Since I have been without power since the freak wind storm on Sunday, it has felt a lot like what 1929 must have felt like on a lot of fronts. Let's see, where once there stood five major historic finance houses, now there are two. The government has nationalized the giant home mortgage loan companies and now has a majority equity stake in the largest insurance company in the world. Individual shareholders and employees at these companies who have seen their savings and their retirements and their lives wiped out in an instant have been told by the "inventor" of that great Canadian device, the blackberry, that "the fundamentals of our economy are strong." (The inventor of the blackberry realized after conferring with his staff that no stupider statement could possibly have been made and tried again a few hours later.) The Dow Jones Industrial Average has fallen almost 1000 points taking with it thousands of dollars that you and I have put away for retirement --- although likely the market will rally today with news of this societal bailout. Credit card companies overnight began slashing all of our credit lines, after decades of encouraging our profligacy --- they don't seem to understand that it is my right as an American to have stuff I can't afford, because it is not fair for people with money to live better than me.
No, the fundamentals of this economy are not strong. It is hard to know even where to begin the discussion of the events that have occurred over the last week that have led to the remarkable interference in the markets announced by Treasury Secretary Paulson and the SEC this morning.
First, the SEC and its UK equivalent announce that they will prohibit, at least temporarily, the short selling of financial company stocks, which means that no longer will these free marketers allow you to bet that the price of the stock will fall. Now you can only bet that it will go up --- hardly an unfettered market.
Treasury also will create a $50 billion fund to protect investments in some segments of the mutual fund market --- the market where most of us have our retirement money after the government's idiotic decision to drive retirement dollars to the speculative markets as a way of giving us all freedom --- freedom to be poor in old age (How much is in your 401K and how many years salary does it represent? Enough if you live to 80? Or are you counting on that "conservative" 8% annual growth?)
Next, the Congress and Treasury will work together to essentially create a "bank" to buy up and hold over a trillion dollars in bad toxic mortgage debts that financial institutions have created by putting individuals in houses and loan instruments that they could not possibly afford and then selling those loans off --- all the while knowing they were crap and that the whole system was built upon the false assumption that housing values would never fall.
So to all you free marketers out there benefiting from your government subsidized education with your money held in government protected accounts and living in your house mortgaged by a government protected entity, here's a toast to the week that the myth of free market capitalism crashed and burned. Unfortunately no one will be held responsible and we will be paying for this devastation for years.
So maybe this election will be about more than lipstick and pigs and whether McCain knows where Spain is and whether he invented the blackberry and whether Obama is a celebrity who chose hoops over troops, and whether Palin is a celebrity who had her brother in law fired because he was a cad or whether she can actually see Russia from Alaska and thus is a foreign policy expert on the Bush Doctrine --- maybe this election is about us and our children and our country and our future and what kind of country we will be and whether we will continue to be a country that tortures and one that honors its values.
Hope springs eternal, but today feels like 1929.