Yikes. Here’s a story about grain shipments being held up on the dock because buyers are unable to obtain letters of credit satisfactory to the sellers.
In other words, business is stopping. As business stops, people lose jobs. Etc. At which point the threat posed to people by foreclosure will be the very least of our problems.
This is a very, very bad omen indeed.
It would be nice if anyone, of either party, had their eye on the ball here.
UPDATE, replying to Charley:
There are a number of problems with the economy at present. One is that we are headed into recession, another is that many people are losing their homes due to foreclosure. Lastly, arising from these but now a separate issue, is the freezing of credit markets.
This last problem is acute; there is not much time to fix it. The former problems are quite a bit less acute; they can wait until January.
Stabilizing the credit markets now probably won’t avert a recession, and won’t do a thing about people losing their homes to foreclosure, but would avert something far worse than a recession.
I still see the parties (now the Republicans, too) focused on the “what about main street” thing, for vote pandering reasons. This is eyes off the ball. Likewise, yapping about regulation, whether you support it or not, is pandering at this point, because no regulation is going to solve the problem at hand right now.
It is as if the ER doctor is worrying about whether the patient’s smoking habit might cause lung cancer, and whether he should advise the patch or a 12-step program, while the patient bleeds out on the table from a neck wound.
ryepower12 says
we don’t need any of them stinkin regularations, god dammit!
centralmassdad says
The financial market is global, and the writ of any American, or anyone else’s, regulations may or may not be sufficient to solve the problem.
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p>That is why all of these foreign finance ministers are in Washington, trying to figure out WTF to do.
sabutai says
I thought the WTO and allied agencies were the recognition of this quandry?
stomv says
I know, it hasn’t all been distributed yet, but we keep hearing about tens of billions going here and there… is that money sitting in a vault? Is it being lent? What’s going on with that money?
laurel says
it is not being used to grease the skids of the business loan market, but to buy worthless shares of failed investment companies. thank heavens we can all at least be certain that the toy wooden arrow industry in oregon is on sound footing! đŸ˜‰
centralmassdad says
that, while running around for 10 days like a guy with his hair on fire to get the $700B, Mr. Paulson might also have been developing a plan about what to do once he got the funding.
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p>We are, again, dealing with a Bush appointee in a time of crisis.
bob-neer says
It all burned off, I guess. “We are, again, dealing with a Bush appointee in a time of crisis.” You hit the nail on the head with that one.
trickle-up says
Seriously, a condition of the deal should have been Paulson’s resignation and replacement. With someone from outside the dubbayaway.
centralmassdad says
sabutai says
Anytime one is dealing with a Bush appointee, crisis is right around the corner.
kathy says
Can you say ‘out of touch’?
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p>This is very, very scary. I’m listening to economist Ravi Batra right now on the Thom Hartmann show, and he is not optimistic.
centralmassdad says
Last week he suspended his campaign in response to the early, relatively minor, manifestations of the crisis, but now that things have gotten so much worse, he wants to talk about the Weathermen.
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p>Eyes off the ball.
hoyapaul says
Not sure what you mean by this. What, exactly, should the campaigns be talking about other than how they would help Main Street, define the parameters of government intervention in the crisis, and set up regulations that would prevent something like this from occurring again?
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p>That seems exactly like what they should be talking about. How specific do they need to get on the credit situation? I can’t speak for McCain’s side, but I know Obama has been talking about how at bottom this is a major credit problem (and the small business proposal today might be a (small) step in the right direction). Additionally, maybe the Fed’s actions haven’t been perfect, but one can hardly say that Bernanke has his “eyes off the ball” — they’ve been throwing everything but the kitchen sink around to get credit moving again.
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p>So I just don’t know what you’re talking about when you say that the parties have their “eyes off the ball”, and I don’t think your update clarifies anything. What SHOULD they be talking about?
centralmassdad says
At this point, this is something of an artificial distinction. Indeed, much of what most people think of as Wall Street–that is, the plunging equity markets– aren’t really relevant at all.
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p>The sellers of the grain leave the grain on the dock because no one has sufficient credit to buy it. Even though buyers have the cash. So no work for the guys who ship the grain to its destination port, or overland once it gets there. No grain for the flour mill to make flour, so they don’t need employees either. No flour for the baker, no bread for the shopkeeper. Etc.
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p>If this is happening with agricultural products, you can bet it is also hitting the fishing industry, and anything that relies on import or export. And in each industry, the effects can ripple along down the chain.
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p>This is why I think that Ryan’s Take is dead wrong. He wants the focus to be restructuring mortgages in order to keep people in their houses, but if they lose their jobs in numbers, then mortgage restructuring is a moot point, because they won’t be able to pay any mortgage, the real estate taxes, or to even heat the houses that he is trying to keep them in. In other words, this doesn’t even begin to address the actual immediate problem.
goldsteingonewild says
Question — how do you think first Obama 2009 will differ from what he ran on, given the economic crisis?
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p>* * *
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p>I predict:
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p>1. “He will increase investments in infrastructure, energy independence, education, and research and development.”
