Quote of the Day: “A crisis of the moral economy.”

by matttbastard

The greatest irony of the Thatcher crusade is that its economics pulled against its ethics. I doubt if the idealised abstinent, puritanical, self-respecting Grantham of her imagination ever existed in the real world. It certainly didn’t exist in her Britain. As a quick reading of the Communist Manifesto would have warned her, free-market capitalism is, of its very essence, subversive. It is restless, heaving, masterless, wonderfully dynamic and creative, but, in itself, utterly amoral. The hot breath of the cash nexus dissolves the ties of faith, community, family and tradition. And, as Friedrich von Hayek pointed out more vigorously than any critic of the free market, entrepreneurial success has nothing to do with merit or fairness. It is about satisfying wants and even at times about creating or manufacturing them; and the wants are as likely to be bad as good. The speculative frenzies and spectacular frauds that have studded its history are of its essence, too: among the forces that drive it, greed, credulity and the herd instinct loom much larger than the rationality that most economists celebrate.

– David Marquand, The warrior woman

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The Bottom Falls Out–Again.

by matttbastard

ugggh

Dow hits 5-year low, closing below 8000 points.  Wheeeeee!

Related: Roubini: U.S. recession will be worst in 50 years (h/t Calculated Risk)

(image via The Brokers With Hands on Their Faces Blog)

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Niall Ferguson: China, the U.S. and the Economic Crisis

by matttbastard

ForaTV:

Harvard historian Niall Ferguson warns that the greatest danger of the current financial crisis could be the possible collapse of economic relations between China and America.

Watch full video here.

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The Stench of Desperation (I am [not] Joe).

by matttbastard

Right wing identity politics and carefully-manufactured pseudo-populist rage against ‘vote fraud’; Race/red/God-baiting Obama to ridiculous extremes; the hyperbolic overreaction to McCain’s latest campaign stunt FAIL.

Oh, and my personal favourite, McCarthyism redux from Rep. Michele Bachmann:

Everywhere you turn, it seems doctrinaire right-wingers, in concert with the McCain campaign, are flailing wildly, lashing out with every trick they know, every demonstrative tactic that used to be filed under ‘slam dunk’ in the wingnutosphere handbook.

But you know what?

None of it means a goddamn thing, because–sorry, wingnuts–it’s still the fucking economy, stupid; all the irony-free ‘I am Spartacus’ circle jerks in the world won’t magically reverse the real average Joe and Josephine’s negative home equity, protect their jobs, nor will it restore their 401k, inoculate them from losing it all. Like it or not, in this election cycle, issues are trumping (trouncing, trampling) identity. Which is why your out of touch, totally overwhelmed and over-matched Maverick is losing.

Deal with it.

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Dow Drops Another 500 Points, Closes at a 5 Year Low; TSX Drops Over 400 Points, Lowest Close Since 2005

by matttbastard

As Atrios would say, WHEEEEEEEEEEEEE!

Oh, and for us Canucks, WHEEEEEEEEE, EH!

h/t Kyle for the CNN link

Related: WaPo:

“Quite frankly, what the market is looking for is some kind of coordinated action from central banks around the world.” said Kathy Lien, director of currency research at GFT Forex. The Paulson plan, she added, is like a “Band-Aid for a problem that stretches way beyond the banking system now.”

Also see Steven Pearlstein, who says this is no longer a financial crisis but rather “a meltdown — an uncontrolled and largely uncontrollable financial chain reaction that threatens serious harm to the broader economy” and may “take most of the global economy into recession.”

In other words, we are fucked.

(Psst Uncle Steve — that includes us.)

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Happy Market Meltdown Monday!

by matttbastard

So, what did we learn this weekend (besides the fact that Sarah Palin is the spiritual reincarnation of Richard Nixon and John Sidney McCain III has, according Howard Wolfson, jumped the shark)?

Well, the European banking crisis is spreading; US bank failures are expected to increase in ’09; US consumer confidence is next-to-non-existent, with a new CNN/Opinion Research Corp poll showing that 59% of Americans believe a depression is imminent and 84% consider the economy to be poor.

