Preparing one’s self and family for an uncertain future. News and opinion on peak oil, economic and environmental crises, and sustainability in a post-carbon world.
This is more or less what Secretary Paulson and the Bush White House are saying to Congress right now. As I understand it, the bill submitted to Congress more or less would give Paulson the discretion to bail out whomever he chooses with no congressional oversight. I applaud Congress finally locating their cajones and standing up to the White House. Maybe they’ll try to become the party of the working man again after all.
This bill follows the usual Bush tactics that we’ve seen in previous crises like 9/11 and the Iraq war vote. Submit a bill to Congress that’s extremely favorable to you and your cronies and then warn Congres to not screw around, for national security is at stake or some similar BS. The message being sent is “give us what we want, or we will make you look like the bad guys that dithered while things went to hell.” To me, this sounds like the Patriot Bill passage (where congress voted on a bill they hadn’t even gotten a chance to read in many cases). Don’t ask questions, there’s no time… just give us what we want!
The Democratic-led Congress are right to stand up to the White House in this case and press for more oversight and try to get what they can for the taxpayers. Naturally, the Republicans and banking lobbyists are indignant that the Dems would actually try to put limits on Bank CEO golden parachutes or take an ownership stake in companies that approach the bailout window. They want the positive aspects of the new socialism without the negative ones… that would be unpatriotic I’m sure…
The game of brinksmanship being played right now is for extremely high stakes, and we’ll see who blinks first.
Welcome to socialism… for big business at least. Private profits, but public losses. The ‘free market’ suddenly isn’t free anymore, and we have become the suckers holding the bag.
No one knows the final dollar amount for sure yet, but I’m positive that by them time everything’s said and done American taxpayers have shelled out at least 2 trillion dollars with all of the bailouts that have been promised in the last few months. I don’t believe a word that comes out of Treasury Secretary Paulson’s mouth right now. He asked for all this power earlier this summer claiming it was a good idea, but he didn’t think he’d have to use it, and now look at where we are.
This stuff came to a head very fast. From what I have been reading, it sounds like this was a combination of a couple things. Rumors are out there that some of our foreign creditors more or less laid down an ultimatum stating “bail out our investments, or we stop buy Treasury bonds.” Without foreign banks buying our debt, the government basically stops. Another rumor was that the Bush team saw the writing on the wall with regard to the elections… namely that Obama was likely to win. Policymakers in the White House may have decided that the Obama team would be less likely to open the credit floodgates for Wall Street, so they decided to take the pain and bail the big boys out now while the window of opportunity was still available.
So what does all this mean? I honestly have no clue, but here’s what I’m thinking right now:
Get ready for higher taxes. We have taken on a huge debt load, and anyone who thinks we’ll get away with lower taxes is fooling themselves. The only other solutions are hyperinflation or debt repudiation. We may have to take option #2 at some point… option #3 is unlikely short of open warfare breaking out.
Get ready for lower standards of living. Frugality will be the new conspicuous consumption. Assuming the economy is still standing next year, we’ll be paying so much in taxes and for goods that most peoples’ abilities to pay for luxuries will be down.
Debt slavery is a real possibility. As consumer credit dries up, we’ll spend more and more just to service our mortgages, credit cards, loans, etc… In my opinion, the government has chosen Wall Street over main street, so we will end up having bailed out the banks and credit card companies that will then turn around and put the screws to us economically. Choice between food & mortgage? We’ll make that easy and foreclose you out of your house. Thank you for playing… The Democrats are trying to put language in the new bailout plan to forestall foreclosures for a while… we’ll see how that plays out.
Keep an eye on your investments. IMO, nothing is truly safe in this environment. Your savings are safe only as long as your bank and the FDIC stay solvent. Money Markets? Safer, but still an element of risk as was seen last week. I don’t think either the FDIC or Treasuries would ever default… a more likely scenario, IMO at least, is the Fed pumping even more liquidity into the markets. You will still have your dollars, but thanks to the miracle of inflation they’ll be worth a lot less. Another form of taxation if you will.
Politicians will say “I’ve got a plan” for this mess, but it’s mostly bullshit. The real fixes are either to let the global economy unwind itself, raise tax rates through the roof, hyper-inflate, cut entitlement programs, or start a major war. How many of those things would make it into an election stump speech?
The USA will start being eclipsed as a world superpower. We are the king of debtors, and the rest of the world knows it. Things may not happen fast, but I think we will start to see the waning of US power projection around the world. Russia & China clearly aren’t afraid of us, and I think more nations will rediscover their backbone in coming years. It takes a lot of money to keep our military power overseas, and if our creditors decide they’ve had enough of our bullshit, we may see more troops being recalled from overseas. I’m sure it’ll be spun as ‘Mission Accomplished’ but I don’t know that it will be true.
Those are my gut reactions to the fun & games going on with our economy. Stay vigilant, and stay flexible. The radio & papers are already saying that we are entering a new economy with the decline of the investment banks. They are shying away from stating whether that’s a positive or negative development.
