Faster, Economy. Fail! Fail! Fail!???

Dammit, I Coulda Fixed This Mess!

Oh dear, oh dear. Is our post-Chicago School neo-liberal deregulated greed-is-good utopia showing the cracks in its free-for-all facade?

NEW YORK – When Wall Street woke up Monday morning, two more of its storied firms had vanished.

Lehman Brothers, burdened by $60 billion in soured real-estate holdings, said it is filing for Chapter 11 bankruptcy after attempts to rescue the 158-year-old firm failed.

Bank of America Corp. said it is snapping up Merrill Lynch & Co. Inc. in an $50 billion all-stock transaction.

The demise of the independent Wall Street institutions came as shock waves from the 14-month-old credit crisis roiled the U.S. financial system six months after the collapse of Bear Stearns.

The world’s largest insurance company, American International Group Inc., also was forced into a restructuring.

But are we panicking? Heck no! The Murkin economy is strong and secure! The fundamentals are sound! Pay no attention to that man behind the curtain!

Well, maybe we’re panicking a little bit.

And a global consortium of banks, working with government officials in New York, announced a $70 billion pool of funds to lend to troubled financial companies.

The aim, according to participants who spoke to The Associated Press, was to prevent a worldwide panic on stock and other financial exchanges.

Ten banks – Bank of America, Barclays, Citibank, Credit Suisse, Deutsche Bank, Goldman Sachs, JP Morgan, Merrill Lynch, Morgan Stanley and UBS – each agreed to provide $7 billion “to help enhance liquidity and mitigate the unprecedented volatility and other challenges affecting global equity and debt markets.”

In a way, I think this was the point of globalization – to get us all so dependent on each other that no large country’s economy could be allowed to fail. Unfortunately, there is a lot of good faith assumed under this idea – good faith which we, as a nation, did not practice. We allowed our banking institutions to make extremely risky investments and deregulated our credit industries, and now both our economy and the economies of other nations around the world are being adversely affected.

Oh, and about those vaunted fundamentals? They don’t matter so much.

[Nouriel Roubini, chairman of the consulting firm RGE Monitor], said it’s difficult to accurately gauge the health of companies like Merrill because their financial health depends on how they value complex securities. As a result, their finances aren’t very transparent, he said.

That can lead to a loss of confidence in the financial markets, he said, which can overwhelm an investment bank even if it is financially healthy by some measures.

“Once you lose confidence, the fundamentals matter less,” he said.

Will the bleeding stop soon? Not bloody likely.

The International Monetary Fund predicted earlier this year that total losses from the credit crisis could reach almost $1 trillion. So far, banks have only taken about $350 billion in losses.

Commercial banks are also starting to feel the pinch. Eleven have closed so far this year, including Pasadena, Calif.-based IndyMac Bank, which had $32 billion in assets and $19 billion in deposits.

Christopher Whalen, managing director of Institutional Risk Analytics, a research firm, predicts that approximately 110 banks with $850 billion in assets could close by next July. That’s out of 8,400 federally insured institutions, he said, which together hold $13 trillion in assets.

Individual customers are starting to get nervous about the financial health of their banks for the first time in generations, he said. Whalen’s firm analyzes the safety and soundness of banks for business clients, but began receiving inquiries from individuals in the past two months for the first time, he said.

“If we don’t get ahead of this, we are going to face a run on the retail banks by election day,” he said.

A run on the banks. Overspeculation in real estate. Deregulation to the point of insanity. The government forced to take drastic measures and throw ever-more-valueless money into failing financial institutions, thus making government BIGGER. Hmmmmm, what does this remind me of?

Some think the frightening downward spiral of this economy will favor Democrats, and Barack Obama, in November. But I believe that the Democratic Party has squandered its economic credibility, jettisoning the Clintons, one of the most trusted economic brands in the history of America, for Barack Obama, an unknown brand with newer packaging. 

Regardless of their choice for president, voters judged Hillary Clinton to be the most capable of the three candidates when it comes to dealing with economic problems. She garnered 32%, compared with 26% for Obama and 23% for McCain.

Given that horrible decision, where is the superior judgment of the Democrats on the economy?

It looks like the American people are no longer certain of that judgment. McCain and Obama are now basically tied on economic trust issues, although at one time, Obama had a 16-point lead in that area. In fact, downticket Democrats are now in a lot of trouble, putting our once-anticipated veto-proof majority in the Senate at great risk.

And don’t expect the latest set of attacks by Obama to stick to John McCain, because for the quadrillionth time, McCain and Bush are not the same. Not even close.

I don’t know if anyone can help America, and the Democratic Party, at this point in history. I think Bush has royally screwed us for at least another 4-8 years, and the DNC has fucked things up beyond all possible imagination. But maybe, just maybe, we PUMAs can help wake the Party up to its massive errors in straying from its core principles. And maybe we can help downticket Dems with their money problems. And maybe we can convince other Americans to join us and help clean the Augean Stables of the incredible corruption that infects both parties.

And maybe, just maybe, We The People will come through this crisis better, more unified, and more powerful than ever.

Because what doesn’t kill us, makes us stronger.

PUMA POWER TO THE PEOPLE!!!