And now it’s Monday and the markets are open.

You know what that means:

We are fucked:

U.S. stocks plummeted in early trading today as economic turmoil rippled through Europe and investors questioned whether a bailout of the financial sector would be enough to prevent a global recession.

The Dow Jones industrial average fell more than 500 points by mid-morning but then retreated to more than 400 points lower by 11:18 a.m. It was the first time since October 2004 that the Dow fell below 10,000. The Nasdaq and Standard & Poor’s 500-stock index both fell by 6 percent but by 11:18 a.m. had come back slightly, down 5 percent and 4.7 percent, respectively.

The day started with a negative momentum that has turned into a global panic, said Art Hogan, chief market analyst at Jefferies & Co. “It is just a realization that the global economy is going to be stagnant for the next 12 to 16 months” even with the rescue plan, Hogan said.

Investors remain concerned that the $700 billion financial bailout plan enacted by the federal government last week is not enough to address the country’s fundamental economic problems, including rising unemployment and falling home prices. Banks remain reluctant to lend to each other, keeping the credit markets frozen, and overseas banks are increasingly facing problems of their own.

European officials are scrambling to bolster financial firms, and Asian investors have grown worried that a global recession will undercut their export-dependent economies. Europe has been forced to prop up other banks in recent weeks. Markets in Asia and Europe were down from between 4 and 6 percent.

“People realize that the [bailout] is not going to prevent a more serious economic downturn in the U.S., including a couple of quarters of negative economic growth,” said Marc Chandler, head of currency trading at Brown Brothers Harriman & Co. “The banking crisis spreading to Europe is another negative. It means the crisis is getting bigger.”

The price of oil fell as low as $88.89 a barrel in morning trading today, off its peak of $147 a barrel in July. The price of gold jumped as investors sought a safe haven from the market turmoil.

Glad I have today off, as I feel the need for a drink, to be quickly followed by another.

Oh, and memo to Uncle Steve: Canada is most definitely included in that aforementioned ‘we’. This is not simply a financial crisis for the US–it’s a global (yes, global) crisis.

A global crisis that, as Marc Chandler noted, is growing bigger.

We are fucked.

h/t James Curran for the vid

Related: Must read op-ed by David Rothkopf, visiting scholar at the Carnegie Endowment for International Peace and the author of Superclass: The Global Power Elite and the World They Are Making, who argues that the financial crisis is a paradigm-shifting event “bigger than 9/11”:

We now know that the costs to the U.S. government associated with this crash will surpass those associated with the wars in Iraq and Afghanistan. We also know that all such government cost estimates tend to be on the low side. We further know that the U.S. economy recovered quickly after 9/11 and that we are in the midst now of a global downturn that may last for many months and perhaps years. We know that there have been vastly more job losses — 600,000 recorded thus far this year in the United States — than were associated with the 9/11 shocks, and that the global job-loss totals that a recession is likely to bring will be measured in the millions. Among the poorest, the likely shocks to emerging markets caused by the United States’ inability to spend freely will take a devastating human toll.

By all the metrics available to us, then, the current financial crisis easily exceeds the post-9/11 war on terror in economic terms. Human costs are harder to measure, of course, and the tolls of both events have been devastating. But the financial crisis will certainly touch many more people in many more countries than did 9/11. And even greater crises may loom ahead, thanks to our unwitting creation of a financial Frankenstein’s monster of unregulated, risk-laden, global derivatives markets.

As the dithering U.S. governing class is grappling with the disposal of “toxic assets” in the U.S. economy, the world is moving on to debate what is widely seen as a toxic ideology: a form of market fundamentalism that promotes inequality.

As they say, read the whole damn thing.

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McCain’s Economic Strategy: Obama is a SCARY BLACK RADICAL!

by matttbastard

Dean Baker:

This is the first time in the history of the United States that the president has sought to provoke a financial panic to get legislation passed through Congress. While this has proven to be a successful political strategy – after the House of Representatives finally passed the bank bail-out plan today – it marks yet another low point in American politics.

