One of the things I find extremely humorous is the claim regularly made by some of the commentators that the American economy is doing so well. It leads one to wonder why, since they are so cocksure, they aren't the ones running it. Maybe it's because they aren't qualified to herd empty piggy banks at Wal-Mart.
Throughout American history, fiscal crises have often been caused by the economic malfeasance of a select few, aimed at enhancing their personal portfolios with the gleanings of a market on the way down. The Panic of 1857 was caused by the failure, due to widespread embezzlement, of the New York City branch of the Ohio Life Insurance and Trust Co. British investors insured themselves against further losses by removing their funds from U.S. banks, much like Japanese investors are reportedly doing of late.
Several years later, after the Civil War, The Fisk-Gould Scandal was caused by two speculators' efforts to corner the gold market on the New York Gold Exchange. We'll see this act played out again in the future, as you will soon see.
The Panic of 1873 was instigated by the bankruptcy of the Philadelphia banking firm Jay Cooke and Company due to excessive speculation in railroad stocks. Funding railroads at that time was much like pushing NINJA loans.
Once railroads found profitability, they attracted venture vultures. The Panic of 1901 was caused in part by stock manipulations among E. H. Harriman, Jacob Schiff, J. P. Morgan, and James J. Hill against the holdings of the others, all vying for the financial control of the Northern Pacific Railroad.
J. P. again heads the playbill just a few years later during The Panic of 1907, which featured a tussle between J.P. Morgan and other "established" bankers versus the "upstart" F. Augustus Heinze and his bank, the Knickerbocker Trust Company. The second crash during the Panic, in October 1907, was caused by a scheme of Heinze's to corner United Copper. As a result, asset runs by depositors occurred against nearly every trust in New York.
Morgan organized a rescue effort to shift money into affected banks (much like Bernanke is currently doing), with some of these monies borrowed from foreign sources (while being secured mainly by Morgan's personal guarantee) and used to purchase stock of affected companies which were otherwise financially sound, just as his namesake descendant did for Bear Stearns.
In more recent times, the Hunt Brothers attempted to corner the world's silver supply, managing to acquire one-third of it before margin calls ended their effort. A rare after- effect of this scam was that Nelson Bunker Hunt was convicted for his actions.
Charles Keating led a fiscal cabal, aided and abetted by five sitting US Senators – including the current eventual Republican nominee for president, Lame John McCain – in an effort to make personal use of other people's money taken from Lincoln Savings and Loan. McCain was "rebuked" by the Senate Ethics Committee for exercising "poor judgment" for intervening with the federal regulators on behalf of Keating.
But that's OK now, isn't it? After all – the family of the current Republican occupant of 1600 Pennsylvania Avenue is regularly involved in such events!
For instance, think back to 1988, when a Director of Silverado Savings and Loan – one Neil Bush, son of then Vice President of the United States George H. W. Bush – caused it to collapse and cost US taxpayers $1.6 billion to clean up the mess. The penalty assessed to Neil Bush was an out of court settlement for $50,000.
But that is all past history. Current history is being made as we speak, not that the commentators want to admit it. By instead paying attention to those outside the Bush administration who are running the economy – such as Martin Feldstein, president of the Cambridge group that is considered the official word on economic cycles – one learns that the United States has already slipped into a deep recession that could be the most serious since World War II. More than 70 percent of economists surveyed by those Marxist-Leninists over at The Wall Street Journal agree with Feldstein's assessment. None reportedly were bragging about the bargains available for the taking on the way down.
While in Florida [where Australian coins have in the past been discovered in vending machines], Feldstein reported the severity of this recession "could well be longer and deeper than the recession in the early 1980s that lasted 16 months." That would be during the reign of that noted fiscal conservative, Ronnie the Grate Communicator. Was he not the champion of the Laffer Curve, which purportedly demonstrated that lower taxation produces enough additional tax revenue in sufficient quantity that the American Republican government can go to war with a 600 ship fleet (bolstered by WWII battleships fitted Rube Goldberg-style with Flash Gordon's arsenal) launched against the working class all over the world without worrying about paying for it?
Who, then, could blame the executives of Bear Stearns for following this fine example of sound leadership? One can understand their declaring war on the lower-working class of the United States, fought by dropping houses on them which they couldn't afford without a huge increase in their incomes! And, when reality bites, and the truth is discovered, to attempt to pass the debt burden along to those of the investor class (while assuming that the true value of the assets would remain undiscovered)!
The sad thing for the execs of Bear Stearns is that their plan failed in the final stage. All along Wall Street, the investors aren't taking unverified value claims for granted anymore. Once Bear Stearns is digested by JP Morgan Chase, appetites will be whetted for the next victims, slated to be Lehman Brothers and Merrill Lynch.
Now that the investor class have been burned by Bushwa economic policies, their media properties have been given the green light to spotlight the lightweight who is nominally in charge of this entire mess. Maureen Dowd snipes, "Now that he's mucked up the world and the country, he can finally stop rebelling against his dad and relax in the certainty that the Bush name will forever be associated with crash-and-burn presidencies."
I wish you would have said that years ago before he mucked it all up, MoDo! You might have helped to prevent this.
MoDo's employer, The New York Times, editorialized:
Americans are ill-prepared for hard times. That makes the need for clear-eyed policies all the more urgent. We need them from the president, Congress and the contenders for the White House."
But columnists Walter Williams and Bryan D. Jones expressed doubt that this wish will be realized, stating:
"Bush policies put U.S. on road to second-tier economy and vanishing middle class …. aided and abetted by the continuing reluctance of the congressional Democrats to take a stand against Bush's destructive tax cuts. It is just one more depressing example that the federal government lacks the will to cope with the major economic problems that threaten the United States."
The will is lacking in the government because the will is lacking in the electorate. I expect that this will change as more borrowers fall into the yawing maw of the burst housing bubble.
It's now time for me to keeping George's economy from being a total failure by attending to my employment, so I yield the floor for another stream-of-consciousness rant with full-blown ignroance (sic), misinformation and propagandbits (sic) included. It emanates from all of that muzak spewing forth from the off-key organ of arrogant economic self-righteousness performed by self-made tycoons. I would explain further, but you all come up with the most entertaining speculations.
Until next time! Don't take any wooden nickels!