This thing is so big, it is not making sense to me. It is just so huge. I can try and draw historic parallels, but there is no denying we are breaking new ground. Noone really saw it coming, although many warned of the malpractices in the mortgage industry.
Great Depression?
That was the last big crisis of this proportion, although the times were much more painful back then. A wrong lesson to draw would be to think now is the time to usher in a new bag of entitlement programs. There is no free lunch, the cliche goes. Someone somewhere has to pay. That someone could be unborn children, but they are still paying.
This Is America Paying For The Iraq War
The direct cost was the trillion Bush poured into the Iraqi sands. The indirect cost is this global financial meltdown, although it no longer feels all that indirect.
Bin Laden, Right?
Bin Laden talked of "the myth of the superpower" before he drove the Soviets out of Afghanistan. 9/11 triggered the Iraq War that triggered this financial crisis. Wall Street saw the White House act wildly fiscally irresponsible, and it mirrored the behavior.
Synthesis
The communist Russia of 1917 scared the capitalist west. The welfare state of the FDR types was a synthesis to save capitalism and democracy. The challenge of the War On Terror is for America to morph into becoming a non racist democracy. The election of a Barack Obama is a good start.
700 Billion Bailout, 500 Billion Stimulus?
The answer to America's economic challenges are not in the past. If the American taxpayer does not get all those 700 billion dollars back, the Paulson gang did not dole out the money right. They will have thrown good money after bad. The bad behavior that brought forth this bad mess has to be part of the rectification. Loans and mortgages have to be renegotiated so most people can keep their homes. Losses will be suffered. Inflated assets will not stand.
To say the rich got the 700 billion bailout, so let the poor get the 500 billion stimulus, that thinking alarms me a little for a few different reasons. One, 500 billion is a lot of money. Two, this 500 billion is not coming back. You could argue a big chunk of the 700 billion might not come back either. Three, this looks like too much of an effort to rescue the old industries. It is for America to invent new industries. The biggest effort ought be to invest massively in human capital. Universal health care and universal broadband are what tomorrow asks for. Broadband is the interstate highway for tomorrow.
Balanced Budgets: Still Sexy As Ever
You can't do it in one year, or even four. But if you can't deliver a balanced budget in five, six years, the pendulum is going to swing the other way. The Democrats can't hurry up and snatch the fiscal indiscipline mantle from the Republicans and still hope to rule for any length of time. Someone somewhere is paying.
Ending the misadventure in Iraq is going to be a big part of bringing down the deficit. Hopefully the US federal government will get a good return on its 700 billion investment in the financial sector. Maybe 700 billion will have become a trillion in five years. It is possible, if the right decisions are being made now. That could help usher a new era of balanced budgets. Health care reform, if done right, is to be a money saver for the country. Universal wireless broadband is to bring the educational costs down too.
Global Financial Architecture
Global warming, global terrorism, global WMD proliferation, global financial meltdown, global US President. Barack did his elementary school in the Third World, the guy has family on three continents.
I think the number one lesson of this crisis is that the big heads need to come together and put in place a new, robust global financial structure in place. No country is an island. No one country can do it alone.
In The News
Obama Unveils Team to Tackle ‘Historic’ Crisis New York Times
Team Obama promises huge jolt to economy
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