves, which potentially represent another landmark step in the Fed's efforts to address the deepening credit crisis, are expected to be temporary..."

[nadinbrzezinski]

6. And scary as shit, from the tax payer perspective

but I knew you knew that

[slipslidingaway]

9. Fun With Funding

Future reading, long article

September 2008
http://contraryinvestor.com/mo.htm


snip>>

"But perhaps another major issue that is not being given enough attention is the fallout consequences due to the one balance sheet not destined to shrink during this process of deleveraging we have described, and that's the balance sheet of the Federal government. While the financial markets, the household sector and in good part the corporate sector engage in long overdue deleveraging, a natural offset to avoid either the reality or perception of collapse will be the continued expansion of the government's balance sheet. And this process of expanding the Federal balance sheet, as you know full well, has already begun in full force. For now, the de facto bail out of the GSE's and the residential mortgage bail out bill are two poster child examples of this phenomenon at the exact point of acceleration. Even the auto manufacturers have their hands out. Will it be the airlines next? Unfortunately, we expect a lot more where this came from ahead. In one sense, the government really has no choice. This is the price all US taxpayers will bear for years of regulatory self induced blindness. Could our current set of circumstances have been avoided? Of course, but regulatory oversight simply turned a blind eye in deference to the Wall Street and credit cycle driven profit motive. Let's face it, a lot of individuals became very wealthy during the prior credit cycle mania period, now clearly seen to be at the expense of the larger US taxpayer base. Privatizing profits and socializing risk. Sounds like Russia a decade ago, no? Welcome to the USSA. As Jim Grant recently opined, "where is the outrage?". We have no idea.

Enough of the ranting and raving. Let's get to the point. As this process plays out and the Federal government is continually forced to expand its balance sheet as an offset to the leverage contraction occurring largely throughout the remainder of the economy and domestic financial markets ahead, THE big question becomes, where will the funding for this balance sheet expansion come from and what will it ultimately cost? A question near and dear to the hearts of US taxpayers everywhere, to say nothing of the investment community. This, we believe, is now and will continue to become one of the most important questions for our investment activities. We cannot take our eye off of this ball as we move ahead. Point blank, and we could not be more serious when we ask this, will the US face a funding problem at some point?"

[Waiting For Everyman]

7. It's a good time to talk about re-negotiating the trade agreements.

We have a perfect opportunity now, with where they stand. Pat Choate was talking about this on C-SPAN a few weeks ago, and callers from ALL parties were very interested in what he had to say. (Perot's 1996 running mate.)

CitizenWatch.org has good info on it too. I think this would get Obama votes.

[alcibiades_mystery]

8. No retreat from globalization

Globalize social justice.

[nadinbrzezinski]

10. I am betting the US, as it becomes a second class power, will look

inwards now... it is in our national DNA

[kurt_cagle]

11. Hmmm ...

I have to wonder if in fact we're at a stage (or will be within the next decade) where it becomes necessary to try to find a new way that doesn't fit neatly into either disaster capitalism or retrenchment and isolationism. We've had an entire century of economics predicated upon growth, necessary at first in order to build up the US from an agrarian to an industrial and then post-industrial society, with much if not most of it driven directly or indirectly by the harnessing of oil.

Now, however, we've entered into a new regime where resources are either played out or in increasingly inhospitable or politically hostile environments, and where information moves around faster than it is possible to think. Our cities are built on the assumption that energy is cheaply available and there are no consequences (beyond the waste of an employee's time) for two hour long commutes, and we've become addicted to our thousand mile salads washed down with 2500 miles Starbucks coffee. Everywhere you turn, there are signs that we've exceeded the carrying capacity of the planet, and the planet is entering a feedback loop that will end up reducing the population regardless of our best intentions.

My suspicion? We're entering an age of relocalization and simplification as we face a future of diminishing energy inputs. Decision-making becomes provincial, rather than federated. Localized currencies appear, issued by states, regional blocs or corporations (to put this into perspective, in Canada, until the mid-1860s the principle currency was the Hudson Bay Company scrip, rather than money issued by a national government or a provincial entity. With such a script you knew that a beaver pelt was worth roughly $100 dollars regardless of where you were, whereas the scrip of a country can fluctuate significantly, especially with nothing else to back it up. In other words, we're entering a regime where growth oriented economies will have to give way to sustainably-oriented ones, which have vastly different assumptions about labour and production.

As with any transition of that magnitude, it will result in a lot of dislocation for a lot of people, will require that we change our assumptions regardless of where we are in the social or economic strata and will be met with a great deal of resistance from people who will fight to maintain the status quo long after the status quo is no longer even vaguely maintainable.

[HCE SuiGeneris]

13. An excellent article, Kurt.

You should repost this as a stand-alone OP, if you haven't done so already. Thanks for the very cogent thoughts.

[nadinbrzezinski]

14. Correct, at many levels

I have written about peak oil, hell I have written about a post peak oil world in fiction... which by the way... has yet to be accepted by publishers

But that is a whole different kettle of fish

Go and post it as a stand alone OP, it deserves it

[HCE SuiGeneris]

12. Is a garbage bag filled with poop deemed to be equity?

'cause I'm just wondering what the Fed's stringent requirements might be...

[nadinbrzezinski]

16. Think of this in the following way

a kid trying to hold the dike together with finger in hole, problem is it was breached and water is coming in to his waist, next to him

[Cleita]

15. Isn't it Chicago school that has gotten us into this mess?

Why would any one want more of this? We need to go back to Keynesian economics to rebuild this country. It was this theory of ecomics that Roosevelt used to bring us out of the Great Depression.

http://en.wikipedia.org/wiki/Keynesian

[nadinbrzezinski]

17. Absolutely

but they will try to go chicago on you and me

and that is why I said they will try.. this is PURRRFECT for the disaster capitalists, they LIVE for moments like this