Actually, hope is a good thing. It’s good psychologically. It’s even good for the economy. It’s just that a systemic, global meltdown isn’t ready to disappear quite so quickly.
It has been said that expectations are the largest factor in determining the ups and downs of the economy. A little hope is giving us the fifth straight day of gains in the Dow. One shouldn’t depend on the Dow but the Dow is reflecting some hope, as seen in better than expected retail sales and other markers.
While that is welcome it doesn’t erase the staggering job losses, foreclosures and other significant indicators. There are simply too many serious problems for them to have been resolved in a few months.
AIG points to something less than mastery of the economy by the Treasury, Fed and Congress. Still, they are trying to use more tools than the Europeans. Remember, this is a global crisis.
The G-20 met. They are not prepared to save the day. The word is out that they are not interested in a concerted stimulus. They hold tightly to the old ignorance that the key is the financial system. They want to boost the banks, as though that will solve the problem. It is an absolutely inadequate approach.
The banking system needs to be addressed but the key is that economies are shrinking. They will continue to shrink for a long time unless stimulus is applied. The banking system needs more than money. It needs a total revamping.
The government should take over Bank of America, permanently. The other banks should be left to the market forces they kept saying they are devoted to. AIG should be taken over. After all, we already own 80% of it. It needs to be broken down into pieces that are not too large to fail and sold off or closed. Any other company that threatens to become too large to fail should be similarly treated.
Paul Volcker is being effectively shut out by Larry Summers, Tim Geithner and their cabal. These are people still lost in the past. They are foundering. They will continue to founder because they just don’t get it. They think they understand what they are doing. They are only listening to their friends who share their hubris, their ignorance and their failed ideology.
Too many people are running around scared of words and concepts they think they understand. Nationalization is the biggest. We need people who are not tied to the ignorance of 1929. We need people who are willing to take actions that actually make sense. To continue the mindset that caused the problem is madness.
The banking system needs a thorough housecleaning. They still haven’t learned anything from the mess they caused. We need to give them the opportunity to experience the full effects of the nonsensical cant they preach. Let them go down the tubes.
Reinstate the Glass-Steagall Act. Separate commercial and investment banking. To this point the government has encouraged a melding of the two. They pushed Bank of America into acquiring Merrill, Lynch. That is exhibit number one of the wrong-headed thinking in Washington. All private banks should once again be restricted by state lines.
Quit paying too much for mortgages from zombie banks. Just take them. It will cause some banks to fail but they can’t survive without our tax money anyway. Their continued operation is not a matter of private enterprise. It is simply a sham propped up by our money. The important thing is to keep more inventory off the market so that it doesn’t further depress real estate prices. They are behaving as though the important aspect is guaranteeing profits to the gamblers.
These suggestions will result in a considerably shorter depression. Unless the Europeans come to their senses, they will make even our recovery more extended than necessary. Remember, it’s global. Whatever the Europeans do or when they do it, we must do what we can and hope they come to their senses sooner rather than later.
Those people and those ideas that brought us to this crisis should have no place in creating the future. They cannot find the path out of their mess. They are not only expendable, they should be prosecuted. Our present leadership, and that of Europe, is focused on salvaging them. Bad move.
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