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p>Nope. Tiny cosmetic stuff, but cuts overall, except to green tech, because it has econ upside. He’ll fight to reduce Pelosi stimulus.
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p>2. “Reinstate PAYGO Rules” and reverse Bush tax cuts for wealthy.
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p>Yes.
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p>3. $65 billion health care plan.
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p>No. Instead, do some little stuff, like “Require hospitals to collect and report health care cost and quality data.”
gary says
Considering the size of the deficit, the only infrastructure spending will be a new traffic light for the corner of L Street and 34th. A blinky one, not one of those fance red-yellow-green ones.
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p>Reverse Bush cuts. In a heartbeat. Funny that the question in the recent debate was ‘what kind of sacrifice will have to be made?’ Obama basically said taxes would increase on the wealthy. Are we such a bunch of pussies that he’s afraid of saying we’ll all pay for this $700B bailout?
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p>Health care plan? An aspirin paid for by the Federal government, not just for the wealthy americans, but for everyone…. [cue balloons]
gary says
Hard to decide if doing nothing is better than making things worse. prop up consumption?! Christ here comes another stimulus check:
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p>
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p>The new proposal would be far greater than the $60 billion stimulus package that the House passed in late September, Mr. Frank said.
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p>Son-of-a-bitch, the stock market’s falling, not because the values aren’t there but because there’s no confidence in anything other than Tresuries and Barney “decorate this bill up with christmass tree lights” Frank wants to send out more checks to people so we can buy more crap from China who takes the cash and buys US bonds?
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p>No wonder there’s no confidence. No confidence with Congress–those assholes can’t say anything with prefacing it with ‘failed Bush policies’, same as Obama. McCain can’t say anything other than news about some chicago communist who–thank you very much–has had far more than the 15 minutes of fame he deserves. Bush can’t say anything because he works for Paulson, much the same as the next president will work for the Secretary of Treasury.
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p>BTW, silver lining: Bush’s revenge. Spend $700B in last months of office guarantees no government program spending for next 10 years. Goodbye Universal health.
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p>So, what to do? What a turning point! And it has nothing to do with presidential candidates, either of which are just a couple of jerks with a glide path toward election day and no idea what’s going on, and no idea how to instill confidence.
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p>Turning point: (1) a bailout nation where the Fed prints money not only to fund the banks but also the over-spending States, the under-funded pensions, the under-capitalized insurance companies, a stimulus check so we can blow it on Christmas crap, a buy out of all the under water mortgages because we all had to own a home regardless how much we owed, or (2) a calm statement by someone in charge that explains how we weathered recessions before, and we’re pretty damn good at it, and the system that’s been built over 300 years isn’t going to crumble because some smartass on Wall Street screwed up with a real estate ponzi scheme.
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p>Vote yes on Question 1.
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p>Vote against every single incumbent.
joes says
We all talk in billions now, sometimes in trillions, but if you want to get a reality check, look at the numbers from the Treasury’s web site:
http://www.treasurydirect.gov/…
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p>US Federal Debt as of:
10/1/2007 = $9,062,552,400,356.63
10/1/2008 = $10,124,225,067,127.69
10/9/2008 = $10,266,382,646,543.62
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p>Although we hear the FY 2008 deficit may be in the order of $410B, the actual increase in debt for the period is $1,062B.
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p>And if that isn’t bad enough, we have added another $142 in the past 8 days!
ryepower12 says
Just because a politician is talking about the other issues you brought up – foreclosures and regulations – doesn’t mean they’re “pandering.” Voters want answers to those questions. That’s called democracy. Discussing those issues isn’t mutually exclusive with dealing with the current credit crisis.
centralmassdad says
They both pretend that (providing relief to homeowners/letting people off the hook) will solve the immediate crisis. It will not. They know it will not, and pretend it will anyway, because that is what people want to hear. The only way to describe this without being uncharitable is to call it pandering.
ryepower12 says
please prove that first sentence. As far as I’ve heard, there’s no one saying there’s a sure-fire, one-shot fix for the economy. Until then, it’s better to approach the different problems with different, numerous solutions. So, again, this isn’t pandering.. it’s listening to the American people and trying to come up with solutions to their problems. It’s government.
centralmassdad says
to come up with solutions to their problems” is a nice way o saying “tell people what they want to hear.” It is pandering; this is what politicians do.
ryepower12 says
all politicians should do exactly the opposite of what their constituents want to hear… riiiiight.
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p>you call it pandering, I call it democracy. Does that mean it can be taken over the top? Sure. But we’re having record numbers of foreclosures and are on the verge of economic collapse, according to some experts. I don’t think the ideas that have been presented that actually would help regular, struggling people are ‘pandering.’ Politics is listening. That’s not a dirty thing, so long as our resources are fairly shared and we set policies first that help everyone and second that help the most people, then on from there.
kbusch says
If commercial paper dries up, the whole economy, top to bottom, is screwed, and no amount of bailing out homeowners is going to fix that. Then, the danger becomes having lots of businesses and pulling the economy out of that danger is exponentially harder.