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Will the Latest Bailout Strategy Work?

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Headlined to H3 3/27/09

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According to various pundits, there are two scenarios based upon which the next great dollop of cash is about to be dumped on the unprotected heads of the bandits of Wall Street: either the "legacy assets" (the new euphemism for "toxic") are correctly valued, and the banks are insolvent; or they are worth more than we think, and the banks can recover with a little help. Some pundits even point out that "value" is different depending on when you evaluate it: if the banks get the loot, the "value" goes up anyway. So we hear all sorts of talk around the question: will it work?

Context is everything.

For instance. If, like me, you believe that our system is properly named Economic Feudalism, then yes, it will certainly work - for the holders of the fiefdom in trouble just now. And from their point of view, the fact that so many millions of people have been bumped off the drastically shortened "middle class" shelf and relegated to a lifetime of serfdom is all good.

If, like say, President Obama, you believe that the system is basically "free market capitalism" with a little bit of Responsible Adult Supervision, the idea that the bailout can make it better is at least a good bet. In this context, "succeed" means the banks recover solvency and are prevented by newly-watchful Federal agencies from getting too far out on the thin-but-profitable ice again. At least for another generation or so. The newly-swollen ranks of the poor, and the newly-shriveled "middle class" will have to fend for themselves.

If, on yet another hand, you think the system is run by psychopaths who only want to hijack everything of value and hole up while the Apocalypse runs it's course, solving most of the really serious problems our human species now faces in a relatively short, brutal "readjustment," then, the bailout is just a holding action while the catastrophe finishes getting ready to put our lights out for awhile.

You hear the world "narrative" a good deal these days. "If we accept that narrative," says the UN High Commissioner of Human Rights. Only now, we hear moss-covered Economists come out with stuff like that. Everything can be understood as a "Narrative." We have ex-Secretary Rumsfeld and that dick Cheney to thank for this new business of selling 'Narratives".

But nobody is talking much about context these days. That's because context is the word for what we assume without thinking to be the very air we all breath, the water in which we swim: the ubiquitous and unchanging conditions of life-as-we-know-it, the petty pace of our brief hour of strut-and-fret. But actually, the context in which we speak, and worse, know what we know, is not the same in all these conversations.

This crazy state of affairs is handy, though, for the "Narratives" industry. Even when somebody hits on the fantastical idea of putting the banks into Receivership, the time-honored and well-understood way of dealing with insolvent companies, the chorus of pooh-poohs and disdainful derision from these so-called adults is deafening. One side thinks it is "government interference" and paints all things government as wasteful and incompetent (unlike the Wall Street gangs?); and another says this situation is simply too big for the pathetic little FDIC, etc., to handle at all, which is why we need to just heave bales of thousand dollar bills at the general area of Wall Street. We all can see that the context from which each group speaks is a tiny bit skewed. But as long as nobody mentions this, they can all thunder away as self-righteously as Holy Inquisitors. In modern parlance this is called "balance".

So if you hear a group of homeless people, perhaps your erstwhile next-door neighbors now living in their defunct Hummer, talking about what needs to be done for the economy, you will hear a cogent and sane analysis, something like: "They oughta just give all those billions to us, we'd spend it pretty fast on stuff we really need, and the economy would start rolling again bigtime." But check the next time you hear that on some call-in talk show, as happened on NPR this morning. There was a brief flurry of spluttering from the Progressive, the Conservative and the Chicago School Economist, all in complete agreement that this idea is childishly simplistic, that the situation is terribly complicated, and that generally its a good thing the grownups are in charge, clueless as they may be.

Without reference, and very careful and specific reference, to context, no conversation anywhere has to make any sense at all, outside its own little boundaries where actual reality holds sway. So the pundits and the media and Wall Street and their retainers in Washington need have no fear that we, the People, will get a clue, or a grip, much less any kind of relief, any time soon. They will all get to keep their jobs as long as they hold to this line.

So don't reach for the rakes and pitchforks yet, friends. I'd stock up on clean underwear and granola bars, though.

 

I'm an old Pogo fan. For some unknown reason I persist in outrage at Feudalism, as if human beings can do much better than this. Our old ways of life are obsolete and are killing us. Will the human race wake up in time? Stay tuned...
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As long as our country has more money going out th... by Matthew Peters on Friday, Mar 27, 2009 at 4:08:03 PM