Sep. 8th, 2008

peterbirks: (Default)
Yes, it's the plaintive cry of small-town America every year.

Unless, of course, your small town is in such deep shit that you can't cope, in which case the cry is:

"Why isn't the Government doing something?"

The US probably has one of the most state-interventionist (if you take 'the state' in a rather broader sense than 'Washington') systems in the developed world, and it finally gave up any pretence that it wasn't interventionist by effectively nationalizing 50% of the mortgage debt in the country -- just the $5,000 billion. Presumably it saw the alternative as the total collapse of the US monetary system. Freddie Mac and Fannie Mae have always had an odd status, with the latter harking back to Roosevelt and the former being an even weirder institution, created to provide 'competition' to Fannie Mae. Until now, the shit hasn't hit the fan, so people have not cared to look too closely at the ins and outs of the matter. Now that the shit HAS hit the fan, the US Government has come to understand the downside of modern economics -- many financial institutions are 'too big to fail'.

Of course, for non-Americans, it's great news. The US taxpayer funds a bail-out of the world economy to the tune of about $30bn. Well, at least, that's what one hopes will happen. Because, make no mistake about it -- this is just about the last throw of the dice. If defaults and repossessions continue to rise in the US, and if the level of credit available shrinks back to the levels of the 1970s (the 1990s would be disastrous, the 1970s would be apocalyptic) then all of that consumer spending in the 1990s and early 2000s that was 'borrowed against the future' will be have to be paid back in a rather shorter timescale than anyone imagined. And if THAT happens, it's quite feasible to see serious political upheaval as a result.

And, in that sense, one can see that all politicians worldwide are conservatives, with an interest in maintaining the current system. If maintaining the current system requires mass government intervention, then all principles about 'no government intervention' get thrown out of the window. One of the appealing things about Thatcher (despite her many practical lunacies and penchant for economic juju men who shouldn't have been allowed out of the asylum) was that she didn't give a shit about the implications of her principles -- she would stick with them anyway. If a certain economic strategy could lead to glory or total social collapse, Thatcher wouldn't have looked at the risk vs reward and taken the 'safer' option. She would have gone ahead gung-ho. She was, indeed, the anti-politician politician. The people in charge today have a rather more pragmatic attitude. That's what makes them politicians. And so, the US takes a lien on half the mortgaged property in the US. Stalin would have been proud.

++++++++++++++

Headline in yesterday's Sunday Mirror:

"Ross Kemp fights on behalf of troops in Afghanistan"

Jolly noble of him, but, surely, isn't that the soldiers' job?

+++++++++++++++

Poor old Ray Nagin has a potential upcoming problem with Hurricane Ike, doesn't he? Will it be another "storm of the century"? How many of them does he plan to predict? But, if he stays quiet, and Ike DOES hit New Orleans, one would be tempted to say 'God, Ray, can you get nothing right?"

At the moment, it's v hard to predict Ike's actual course -- with a range from Key West to Mexico. It's also a much 'smaller' hurricane. By that I do not mean 'weaker'. It could indeed get very ferocious, but it has a smaller size of impact -- about 22 miles from the epicentre is the peak wind speed, as opposed to 70 miles in the case of Gustav and 90 miles in the case of Katrina (although I quote those numbers from memory). That can make for more spectacular pictures, but lower overall economic damage. Not much compensation if it happens to be your house that's 22 miles from the epicentre, of course. But, hell, serves you right for being mug enough to move to Florida. I've got rather more sympathy for the poor souls on the coast in New Orleans, in that at least the majority of them haven't retired there from Queens.
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