Wednesday, September 24, 2008

What do they want from us?

Bing! My "Refuse to be Afraid"-o-meter clicked on last evening as I stumbled across a sound bite of Federal Reserve Chairman Ben Bernanke staring into the camera and threatening the talking heads of a Senate committee.
I believe if the credit markets are not functioning, that jobs will be lost, that our credit rate will rise, more houses will be foreclosed upon, GDP will contract, that the economy will just not be able to recover in a normal, healthy way.
Bernanke and Treasury Secretary Henry Paulson have spent the past few days implementing H.L. Mencken's vintage formula regarding the ruling class:
The whole aim of practical politics is to keep the populace alarmed (and hence clamorous to be led to safety) by menacing it with an endless series of hobgoblins, all of them imaginary.
The populace is indeed alarmed and clamorous to be led to safety, but this is the worst time to be alarmed and the absolutely worst time to be terrified. When rulers send their minions to whip you into a state of irrational fear, the question always to ask is, "What do they want from us?" Well, clearly they want the "bailout plan" that appeared overnight to be passed, preferably without most of us reading the fine print or considering the ramification of the federal government taking ownership of the means of production financial sector.

Journalist William Greider, writing in The Nation, is among those saying "Hang on just one darn minute, fellas." He begins an article titled "Goldman Sachs Socialism":
Wall Street put a gun to the head of the politicians and said, Give us the money--right now--or take the blame for whatever follows. The audacity of Treasury Secretary Henry Paulson's bailout proposal is reflected in what it refuses to say: no explanations of how the bailout will work, no demands on the bankers in exchange for the public's money. The Treasury's opaque, three-page summary of plan includes this chilling statement:

"Section 8. Review. Decisions by the Secretary pursuant to the authority of this Act are non-reviewable and committed to agency discretion, and may not be reviewed by any court of law or any administrative agency." In other words, no lawsuits allowed by aggrieved investors or American taxpayers. No complaints later from ignorant pols who didn't know what they voted for. Take it or leave it, suckers.
You always have to wonder when a government agency seeks carte blanche power and immunity from prosecution. Oh, wait, no, you don't have to wonder. You just have to refuse. Something is rotten in the state of Denmark. (For the semi-literate, that's a Shakespearian reference, not a sudden change of subject to Copenhagen politics.) In the end, Greider drinks the Kool-Aid, opining that if the Bernanke-Paulson power grab doesn't work, the next step should be to "force-feed new life into the real economy with government spending on public projects and capital formation. How much spending? Rescuing America from irresponsible Wall Street is worth whatever it costs to save the bloodied bankers." And then how do we rescue America from irresponsible government spending?

As I've confessed over the past few days, I don't know enough economics to propose a different answer than borrowing $700 billion to give to banks that have borrowed too much. I do know enough personally about bankruptcy to recognize that getting a new credit card only postpones the crash. Oh, and I know that the crash is never as bad as you feared and in many ways even a relief.

And I know that fear is the mind-killer. Others are writing good writings about what it all means and how to protect your assets as best you can. My sole advice is for you, before you take any action, to take a deep breath and repeat Frank Herbert's litany of the Bene Gesserit from his Dune novels:
I must not fear. Fear is the mind-killer. Fear is the little-death that brings total obliteration. I will face my fear. I will permit it to pass over me and through me. And when it has gone past I will turn the inner eye to see its path. Where the fear has gone there will be nothing. Only I will remain.



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