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Throw a TARP Over It
The mania of self regulated markets is now history as the Federal Government announced the grand daddy of all bail out plans. Sec. Treasury Henry Paulson outlined with sparse detail this new tax payer funded catharsis and a asked Congress to act quickly on implementing the cleansing.
Historic Measures
All told the Temporary Asset Relief Plan (TARP) will utilize upwards of $800 billion (that's six and a half years of Iraq) to buyout bad mortgage backed paper held by the multitude of financial institutions. This doesn't include the hundreds of billions being dedicated to insuring the money market funds that are also exhibiting signs of strain despite the long held belief these funds where almost as liquid as cash.
TARP is a fitting plan for Paulson and Bernanke's attempt to cover up the carnage left in the wake of a decade of a self regulated maelstrom. Understanding the implications of this historic measure on the U.S. economic system is not easy to grasp. The plan will attempt to stanch the flow and get the markets back to terra firma. It is a rehabilitative measure not a stimulus plan for the greater economy.
The real economy has yet to stop shuddering. The indicators that us mere mortals are exposed to like unemployment and inflation are still blinking red. The just released unemployment rate for Ohio hit a 16 year high of 7.4% in August. Inflationary pressures still abound at the grocery store and the gas station. Local and state governments are all facing budgetary disasters in the next year or two if the economics that feed their coffers don't improve. My fear is that the TARP may have arrived just in time to cover the corpse of the greater U.S economy left slain on the ground. How much pain will we have to endure before it is revived?
Electionomics
I have one admonition for all of the talking heads in cablenewsland. Stop wasting time trying to determine if either Obama or McCain have offered any solutions to the current financial problems. It's not the job of a the president to personally concoct plans such as the rescue program announced this week.
What really matters is the candidate's philosophy on how the American financial system should function under a regulatory regime and what that regime (if any) should look like. We are looking for leadership under the current duress of our times not electing a newly anointed John Maynard Keynes of the 2000's. Who the next president taps to provide counsel on defining financial policies and formulating new frameworks for governance is the real indicator of economic wisdom. That's judgment we can bank on.
Which of the two men would make the right choices and pick somone like a Keynes to see past prevailing and failed philosophies (like self regulated markets) and work toward re-stabilizing the financial landscape? Everything I am observing and absorbing says that Obama is that person.
Historic Measures
All told the Temporary Asset Relief Plan (TARP) will utilize upwards of $800 billion (that's six and a half years of Iraq) to buyout bad mortgage backed paper held by the multitude of financial institutions. This doesn't include the hundreds of billions being dedicated to insuring the money market funds that are also exhibiting signs of strain despite the long held belief these funds where almost as liquid as cash.
TARP is a fitting plan for Paulson and Bernanke's attempt to cover up the carnage left in the wake of a decade of a self regulated maelstrom. Understanding the implications of this historic measure on the U.S. economic system is not easy to grasp. The plan will attempt to stanch the flow and get the markets back to terra firma. It is a rehabilitative measure not a stimulus plan for the greater economy.
The real economy has yet to stop shuddering. The indicators that us mere mortals are exposed to like unemployment and inflation are still blinking red. The just released unemployment rate for Ohio hit a 16 year high of 7.4% in August. Inflationary pressures still abound at the grocery store and the gas station. Local and state governments are all facing budgetary disasters in the next year or two if the economics that feed their coffers don't improve. My fear is that the TARP may have arrived just in time to cover the corpse of the greater U.S economy left slain on the ground. How much pain will we have to endure before it is revived?
Electionomics
I have one admonition for all of the talking heads in cablenewsland. Stop wasting time trying to determine if either Obama or McCain have offered any solutions to the current financial problems. It's not the job of a the president to personally concoct plans such as the rescue program announced this week.
What really matters is the candidate's philosophy on how the American financial system should function under a regulatory regime and what that regime (if any) should look like. We are looking for leadership under the current duress of our times not electing a newly anointed John Maynard Keynes of the 2000's. Who the next president taps to provide counsel on defining financial policies and formulating new frameworks for governance is the real indicator of economic wisdom. That's judgment we can bank on.
Which of the two men would make the right choices and pick somone like a Keynes to see past prevailing and failed philosophies (like self regulated markets) and work toward re-stabilizing the financial landscape? Everything I am observing and absorbing says that Obama is that person.
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