Tuesday, March 17, 2009

So, the Swiss Are Starting Their Engines and Whose Nightmare Is This?

Paul Krugman quoting Nassim Taleb blogs that:

It would be like buying insurance on the Titanic from someone on the Titanic.
in response to these facts:
Marketwatch reports: The cost of buying protection against the risk that the United States will default on its mounting debt has surged in the past months, outpacing the rise in corporate-credit costs, now that the government has absorbed more private-sector debt. The spreads on credit-default swaps for U.S. government debt jumped to 97 basis points Tuesday, nearly seven times higher than a year ago and 60% higher than the end of last year, to a level roughly in line with those of France, according to data supplied by Markit. The spreads also hit a record last week. Has the risk of a US government default risen? Probably. Nonetheless, the people buying these contracts are crazy. A world in which the US government defaults would be a world in chaos; how likely is it that these contracts would be honored?
And Joe O’Shaughnessy sums up what's really wrong with our response so far to this continuing nightmare:
If I recall, it was Schacht who introduced Hitler and eased the path for him with the German Industrialists, who were skeptical. Certainly Cheney gets my vote as the one who carried the water for the Neocons with the Corporations, the “Schacht” of the Bush Administration. The close connection between the Nazi Party and the German Industrial machine was certainly analogous to the Neocon-International Corporation alliance of the last 8 years. We know enough about bribery, outright power grabs, torture, kidnapping of American citizens, political threats, firings and flaunting the law. against other branches of government and against the people. We know that the Bush Administration set up a false legal document to create confusion and expand unlawfully the authority of the President and the Executive Branch. The Bush Administratoin structured their actions based on an unlawful memo they requested from the Justice Department. They succeeded in usurping the power of the other branches and created deliberate uncertainty about the relative powers of the three branches of government. They ignored legal subpoenas from the Legislative Branch. Why these people are not in jail mystifies average citizens who are not allowed to ignore subpoenas. Because they acted under the false authority of that memo, the infamous, “John Yoo” memo, we are now told by constitutional scholars that we lived in a technical dictatorship from then until the end of his term. Bush regarded himself as the ultimate “decider” in more than rhetorical terms. And we can be sure that Cheney acted accordingly. Therefore, those who worried about whether Bush would pull some last minute coup were right to worry. Unless we have an investigation we will never know the reasons they did not. They certainly acted and still do with utmost secrecy, not only for legal reasons, but because that is the way that oligarchs act. They do not see elected office as leading. They see it as the acquisition of power, as a form of ruling. They had John Yoo write them what they considered a “Get Out of Jail” card. Now we find that Cheney may have had “hit” squads presumabley made up of CIA or, hopefully, ex-CIA agents acting even here in the United States. While Bush and Cheney may say that they think what they did is legal, just as Willie Horton may have thought that the money in banks belonged to him–they were wrong. Like any other criminal, if they committed illegal acts, they should go to jail. We need a major investigation to know just how close we came to real Nazi-style despotism, or whether some of us did, in fact, experience it. We need to know whether some of these curious coincidences, the deaths of people in government, people under investigation and people who were very inconvenient for the Bush Administration were more than accidental. And we need to act quickly before the trail gets cold. We now know for a fact that there was a conspiracy against Clinton. We know that Bush and Cheney lied about the Iraq war. We know about rendition as a fact. We know the entire judiciary and the Justice Department was corrupted, packed with “party loyalists.” What more evidence do we need to start a serious investigation? Now.
And then, there's always Ivan's worthy two cents:
Our “Lords of Finance” on Wall Street predicted the Great Recession at least 2 years before it happened. Rather than stop it they endeavored to profit from it. The Bankruptcy Abuse Prevention and Consumer Protection Act took effect on October 17, 2005 This change (at a time when there were very few defaults and was unneeded) was a smoking gun. Get out a graph of housing prices in most states and correlate it to October 17, 2005. You will see a kink in the charts a month earlier which indicated a “change in the change” of the rise in housing prices — what they call in calculus the 2nd dirivative. That was the beginning of the roll over of the real estate markets. Wall Street knew exactly what was going to happen and aided by Republicans they put mechanisms in place two years before the downturn that started in 2007 in order to fleece the unwashed masses and squeeze blood out of turnips in the down market they were expecting. — Ivan - March 15, 2009
John Mauldin, ever the happy camper says it's all struggling against the inevitable. As usual.
Right now, it is just small amounts and nothing that will rock the system. But these things can get a life of their own. If the Swiss can move to take their currency lower, then there will be a score of countries that will ask why they shouldn't be allowed to do the same. And the one currency they all want to be lower against? The dollar. Even though our economy is in shambles and consumer spending is falling, it is still a huge spending machine. And every export-growth-led country wants a piece of it. We are getting ready to run a huge, $3-trillion deficit, and the Fed is going to print a lot of money and inject it into the economy. There is real reason to worry about the strength of the dollar. And yet, the dollar is the weakest currency except for all the others. As much as we in the US worry about the fall of the dollar, it could rise over the coming year. That is going to put a lot of pressure from a lot of sources on President Obama, who ran as a populist. Here is hoping that his advisors steer him away from starting a round of trade protectionism that could beggar the world, just as Smoot-Hawley did 75 years ago. This bears watching closely.
Just saying. Suzan _____________________


Batocchio said...

You might find this interesting.

Cirze said...

Thank you, friend.

I did.