The first large study of humans exposed to a chemical widely used in everyday plastics has found that people with higher levels of bisphenol A had higher rates of heart disease, diabetes and liver abnormalities.
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BPA is ubiquitous in modern life; it is used to give polycarbonate plastic its shatterproof quality and found in everything from water bottles to dental sealants to the linings of canned food and drinks. The chemical can leach into food and liquid; one recent federal study detected BPA in the urine of 93 percent of the population.
Although the human body quickly metabolizes the chemical, it shows up in steady levels in urine and blood, which means humans are constantly exposed to it.
If you still had any questions… there ya go. For what it’s worth, BPA can be found in some plastic containers with the #7 recycling logo… and sometimes in the #3 apparently.
The 500-point drop in Wall Street yesterday was just an appetizer. Today could be where the fireworks truly start. AIG is on the brink of filing bankruptcy unless it gets help (i.e. a bailout) from the Feds. When Lehman Brothers filed for bankruptcy, it was for $639 billion… the largest bankruptcy ever. AIG would trump that with $1 trillion…. think about that for a second. A lot of this is tied up with derivatives and other exotic financial instruments, and AIG defaulting on a basket of these weapons of financial mass destruction could trigger an unwind of tens of trillions of dollars of this crap.
From what I’ve been reading, the government made a decision to let Lehman go in order to save it’s final bullets for the real big boys like AIG. There will be more failures coming after AIG… how much money will it take to keep putting band-aids on what is fundamentally a broken financial system?
In other news, if you haven’t heard, the Federal Reserve just pumped another $70 billion into the markets to try and keep things as liquid as possible. Hard to believe, but right now that seems like a paltry amount.
Let’s see if Mr. Bush or Mr. Paulson come out and say that our economy is fundamentally sound today or later this week. Their idea of ‘sound’ and mine are apparently radically different. Call me a cynic, but as more pundits and government officals tell us to not panic, the more worried I get that the economic shit is truly starting to hit the fan.
We are overdue for a financial day of reckoning… perhaps this is the start of that process. I’ve reached the point where I’m more interested in taking the major pain and getting it over with so we can move on and make things better for the next generations.
The USA is broke… most folks just don’t know it. If you have a chance to see this movie, I’d suggest doing so… especially if you think either major party is ‘fiscally conservative.’ This looks to be a bracing corrective for that line of thinking.
We are racking up debts we cannot repay, and that debt will be passed on to our children & grandchildren. Inter-generational financial child abuse of the worst sort.
The central bank is an institution of the most deadly hostility existing against the Principles and form of our Constitution. I am an Enemy to all banks discounting bills or notes for anything but Coin. If the American People allow private banks to control the issuance of their currency, first by inflation and then by deflation, the banks and corporations that will grow up around them will deprive the People of all their Property until their Children will wake up homeless on the continent their Fathers conquered.
Wall Street is panicking, and no-one is really noticing that oil has now slipped below $100/barrel again.
If you have any cash in banks, I would keep an eye on financial news for some time to come. Even if you don’t have a whole lot, there are reports that the FDIC (the government agency that is supposed to guarantee depositors) may exhaust it’s reserves if a few more banks go belly-up. They can always go to the Fed for more money if need be, but doing that would open up a whole other Pandora’s Box.
It appears that Hurricane Ike will end up being more of a financial catastrophe versus a human one. If there’s a silver lining to be found in the events of the last 24 hours, that’s it. It’s still early, but it appears the worst of the storm surge hit in the more sparsely-populated areas between Houston and Beaumont. A good number of people are still missing… many of them will be accounted for in coming days, but not all. If you’re interested in following up on the storm, Storm2K and the Houston Chronicle sites are good ones.
From what I’ve been reading, there’s been a general run on gasoline in the Southeast, and prices are rising pretty much across the nation. I filled up earlier this week at $3.49 per gallon; today prices are at $3.79 and are expected to continue rising. If you’re curious, here’s a link to a nice visual map of average gas prices by county for the entire USA. Georgians appear to be taking it in the shorts right now compared to the rest of the nation. There are a lot of oil rigs and refineries that Ike ran over… The refineries are shut down and flooded in some cases, but I haven’t heard of any major damage yet. There’s anecdotal evidence that at least two oil rigs are drifting in the Gulf of Mexico… will be interesting to see if there are more as crews start checking things out in the next few days.
A quick search of Google News shows that rationing of gasoline is taking place in different places around the nation. Odds are good the refineries in the Houston area will be offline for a while, so planning on high prices and limited availability might be a good idea. I don’t know that rationing will make it up here in the frozen North, but the high prices definitely will.
Holy Crap, does this one look big. I’m seeing reports that there are still thousands of people on Galveston Island, which may be completely flooded by the incoming storm surge. I’m offsite right now so no links, but they should be easy enough to find. God help those folks still stuck in the coastal areas.
Ike is only a cat 2 right now, but it’s huge, and the storm surge is predicted to be very high. The Nat. Weather Service told people on coastal areas that they may face ‘certain death’ if they don’t flee. Can’t get much stronger wording than that.
