Screw the Bandaids. Pull the Goddamn Knife Out

Congress is playing the snuff videographer role-- in the most horrific reality show imaginable.

Quoted from Atrios today: ROTFL
To paraphrase a commenter over at Firedoglake:

How's that plan for putting social security into the hands of Citibank, Merrill Lynch and the other financial 'wizards' as President Bush had so strongly urged looking now?

"...in private he has expressed growing pessimism about the economy. Whispers has learned that has told people in recent weeks that the economic situation some see falling into recession will be much worse than he has admitted to publicly.

We're told by those who've heard him that he says the first six months of this year will be "bad," an adjective that some interpret this as signaling there is better than a 50-50 chance for a recession. Even worse, the former Princeton prof believes the ensuing recovery will be "weak" because of persistent problems in the housing market that will result in subdued consumer spending."

But today, we must give him credit. Electronic futures trading had foreshadowed a 500 point drop, and when the stock exchange opened, the DOW dropped 400 points. The announcement of the 75 basis point drop in the bank borrowing rate stemmed an ugly tide... effectively, cutting the drop to just a tad over 25% of what had been feared and making the US stock market's reaction to the previous day's international crash much milder.

Unfortunately, the question arises, how many times can massive rate cuts be applied, before there are diminishing returns?

A few days ago, I wrote that all Bernanke has is an up-down switch for moving the prime rate. I was wrong. He had another trick up his sleeve, and it worked.

The Wall Street Journal has reported that the manipulation of the prime rate is becoming less and less effective in influencing the economy, because there are so many additional global factors which also influence the economy. It would be nice if the nation's leadership-- congress or the Whitehouse-- could flip a switch and correct the problems we face. But that doesn't happen in reality USA. Doesn't happen with Petraeus in Iraq, doesn't happen with the housing crisis, the subprime mortgage crisis, the impending credit-tightening crisis, health care and so many more.

Yesterday, Bush and off the table Pelosi and do nothing Reid got together to discuss the size of the bandaids to be used on the massively hemorrhaging economy.

The solution to these kinds of problems is simple-- inspired, visionary, courageous leadership that supports strong government and enforcement of regulations already in place to police abusive corporate behaviors.

 1  |  2