I found this Newsweek article by way of HuffingtonPost this morning. I like the HuffingtonPost title best: "How Wall Street Rolled Obama." Michael Hirsch has a very good take on what happened. But I think he doesn't take the conclusions far enough. The problem with everything the Obama administration has done to bolster the economy comes out of the premises that are the foundation of his actions. One of the basic assumptions is that the big banks are American companies whose executives have an interest in saving the American economy. These are international companies whose financial interests are global and they don't really care about the American economy as long as they make money. So far they have made money overseas and from sitting on the cash the U.S. government has so generously given them. Another basic assumption is that the more general American economy depends on the economy of Wall Street and not the other way around. For decades those Wall Street banks have made obscene profits by creating phantom value--taking loans based in the main street economy (mortgages, car loans, etc.), bundling them into CDOs and other such abstract instruments and selling those bundles off in sections, and then bundling the bundles and repeating the process. And to make matters worse, they did it with 'borrowed' money. These banks got the illusion of prosperity because they 'made' fat fees on every stage of this process and to keep the whole thing going they had to generate more and more of these funny money instruments. Unfortunately, Obama's main advisors in this (Treasury Secretary Geitner and Larry Sommers) are both products of the Wall Street economy and see protecting that economy as a primary objective. Until the assumptions change nothing else will change.
Monday, August 30, 2010
Good Monday morning to everyone. Nothing momentous to report. The gardens are producing but everything is in maintenance mode. The weather is hot again until a bit later in the week. It was hot enough yesterday for us to close up and put the air on. And my dehydrator stopped working. Thankfully it was not a malfunction. It has some kind of a fail-safe switch which shuts it off if it becomes too hot and without the air conditioning on it got hot. I have it working now to finish off the peppers and tomatoes I put in yesterday morning. We are breathing a sigh of relief because we just bought it about a month ago.