Will also be interesting to see how gas prices react, since they have been steadily dropping for weeks now. Lots of refineries in the general vicinity of Houston.
EDIT: Here’s the NWS warning… (added emphasis)
LIFE THREATENING INUNDATION LIKELY NEAR THE IMMEDIATE COAST AND
BAYSHORE AREAS!
NEIGHBORHOODS THAT ARE AFFECTED BY THE STORM SURGE…AND POSSIBLY
ENTIRE COASTAL COMMUNITIES… WILL BE INUNDATED DURING THE PERIOD
OF PEAK STORM TIDE. PERSONS NOT HEEDING EVACUATION ORDERS IN
SINGLE FAMILY ONE OR TWO STORY HOMES MAY FACE CERTAIN DEATH. MANY
RESIDENCES OF AVERAGE CONSTRUCTION DIRECTLY ON THE COAST WILL BE
DESTROYED. WIDESPREAD AND DEVASTATING PERSONAL PROPERTY DAMAGE IS
LIKELY ELSEWHERE. VEHICLES LEFT BEHIND WILL LIKELY BE SWEPT AWAY.
NUMEROUS ROADS WILL BE SWAMPED…SOME MAY BE WASHED AWAY BY THE
WATER. ENTIRE FLOOD PRONE COASTAL COMMUNITIES WILL BE CUTOFF.
WATER LEVELS MAY EXCEED 9 FEET FOR MORE THAN A MILE INLAND.
COASTAL RESIDENTS IN MULTI-STORY FACILITIES RISK BEING CUTOFF.
CONDITIONS WILL BE WORSENED BY BATTERING WAVES CLOSER TO THE
COAST. SUCH WAVES WILL EXACERBATE PROPERTY DAMAGE…WITH MASSIVE
DESTRUCTION OF HOMES…INCLUDING THOSE OF BLOCK CONSTRUCTION.
DAMAGE FROM BEACH EROSION COULD TAKE YEARS TO REPAIR
Lots of good comments on my post regarding Palin’s speech. If you haven’t been following them, please do… lots of grist for the proverbial mill in there.
I’ve been reading many stories in the past week about the election, following polls and trying to figure out just what in the hell is going on. Most polls show McCain & Obama in a dead heat, and the media is obsessing over Palin’s baggage instead of the issues, which is how the Republicans want it. Much better to show American what commies the mainstream media are by picking on a poor hockey mom & her family than to have potential voters figure out that you’re offering very little new that could help them financially or otherwise.
For their part, I don’t think the Democratic response to the GOP polling surge has been very effective at all. Even some of the liberal pundits are complaining about Obama and crew being too ‘cool’ and detached in responding to the GOP’s barbs, which plays right into the the right’s charge that the Democrats are elitists.
I sat through Sarah Palin’s speech last night. A few observations…
She’s a natural politician. I know she didn’t write the speech, but she delivered it well and did not flinch in the spotlight.
The gloves are off… she went after Obama, his wife, and Democrats in general hard enough that the rest of the campaign will more than likely get nastier. Lucky us who will be deluged with even more commercial tripe on radio and television. I nominate October as the new national “Turn off your TV” month. She delivered a mocking, sarcastic speech that was red meat for the convention delegates.
It’s interesting that we are supposed to leave candidates’ families alone, yet Palin made her family one of the main thrusts of her spiel. The TV cameras cut to scenes of her family seated with Cindy McCain constantly. You can’t have it both ways… either keep your family out of the spotlight, or put them in and deal with the scrutiny that comes with it.
I got a huge laugh when the cameras showed Palin’s youngest daughter holding her baby brother. The scenes where she was licking her palm and then trying to comb the baby’s hair down was hilarious, and was when she was digging in his eye, and all the poor baby wanted was to sleep. I could totally see my son doing something similar…
That poor bastard who knocked up Palin’s daughter looked like a deer in the headlights quite often. He’s probably wondering just what he’s gotten himself into.
Palin has a tendency to jut her jaw out and squint her eyes when making a strong point about something. She did it multiple times last night, and each time she did it, I thought she looked like old pictures of Mussolini. That’s an un-P.C. comparison, I know, but it’s what popped into my mind… similar mannerisms.
There should be a new drinking game… every time the words ‘Viet Nam’ or ‘Maverick’ is mentioned, everyone takes a shot of their favorite rot gut. No one questions McCain’s service in Viet Nam, but if he’s such a damn maverick, why didn’t he go with either Lieberman or the pro-choice Tom Ridge as VP? I personally think the choice of Palin was shoved down his throat. McCain appears to have sold out for a chance to get the presidency… some maverick.
When McCain came out at the end of Palin’s speech, the main thing I thought was: “man… does he look old.” He looked more like a doddering senior citizen than a strong leader of the free world.
Those are the main things that jumped out at me… like most political speeches it was long on dramatics and short on specifics. I hope that both the GOP and Dems get grilled properly by the press at some point before November. Candidates promise the world, often with little or no clue as to how they would implement or pay for their programs.
Posted by Bart 
The Moral Equivalent of War 