Just Another Blog
Thursday, September 25, 2008
Atypically, I watched the speech from the President last night. I was unimpressed. I didn't hear anything new. While I thought the synopsis of how the problem came to be wasn't bad, I thought it was very poorly delivered. The speech had been written such that the problem was explained in very basic terms and very broadly. Still, the President seemed to have a very hard time reading the speech as it flowed across the teleprompter. Doesn't this guy have an MBA? Shouldn't dumbed-down financial topics roll off his tongue more smoothly than that? I feel quite certain that the overview of the crisis was written by someone other than GWB, but I'm not quite sure he understood what he was talking about.
The talk from the President and similarly from Paulson / Bernanke always cites in the very broadest of terms the dire consequences of inaction: harder to borrow money for cars (who gets car loans from investment banks?), harder for parents to borrow for kids college (student loans are ultimately based on the student's ability to pay), decreasing 401k balances (how do they know how I've chosen to invest my 401k funds?), increased unemployment (but not clear that this would be true anywhere other than Wall St.), and rising interest rates (which is to be expected any way after several years of historic and generational low rates). All these terrible things are implied to be inevitable, and yet there is never a chain of causation presented that shows how not removing convoluted derivative assets from the books of a handful of financial services firms will cause this vast catastrophe.
I am still not buying it. I don't think the banks deserve a bailout. I don't believe that a recession or a depression would be the worst thing in the world. I don't think the Japanese are so terribly poor-off today after their stagnant 90s; I don't think we'd be so terribly poor-off in a decade if we faced 10 years of depression. The special interests of Wall St managers, hedge fund employees, and baby boomers seem to be demanding that we ensure their current financial domination at the sure cost of future stability. I'll take ten years of recession starting last year over fifty years of 50%+ taxes and decreased government ability to support its citizenry.