It was incredibly irresponsible for George Bush to tell the American people on national television that the country could be facing another Great Depression. By contrast, when we actually were in the Great Depression, President Roosevelt said: “We have nothing to fear, but fear itself.”

It was even more irresponsible for President Bush to seize on the decline in the stock market five days later as evidence that his bailout was needed for the economy. President Bush must surely understand, as all economists know, that the daily swings in the stock market are driven by mass psychology and have almost nothing to do with the underlying strength in the economy.

The scare tactics of President Bush, Henry Paulson, the Treasury secretary, and Ben Bernanke, chairman of the Federal Reserve, created sufficient panic, so that by the time of the first vote on the emergency package in Congress, much of the public believed that the defeat of the bail-out may actually have had serious consequences for the economy. Millions of people have changed their behaviour because of this fear, with many pulling money out of bank and money market accounts, and adjusting their financial plans in other ways.

This effort to promote panic is especially striking since the country’s dire economic situation is almost entirely the result of the Bush administration’s policy failures.

And now that the mission has been accomplished, it’s once again back to the real number one issue facing the nation: Barack Obama, scary, radical associate of “terrorists”:

Stepping up the Republican ticket’s attacks on Senator Barack Obama, Gov. Sarah Palin on Saturday seized on a report about Mr. Obama’s relationship with a former 1960s radical to accuse him of “palling around with terrorists.”

“This is not a man who sees America as you see it, and how I see America,” Ms. Palin, the Republican vice-presidential nominee, said in Colorado, according to a pool report. “We see America as the greatest force for good in this world. If we can be that beacon of light and hope for others who seek freedom and democracy and can live in a country that would allow intolerance in the equal rights that again our military men and women fight for and die for all of us.

“Our opponent though, is someone who sees America, it seems, as being so imperfect that he’s palling around with terrorists who would target their own country.”

See? Obama really does = Osama (or Bobby Seale’s love child–take your pick). Who sez forwarded emails can’t be trusted?

The article to which she referred, in The New York Times on Saturday [link added -mb], traced Mr. Obama’s sporadic interactions with Bill Ayers, a founder of the Weathermen who later became an education professor in Chicago and worked on education projects there with Mr. Obama, the Democratic nominee for president.

Yep, that blast from the not-so-distant past. Of course, as Steve Benen notes, more than six months down the road there still isn’t any there there, except perhaps in the feverish imagination of Stanley Kurtz. But when did such middling, inconsequential details like “facts” or “the truth” ever stop a wingnut from opportunistically picking up a heaping pile of bullshit–even a crusty, dried-out heaping pile of bullshit–and then try to smear it all over the face of an uppity, radical negro (who, as Governor Palin so helpfully observed, just isn’t like “us”, or, rather, “you”)?

“Well, I was reading my copy of today’s New York Times and I was interested to read about Barack’s friends from Chicago,” Ms. Palin said at the fund-raiser in Englewood, Colo. “Turns out one of Barack’s earliest supporters is a man who, according to The New York Times, and they are hardly ever wrong, was a domestic terrorist and part of a group that, quote, launched a campaign of bombings that would target the Pentagon and U.S. Capitol. Wow. These are the same guys who think patriotism is paying higher taxes.

Ok, now I get it. Paying your fair share by investing in the services and institutions that we all benefit from is not actually an example of upholding one’s civic duty, but is, in fact, the moral equivalent of a musty, half-baked left-wing domestic bombing campaign from the swingin’ ’60s (like the NY Times, we won’t bother mentioning a more recent example of a vicious home-grown terror attack, since we all know it isn’t really “terrorism” unless the perpetrators are brown, leftist, or–ideally–both). This, apparently, is what passes for serious, in-depth economic analysis on the Straight Talk Express, as McCain and Palin’s team of mavericks carefully hone their bold plan to address the global–yes, global–crisis.

As the old saying goes, desperate times call for desperate measures.

Related: As the credit crunch continues to tighten its death grip on Main Street and, according to economist Nouriel Roubini, the US financial and corporate system lies “in cardiac arrest”, Der Spiegel takes a moment to offer a bitter eulogy for The Reagan Revolution and American economic dominance.

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